As you know, running a warehouse or distribution center is a game of seconds.
If you can shave just one second off the time it takes your workers to find, pick, and deliver medium-throughput SKUs, you’ll:
- Increase efficiency
- Reduce overhead
- Boost employee morale
Doing the same for high-throughput and low-throughput SKUs will maximize that impact. You need to optimize every square foot of floor space, minimize time spent searching for unorganized SKUs, and ensure that order pickers - who are diligently on their feet for upwards of eight hours a day - travel as efficiently as possible.
In fact, 60-80% of the cost of a distribution operation is wrapped up in labor costs. More specifically, it’s wrapped up in order picking operation costs.
And the way to reduce those costs is to focus on two areas of improvement:
- Reducing Search.
- Reducing Travel.
We put together the ultimate list to help you do just that.
Reducing Search Time
The first step to optimizing your distribution center or warehouse is implementing a “slotting system.” When in place, a proper slotting system allows for each SKU to be stored in its optimal position (or “slot”), have its own “address,” and be stored based on its throughput. Without a slotting system in place, your order pickers may find themselves wandering, or even doubling back, to find the SKUs they need to fulfill an order. This wastes precious time heightens the chance of a mispick, and reduces your bottom line (not to mention your customer service ratings and employee morale).
These first three tips are focused on reducing search time and preventing all of that from happening.
Give Each SKU an Address
Without a slotting system in place where each SKU has its own optimal position, order pickers will have an experience similar to delivering a package to a seven-story apartment building with no information but the building's address. They know the package has to go to Mrs. Brown at 574 Smith St. but they have no floor or apartment number. (They know the general area where the SKU is located in your warehouse but don’t know the specific location.)
How do they find Mrs. Brown in that scenario? How do they deliver the package? They would have to go door by door. (In your warehouse, they would have to search the general area SKU by SKU.)
Slotting a SKU in a specific position gives the piece an address. The more specific the address, the better. “fifth floor” is not enough. “fifth floor, apartment E” would allow the order picker to go directly to the SKU, reducing search time dramatically.
This makes it so much easier for order pickers. Aisle two, bay two, position three should always have the same SKU. Otherwise, there could be a mispick and the wrong item shipped to the customer. If you do nothing else to improve the organization of your warehouse or distribution center, do this.
Once an address is determined for a SKU, all efforts should be made to make that a permanent home for the SKU. If space in your distribution center is limited and the highest-throughput SKUs change rapidly, you’ll want to consistently adjust so the highest-throughput SKUs always have the most accessible “addresses.”
When all SKUs have a unique address, the order picker gets a very specific pick ticket or verbal cue that would include the aisle number, bay number, and position number of the SKU (or a pick sheet showing the location of all the SKUs in an order) instead of a general location. They'd be able to go directly to that location, pick the item, and quickly take it to “shipping,” or whatever step is next in your distribution operation.
Store SKUs Based on Throughput
Okay, so now you know each SKU needs a physical address. But- to continue the analogy of reaching Mrs. Brown- what kind of “building” should be at that address? How should you store the SKUs at that physical address to optimize search time. Should they be stored in a condo, a townhouse, or a studio apartment?
There are many ways you can store items: pallets, carton flow racks, shelving, etc. And the way you determine which storage solution is best is based on whether the SKU is low, medium, or high throughput.
Low Throughput SKUs
Slow-moving SKUs that aren’t ordered frequently don’t need a high-profile position in the warehouse. But they still need to easily be found and accessed. They should be stored in one of two types of shelving options: static and tilted-pick shelving.
Static Shelving
Many distribution centers place low throughput SKUs on static flat shelves located on pallet racks. Often times, static shelves can result in a dangerous pick, requiring order pickers to reach into awkward places in awkward positions. Sometimes, they’ll even have to climb up onto a rack in order to reach an item.
That’s an unnecessary liability.
Other times, order pickers will use a “shepherd hook” to bring an item forward from the back of a shelf. While much safer, this significantly lowers a worker's’ efficiency, slows down the whole process, and increases operational cost.
What’s the solution? Tilted-pick shelving.
It removes the need for workers to put themselves at risk and prevents inefficiencies, saving money in the long run. Another bonus of tilted-pick shelving many operations managers don't consider is that it increases employee morale. Anytime you can make your employees’ job easier and safer, they will appreciate it.
