You Might Have A Bad Warehouse If... Your Warehouse is Built of Cardboard and String

“I’ll huff and I’ll puff and I’ll blow your house in” screams the Big Bad Wolf in “The Three Little Pigs.”   Well, the Big Bad Wolf would be able to blow the warehouse we are featuring this week down with just one puff because this warehouse has built their racking system with cardboard and string. Of course this isn’t the only issue that we see! Can you pick out a few other issues?
 
This bad warehouse story is courtesy of Steve Simmerman of Next View Software, Inc.  He ran across the website for a pharmaceutical distributor in a foreign country showcasing their capabilities.  This particular picture demonstrates their racking (uh...lack of) capabilities.  A closer look at the picture shows the racks are divided into slots by cardboard and tied together with string.  The only real structure is the metal poles (the frame for the racks) and the shelving that the cardboard is tied around.

Steve was quite impressed with the website and was digging around to learn more.  Their website actually has a ‘model’ introducing the company, how to navigate their website, and point you to check out their photo gallery.  It was here that Steve uncovered the photo he sent in.  “I don’t mean to pick on a small company in a foreign country, but if you go to the effort to have a decent website shouldn’t your warehouse be a bit more organized?”  Maybe their web designer needs to be promoted to general manager of the warehouse!

Steve continues, “I realize that certain areas of the world lack supply chain sophistication, resources, etc., but if you are a pharmaceutical distributor you don’t what to show this lack of organization in your warehouse, nor should you have cardboard shelf dividers held together with rope and string.” Steve did forget to mention that upper management may want to review their “marketing” strategy.

While cardboard and string may be considered best practice in other countries, this practice is, well, quite foreign to me. The Warehousing Education and Research Council (WERC) says best practice for storage and inventory control is to design storage systems to meet the needs of the current and planned mix of storage types. Best practice companies have optimized storage locations and layouts to fit product without the need to restack or re-palletize it once received. They also have regular reviews to ensure best access and proper sizing.

If you are not sure of the type of equipment you should be using in your warehouse, I would also suggest talking with the Material Handling Industry of America. And who can forget their trusty, well worn copy of Rules of Thumb: Warehousing and Distribution Guidelines. A new addition was just released and you can request an updated free copy or use the online cost calculator.

Even though this warehouse is located in a foreign country, many of the practices and equipment outlined by both WERC and MHIA are tested and proven and can be applied internationally.
 
Another area this warehouse should look into is organization. There appears to be multiple SKUs in one location. I am sure they could benefit from a quick lesson in slotting strategy.

I really love your feedback - and love your contributions to share those bad warehouse stories to help educate the profession on what NOT to do, and maybe what to do if you’re not doing it. If you've got an example of a bad warehouse practice, send me your story and photo(s) to Kate@SCVisions.com.

If I feature your example in one of my blogs, WERC will send you a free copy of the WERC Warehousing & Fulfillment Process Benchmark & Best Practices Guide (a $160 value). Your submission can be anonymous if you like so you don't get your boss or company in trouble! I'll be collecting examples all year and the winner will receive a free warehouse assessment by Supply Chain Visions, a $10,000 value. The runner up will win a free conference registration to the WERC conference (a $1,375 value).

You Might Have A Bad Warehouse If... Your Directed Put-Away Needs Direction

“Mom, where’re my blue socks. Mom, I can’t find my shoes. Mom…” What did your mother always tell you as you hunted for “missing stuff”? Mine would say, “If you put it where it belongs you would be able to find it when you want it.”

I often get disappointed when I visit a warehouse with a “world class Warehouse Management System” like the one pictured at the right, that is not implemented or used properly. In this bad warehouse example, the WMS system directed the driver to what it thought was the first open location, but the location was full. Someone had used it already, but manually keyed in the location and got it wrong. So the driver asked the system for a second location, and it was empty but too small for the pallet he had. In frustration the driver went a few aisles over, to where he knew from experience there were empty locations, dropped his load, scanned in the location, and headed back to receiving. We asked how that can happen and were told, “The (RF) guns don’t work on some of the rack labels, so we just key it in.” Sound familiar?

Although they had a WMS with system directed put away, they had little location management discipline. Bottom line – their directed put-away process needed direction.We heard comments throughout the day like, “sure the system tells me where to drop it, but it is always wrong, so I change it” or, the ever popular “I know better than the system where stuff goes” and “it is faster to drop the load in an empty location, and change it than it is to drive all over the warehouse to put it where the system says.” The warehouse workers had no faith in the system and how it directed put away.

