Warehouse failures – How to avoid them.
The sequential processes involved in inventory receipt
typically follow a similar order.
Establishment of maximum / minimum quantities of
inventory
Cycle count or automated notice of inventory shortage
Automated or manual decision to purchase inventory
Issuance of Purchase Order to supplier
Receipt of Purchase Order confirmation with anticipated
shipment / receipt date
Automated, or manual, scheduling receipt of incoming
inventory
Anticipating inbound inventory processes (preparing for
receipt, location, quality control review, approval, authorization to pay,
putaway).
Receiving – physical location / process for goods – move
to QC, cross-dock, ship upon receipt, etc.
Quality control review.
Quality processes – pass, reject, partial acceptance, notice to supplier
Putaway, inventory quantity updates, cost updates, etc.
However, prior to engaging in these processes, several
preconditions must exist.
The warehouse must be mapped, so that putaway can be
accurate and efficient
The items to be received must be entered into the system
with full item descriptions loaded
The suppliers must be entered into the system with
associated receipt instructions to receiving staff
The price and quantity must be entered into the system to
be checked against incoming documentation
COD, or other payment processes must be loaded into the
system
There is no substitute for excellent, automated processes
to achieve optimal warehouse efficiency and productivity. These processes require careful planning and
extensive experience in the automation of manual warehouse processes. Examining the elements of excellent warehouse
automation listed above, let’s consider what can go wrong, and how to get it
correct.
The warehouse must be mapped, so that putaway can be
accurate and efficient
It may sound obvious, but a careful warehouse map must be
created before any progress can be made.
Too often, we have seen warehouse operations that are disorganized to
the point of chaos. The business owner
thinks a warehouse management software system can solve the problem. But, organizing chaos results in organized
chaos. First, step back and think about
how the warehouse ought to be organized.
What are the fastest moving items?
What are the slowest moving items?
Are there heavy or bulky items that required special handling or
storage? Is proximity to the shipping
department an important consideration? Is
there room for expansion as product categories change? Can growth be predicted, so that the
warehouse doesn’t become a hodgepodge of locations for identical items? Are bins required for small or fungible
items? Are serialized inventory items
loaded onto warehouse racks in a way that allow old stock to be brought to the
front when new stock is added to the back, so that inventory is logically
rotated according to receipt date? All
of these considerations go into planning in which aisle, row, level and bin
inventory should be stored. A good
warehouse map will be flexible, to grow and change with product changes.
The items to be received must be entered into the system
with full item descriptions loaded
Once the warehouse is mapped and planned, the item
information must be accurate, timely and complete. Consideration must be given to parent and
child relationships. For example a shirt
might come in sizes, colors and may have embroidered initials. These attributes of the inventory must be
anticipated and the steps or processes must be factored into the inventory
system that is adopted. Accuracy of
inventory and the management of value-added processes can only be accomplished
with precise inventory item descriptions.
It will pay large dividends to carefully plan out the inventory
description process. What forms must be
created and used? Who is authorized to
enter the data? Are there single or
multiple sources for these inventory items? Is it necessary to segregate inventory items
from one vendor from those received from another? If so, does that require an inventory item
description that can be supplier-specific?
Does costing information go into the item description? If not, how is cost computed as newly
purchased inventory is acquired at differing costs?
The suppliers must be entered into the system with
associated receipt instructions to receiving staff
Managing a warehouse begins with receiving and
putaway. How do receiving personnel
anticipate the shipping configurations and packaging associated with any
particular supplier? Does your receiving
system anticipate any complications that may offer? Is equipment and storage space anticipated
with reference to particular suppliers?
Loading bays and receiving floor space can often be a very valuable
commodity. How can you be best prepared
to receive goods from particular suppliers?
Where is that information stored and how is it communicated as inventory
receipt is scheduled?
The price and quantity must be entered into the system to
be checked against incoming documentation
It is critical to receive inventory in strict accordance
with a purchase order. What if items are
missed or backordered? What if pricing
is at variance from the purchase order?
What if quantities are incorrect?
Too often these errors are discovered too late and suppliers are
unreceptive to complaints. While an
accounting system may be separate from a warehouse management system,
integration between the two systems is vital to ensure that receipt of
inventory is confirmed against contract terms.
It is crucially important to know where that information comes from, who
is responsible for confirming supplier’s accuracy and what process must be
followed when a variance is discovered.
By planning these processes prior to the acquisition and implementation
of a warehouse management system, these challenges can be effectively managed
and controlled.
COD, or other payment processes must be loaded into the
system
If you want to create a traffic jam at the loading dock,
schedule a COD shipment and keep it a secret from the accounting department. These seem like simple, obvious requirements,
but unless the system is planned, so that vendor information is put into the
system and updated on an order-by-order basis, the coordination of inventory
receipt and payment processes will not be possible. There are really too many examples of areas
where the coordination of information from separate systems is vital. The message here is that a brainstorming
session is an excellent idea, from which a list of activities, or events, that
require the coordination and exchange of information can be created. Then, as the inventory and warehouse
management systems are being designed, interconnection between the necessary
data bases can be anticipated and planned.
Only once that is done can the information be effectively and
efficiently shared. Every aspect of an
effective warehouse management system requires careful and thoughtful planning
to ensure that eventualities are anticipated and processes are in place to
respond effectively.
Pre-planning for the creation and implementation of a
warehouse management system is improved by engaging systems experts from
outside the business. The successful
implementation of warehouse management systems in a variety of environments
will allow a consultant to offer “best practice” advice that will allow a
business to create an optimal design.
Thanks for reading, don't forget to follow us on Twitter, Facebook, and LinkedIn for more company updates and look out for our next weeks blog titled-"Warehouse Failures-How to avoid them part 2"
TEL. (714) 656-2898 | info@avectous.com
http://avectous.com