Tilted-pick shelves are designed on an angle so that once the first or second item of the SKU is pulled from the front of the shelf, the other items automatically move forward, making continued picking of the SKU just as easy and allowing for first in, first out replenishment
Installation-wise, if you’re using four foot deep pallet racks with static shelves, your static shelves can be replaced with tilted-pick shelves without requiring new pallet racks.
Medium Throughput SKUs
For medium throughput SKUs, “carton flow racks” are the ideal solution. Carton flow racks do exactly what they say they do: they allow cartons to flow forward after the carton at the front is picked. They are positioned in a more prominent position than tilted shelving and often replace old structures that use inefficient plastic wheels.
A New York City based online grocer had this exact problem, as described by their Senior Operations Manager:
“Our employees pick about 63,000 orders a week, averaging 8.5 lines per order and 10 items per order. We have delivery guarantees, so every order has to be picked correctly and delivered on time. . .
[and] the existing system was falling apart. The plastic wheels were breaking, leaving debris all over the warehouse.”
- Items were getting stuck or falling through the shelves because of extra spacing between wheel rails.
- Workers were reaching deep into the shelves and using hooks to retrieve and pull forward products that were hung up on shelves.
- Flexibility was non-existent: Dividers couldn’t be moved to accommodate changes in product sizes.
"The system was awkward and a waste of space. Overall, our pick rates were suffering.”
Faced with this challenge, they turned to UNEX. We created for them a custom solution, replacing their carton flow racks using a phased-in approach. And here’s what happened:
- Floor space - floor space required for the operation was minimized in a city where real estate is at a premium, allowing 500 new SKUs to be added in just 1 year.
- Faster pick rates – Inventory is now easy to see, reach and retrieve.
- Cleaner warehouses – Gaps were eliminated, preventing items from falling through shelves.
- Durability – 4 years after installation, Silvio said the product “still looks like new and is in great shape.”
As we did with them, carton flow racks can easily be customized for varying sizes of SKUs. They can also be adjusted according to an operation’s ergonomic window (heights that an operation has deemed are safe to pick from in order to avoid risks of strain or injury).
Seasonal Items and Wheel Beds
Some order picking operations require more flexibility in their carton flow racks or pallet racks- this can be due to changing the SKUs they carry seasonally, or carrying a wide range of SKUs that have a high variance in carton size. Using wheel beds allows for that flexibility by providing an uninterrupted flow, as opposed to separated, dedicated lanes of carton flow track.
High Throughput SKUs
For SKUs that are ordered at a high frequency, there’s no point in even taking them off the pallet when they arrive on at the distribution center.
If your employees are putting a pallet down for a particular SKU and clearing it in a shift (or even quicker), it doesn't make sense to double handle that SKU by putting it on a carton flow rack. It would take more time to load them onto the rack than it would to just pick them directly from the pallet.
And for the highest throughput SKUs, there’s a way to make pallet picking even more efficient:
Pallet Track is a solution that allows you to drop a pallet on a pitched conveying surface. This allows your order pickers to quickly and easily move pallets forward as other pallets are emptied, and can provide first in, first out replenishment to your pallet positions.
Optimize for Piece Picking
Piece-picking, also called “each picking” or “split-case picking” refers to the scenario when an order picker has to pick individual pieces out of a carton for an order. Again, since SKUs should be given a storage location, or “address” based on their throughput, you can have “piece picks” stored on shelves (low throughput), carton flow racks (medium throughput), or pallets (high throughput). In some piece picking processes, it makes sense to have high-throughput SKUs moved from pallets to carton flow racks since, while the individual pieces move quickly, the cartons themselves will take some time to move off the pallet. In those cases, getting the pallet off the floor can create a more efficient workspace. Essentially, in these cases, the high-throughput pieces correspond to medium-throughput cartons and so can be treated as a medium-throughput SKU.
By organizing your SKUs based on throughput, installing the best flow solution based on throughput, and taking into account whether the SKU is a piece pick SKU or carton pick SKU, you will be way ahead of the game. You will reduce pick time, reduce search time, increase employee morale, reduce overall cost, and increase overall profit.
