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 Inventory Management and Warehouse Operations.


 

Baseline  Warehouse Measurement.

  By Dave Piasecki  


This is something I learned many years ago.  It can be very helpful to have some snapshot-in-time measurements that quantify your operation at a point in the past. You can refer back to this in the future to quantify changes to your operations. This isn't performance measurement, it's just measurement that quantifies your warehouse operation. For example, this wouldn't be a measure of how fast you run (performance measurement), instead, this would quantify the length of the track you currently run on. 

Many ERP/inventory/warehouse software programs don't have the functionality to report on things as of a specific date. If you wanted to know how many SKUs you had in stock in 2015, you'd probably be out of luck unless you captured that information back then. And relying on people's memory will result in all kinds of inaccurate information.

It's important to look at your operation and quantify the things that are important to it. If you're primarily a parcel shipper, you probably don't need to quantify Pallet storage or pallet movements. Similarly, a truckload shipper probably doesn't care all that much how many parcels or pieces he ships.

A lot of this is based on transactional information, so make friends with your database or someone else who is close to it. This is something you can do once a year or once every several years. In some operations, doing thorough baseline measurements once every 10 years may be enough.

Below are some examples of they types of things you may want to include in your baseline measurement. Again, you need to measure the things that are important to your operation, so don't think you need to measure all of this.
Try to consistently use the same timeframe for all measurements. For example, if you measure your outbound shipments by month, do the same for your inbound shipments.

Also, keep notes that explain how you arrived at some of the results. Don't expect to come back to this in 5 years, and remember where the numbers came from.

A note on Cube: Cube is typically the territory of Warehouse Management Systems, but surprisingly, WMSs don't use Cube very well. However, for measurement, Cube can come in very handy. Even if you don't have a WMS, you can usually store cube information in a supplemental data field. It's a lot of work to maintain cube data, but it can pay off when analyzing your warehouse storage.

Examples of Baseline Measurement

Outbound

Shipments by type (LTL, TL, Parcel)

Orders shipped

Lines shipped.

Pieces shipped/Cube shipped/pallets shipped. Again, this one is based on your operation, if pallets shipped are the best meausure for you, use that.

Average and max weight per shipment.

Non-inventory lines shipped. This one can be important since non-inventory is more difficult to track. If you were shipping 10 non-inventory lines per month five years ago but are now shipping 150, that is significant.

Lines shipped requiring additional handling. If you have to package some items special for shipment, or if some items are very heavy or oversized, you may want to track this stuff.

Order Profiles and Item Profiles. Read my article on Order Profiles and Item Profiles for more information on these.

Inbound.

Orders received.

Lines received.

Pieces received.

Pallets/Cube/Weight received.

Containers received.  If you receive full ocean containers, you will likely want to track these. 

Storage

SKUs stocked. You may call these Active SKUs. This one can be tricky since you don't want to know how many SKUs are set up in your database because that number could be significantly higher than the actual number of SKUs you stock. One option is to report on how many SKUs have a quantity on hand greater than or equal to 1. But that may be deceiving because some "stock" items may be currently out of stock, and some items you no longer plan on stocking may still have inventory. The best solution sometimes is to go to your planning data to see how many SKUs are set up to order more if you run out.

Cube stocked. This is where having cube in your system can really pay off. You may also want to break this down by product groups to see which product groups are taking up most of your warehouse space.

Pallets stocked. If you're in a full-pallet operation, tracking pallets stocked can be important. You likely don't need Cube for this as long as you have data in the system that tells you how many units make up a full pallet. 

Replenishments. These would be replenishments from overflow locations to fill primary picking locations. 

Returns.

Kitting.  If you do Kitting, you will likely want to track this. You would likely track it as number of Kitting lines shipped. More info on Kitting is available here.

Custom Packaging. Having to repack items either when they are received or before they are shipped can slow down related processes. You may want to calculate this based on the number of lines or pieces shipped that require custom packaging.

Seasonal measurement. Seasonal patterns rarely change for an operation, but it's a good idea to have some measurement that quantifies what your "busy season" is.

Staffing. You'll want to know what your staffing was when this measurement was taken. This may be a simple head count or some hours-based measurement.

Equipment. Though you'll probably think you will remember what equipment you had 5 years ago, you'll be safer if you record this. You don't need to record every little tool you have, but things like lift trucks are important. Even the number of docks and if they have levelers can prove to be important as things change.

 

 More Articles by Dave Piasecki.

Dave Piasecki, is owner/operator of Inventory Operations Consulting LLC, a consulting firm providing services related to inventory management, material handling, and warehouse operations. He has over 25 years experience in operations management and can be reached through his website (https://www.inventoryops.com), where he maintains additional relevant information.