Best Supply Chain Management Practices!

10 Tips to save warehouse costs:

Modern warehouses are becoming more complicated as a result of increasing customer requirements coupled with complex supply chain environments. However, cost savings can be realized by taking a step back and analyzing your warehouse procedures along with implementing “best practices” to help optimize inventory flow in the most efficient manner. The following suggestions come from my years of working with clients and observing what serve as “best practices” in storage management. A common theme in my suggestion is the incorporation of “lean” initiatives. By using Lean suggestions, you can dramatically reduce waste and therefore save costs while providing value to your customers.

1. Communicate effectively and frequently: Clearly communicating to workers your organizational goals, key performance indicators (KPIs), and the processes to achieve them is a key to effective warehouse operations. When managers fail to create an environment of open and clear communication, employee productivity suffers, resulting in high turnover and wasted resources. Effectively manage labor cost in an area that should not be overlooked.

2. Standardize your processes: Another best practice suggestion is to reduce potential variation in areas such as unloading, accounts payable, shift scheduling, and facilities management. Standardization saves time and money, and reduces errors. Remember: There is always a better way to do anything.

3. Measure what matters: For continuous improvement in your processes, measuring what matters is appropriate. If an outcome is not important to customers and shareholders, don't waste time measuring it. A third-party logistics managed distribution center, also called 3PL, that I have had experience with for a major US manufacturer, adopted a work measurement program to measure and report warehouse performance at the employee level. The installation increased productivity by 10 percent and reduced labor costs by 11.3 percent.

4. Results and Enablers: Determine what drives processes to ensure proper connection between results and enablers. Key performance indicators (KPIs) reflect the past; Standardization and error testing are the answer to productivity now.

5. Use the 5-Step Approach – This simple approach can go a long way toward understanding the “why” of your trading, not just the “how.” This Define, Measure, Analyze, Improve and Control approach reduces costly process variations. The backbone of the Lean Six Sigma methodology, DMAIC ensures sustained, defect-free performance and highly competitive costs.

6. Engage, Align and Empower your Associates: Listen to the Voice of the Employee (VoE): The people who do the work every day are process experts who know how to reduce or eliminate waste. Aligning your managers and staff with a company culture committed to research, accountability, partnership, and customer satisfaction can significantly impact warehouse productivity.

7. Educate your leadership: Another tip is to always ask the right questions, gather the necessary information, make decisions, and take appropriate corrective actions. This is vital to improve processes, products and services. Leadership should visit the shop floor frequently and work together with their people to improve processes and solve problems.

8. Create a Robust Training Program – Cost savings can also be achieved through training programs that incorporate cross-training. Break down a job and present the operation to new associates. Allow them to test their performance before releasing them into the process. Try to have your employees shadow tenured employees to gain valuable hands-on experience.

9. Look at variance: To increase productivity, increase efficiency, and control costs, a careful look at variance is warranted. This is the heart of Lean Six Sigma: reducing variation to make a more stable and predictable process. Find a meaningful measure that reflects your process, then reduce the variability of that process as much as possible. The results could yield very useful ideas.

10. Finding the right level of automation and systems: Return on investment (ROI) analysis could include automation in your cost improvement planning. The wrong material handling equipment may be creating hidden wasted time and inefficient product flow, impacting cost and customer service. Ask yourself if you are using the right technology to its potential to achieve business efficiency, waste reduction and cost savings goals.

Additional Information: We hope you found this article valuable. We have many additional items on our website and can also partner with your company if other supply chain management technology solutions need to be explored. We can consult with you to provide solid guidance on strategies and systems that have led to success from our vast experience in the industry. We look forward to hearing from you.