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 Inventory Management and Warehouse Operations.


 

 Measurement in the Warehouse.

  By Dave Piasecki  

 
Measurement can be essential in running a warehouse by providing factual information for making decisions. However, you need to use measurement wisely since you don't want the task of measuring operations to hamper productivity.

Continuous vs periodic measurement.

One option is to do the measurement only occasionally (periodic) versus doing it all the time (continuous). If you just need a rough idea of how long it takes to execute a task, you can just take some short-term measurements to find out and keep that in your records for future use. This is a likely option if it takes a significant amount of time to do the measurement itself. On the other hand, if the data needed for the measurement already exists in your computer system, you may as well use it to measure continuously.

Baseline Warehouse Measurement.

I define baseline measurement as snapshot-in-time measurement that quantifies the warehouse at a point in the past. I have a separate article on Baseline Warehouse Measurement.

Performance Measurement

Inventory Accuracy

Measuring inventory accuracy is a key measurement that all warehouse operations should do. I've written a separate article on Inventory Accuracy Measurement, and even more information is available in my book: Inventory Accuracy: People, Processes, & Technology.

Time to process receipts.

This is important because, in most systems, inventory isn't available for sales or manufacturing until it is received. If it takes a long time to process receipts, you may end up with more inventory because your planners may inflate their lead times to compensate for long or inconsistent receipt times. Measuring the actual time from when inventory hits the dock to when it is received can be rather difficult because it requires you to put a date/time on everything as it enters your dock.

A simpler approach is to set a standard for receiving, and just measure non-compliance to that standard. For example, if your standard is to have everything received within three days, at the end of each day, you just need to put a date on everything that hit your dock that day but was not yet received and review the dates on older items to see if any are more than three days old. You then keep a log of the number of items that have not been received in three days. You would also review these items to determine why they are taking so long and see if you can modify the process to eliminate these late receipts.

Time to put away receipts.

Processing the receipt is only the first step. You still need to get it on the shelf so it can be located to be picked or consumed. Depending on your system setup, the inventory may not even be available until it is put away.
You can do this in several ways. If you have a WMS it's likely that it captures the date the putaway task is generated and then also captures the date the putaway task is completed. So you may able to pull this right out of the data.
Another option is to measure compliance to a standard. If you produce carton labels or a putaway document, just include a date on those. Then, you can physically monitor what is staged to be putaway to see how much is beyond the standard.

Order processing times.

This is another one you would probably measure compliance to a standard. For example, measuring how many orders do not ship same day.

Replenishment.

If you have fixed slots that require replenishment, you need to do replenishment consistently. This is an area that frequently gets neglected because it's not viewed as something that must be done each day. If you don't do replenishment, you're going to have problems processing orders. You can measure this to a standard or just measure open replenishments each day. An open replenishment is a replenishment that has been identified as needing to be done but has not yet been done.

Warehouse Utilization.

Warehouse space utilization can be a little tricky. Measurement can help you identify when your warehouse is approaching full. I've written an article on Warehouse Capacity and also have a book available Saving Warehouse Space.

Housekeeping.

This is probably going to be measured as compliance to standards and will require regular inspections.

Fill rate.

This isn't a warehouse measurement but is a measurement that most fulfillment operations will maintain. It's typically measured as the number of line items filled complete divided by the total number of line items ordered.

Warehouse Labor.

You may measure the total labor hours in the warehouse, or measure overtime, or total cost of warehouse labor divided by total sales for that period.

 

 

 

 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.