Reorganizing your warehouse and reducing search time based on these general principles is a great first step. After that, it’s all about optimization: little tweaks that save lots of seconds.
Now that you know how to reduce search time for your order pickers, here’s the other important step to optimizing your distribution operation: reducing travel time.
Reducing Travel Time
Travel time refers to the amount of time your order pickers need to walk throughout their day in order to pick the SKUs they need to pick to fulfill the orders they need to fulfill. An unorganized distribution center can have them walking needlessly all day, wasting valuable seconds and increasing labor cost. A strategically mapped-out distribution center, on the other hand, will have your order pickers spending more time picking and less time walking, resulting in more orders fulfilled with better accuracy and in less time.
These last two tips will help you better map out your distribution center.
Organize SKUs Based on Throughput. Not Similarity.
Sound familiar? Yes, this tip is very similar to the first tip for reducing search time. It represents just how important organizing your warehouse based on throughput really is. Earlier in the post, you discovered the importance of giving each SKU it’s own unique physical address. But how do you determine what that optimal physical address is for a SKU?
It largely depends on the overall distribution operation and every operation is different. However, in general, the address is determined by the throughput of the SKU.
For example, all low-throughput SKUs should be stored in the same area of the warehouse. They don’t need to be organized by “product similarity” (e.g. If you sell a lot more ketchup than mustard, they don't need to be stored near each other just because they're both condiments.). They need to be organized by throughput. (High-throughput ketchup should be left on pallets in high-accessibility locations while low-throughput mustard should be moved to shelving in lower-accessibility locations).
This will allow order pickers to always know where to go for any low-throughput, medium-throughput, or high-throughput item. And it allows them to easily grab two frequently-ordered SKUs from the same location, dramatically reducing travel time over the long haul (versus a situation where two items with similar throughput are at opposite ends of an aisle). This type of organization increases efficiency by having all medium and high-throughput SKUs easily accessible in a high-traffic part of the warehouse while all low-throughput SKUs are in a lower-traffic part of the warehouse. It prevents situations where low-throughput items are needlessly taking up space in a high-accessibility location, preventing other high-throughput items from being stored there, decreasing overall efficiency, increasing overall cost, and decreasing overall profit.
Don’t get stuck on the idea that all paint needs to be stored together- after all, your workers will be picking neutral colors much more often than hot pink. It’s all about throughput, not item type.
Keep Workers Happy and Safe
This could be the most important tip out of the five, even though it might not seem that way. The impact of keeping your order pickers happy and safe isn’t directly measurable so it’s hard to quantify its power. But the benefits go beyond travel time. A high morale keeps workers motivated and excited to do a good job. By focusing on decreasing travel time, you’re letting them know you care about them too.
Your average order picker is on their feet for eight hours a day or more, and that is no easy task. By investing in more efficient systems that allow them to walk less, they will appreciate their job being made easier. And, even more importantly, they will feel empowered to perform better than they were ever able to before. The other option is to have disgruntled workers, tired of walking miles (literally) each day back and forth, being forced to climb onto racks to reach certain items, and being under constant stress to keep up with a fast pace of orders that the distribution center’s organization scheme doesn’t allow them to keep up with.
When the distribution center is organized properly, none of those frustrations exist and they will feel happy knowing that they are not wasting their time. They will enjoy knowing that they are maximizing the use of their skills and work ethic.
To this end, when you are first planning to optimize your distribution center and implement a slotting system, ask your order pickers for their opinions.
Find out where they’re struggling. Nobody knows the inefficiencies of your distribution center better than the order pickers on the front line. Not only will you get the best information, you’ll also allow them to be part of the solution, further increasing morale.
If you implement those five tips, you will undoubtedly reduce overall cost, increase overall profit, and create a high morale amongst your order pickers.
If you’re not ready to invest in new equipment like tilted-shelving or carton-flow racks, or would like to learn how such solutions would benefit your operation, you can start by conducting a slotting analysis of your facility. By filling out a data sheet with your SKU dimensions and throughput, our expert Pickologists can conduct an analysis that stores your SKUs in their optimal locations. From this analysis, you can make educated decisions on what equipment to purchase and what arrangements you should use to optimize your inventory storage.