The issue was not that the workers were “bad”, it was that the system was not being kept up-to-date. The location maps were wrong, the profiles of the slots were outdated and errors were introduced into the system by issues with location labels and manual entry. Turns out this company had not done a slotting strategy in years, even though they made a number of layout changes and added a lot of new products to the warehouse.

And what about the product that was in the wrong location? I was there most of the day and asked if anyone went back to fix the problem they found that morning. No one had, and they did not have a process in place to fix such issues.

The Warehousing Education and Research Council (WERC) says best practice in slotting management is that the strategy should be reviewed monthly and adjusted in advance for seasonality. Business rules for slotting should be reviewed and changed to support current and expected business requirements. An up-to-date slotting plan is not just nice to have it will help control labor costs and improve warehouse efficiencies. Our suggestion, check into when you last looked at your slotting plan and watch how directed put away is really working, at the driver level. Put trust back into your system.

Many consulting firms can help with a slotting strategy if you don’t know where to start. Fortna, Forte and enVista are three really good boutiques that are known for sorting through warehouse operations problems for companies

For more information on using cubing and weighing as part of your slotting strategy read the article “cube route to better slotting”at DC Velocity.

For more on this subject including recommended best practices we recommend that you read the sections on “Material Handling & Putaway” and “Warehouse Management Systems” in the WERC “Warehousing & Fulfillment Process Benchmark & Best Practices Guide” available from the WERC Online Store.

I really love your feedback - and love your contributions to share those bad warehouse stories to help educate the profession on what NOT to do, and maybe what to do if you’re not doing it.

If you've got an example of a bad warehouse practice, send me your story and photo(s) to Kate@scvisions.com. If I feature your example in one of my blogs, WERC will send you a free copy of the WERC Warehousing & Fulfillment Process Benchmark & Best Practices Guide (a $160 value).

Your submission can be anonymous if you like so you don't get your boss or company in trouble! I'll be collecting examples all year and the winner will receive a free warehouse assessment by Supply Chain Visions, a $10,000 value. The runner up will win a free conference registration to the WERC conference (a $1,375 value).

You Might Have A Bad Warehouse If... You Expedite Orders More Than FedEx

This week’s bad warehouse involved a company that supplied spare aircraft parts. One of their primary directives was to quickly solve any customer parts request which involved an aircraft on the ground (AOG). Almost all outbound shipments were sent “Next Day Air” or some other method designed to get the parts to their destination quickly.  Many were even delivered directly to the airline customer at a local airfield.

Sadly, this expedite mentality permeated through the entire company and resulted in almost 85% of all inbound and outbound shipments being treated as rush shipments – regardless of the need. The picture below was taken on Sept 25 and the package was shipped by the supplier to the company's warehouse UPS Next Day Air . The package was sent on Feb 10, seven and a half months earlier.  Unfortunately this was not an unusual occurrence.

In discussions with the receiving personnel we found that many suppliers seemed to slap an "AOG" sticker on the package and ship everything overnight, regardless of the emergency. We dug a little deeper and found that suppliers did not get penalized for early shipments and were not held accountable for the costs of overnight shipments either because all shipping costs were born by the company – not the supplier. The supplier actually had a perverse incentive to ship everything via air freight.

The Warehousing Education and Research Council recommends that each department or line manager acknowledge, authorize and be responsible for expedited shipments. Not just a cost justification, but a clear description of the reason for each instance.

I also recommend avoiding the use of a “peanut butter spread” approach to cost apportionment for expedited shipments which is absorbed into overhead. Each business unit or profit center should be charged for the associated expenses directly. This level of visibility will go a long way toward helping control expediting costs.

Another tip is to assign reason code type tracking to expedited outbound shipments also, even if the customer is paying for the extra cost. There may be some real opportunity to improve processes and customer service found by auditing these.

Lastly, I highly recommend you work with a firm to do an audit of your expedited shipments and rates. Firms like AFMS, CTSI and TranzAct are excellent resources - often saving a company as much as 40% of their expedited fees in better rates and management of their expedited process. AFMS will work on a vested outsourcing solution to develop a win-win solution for managing your expedited freight.

I really love your feedback - and love your contributions to share those bad warehouse stories to help educate the profession on what NOT to do, and maybe what to do if you’re not doing it.

If you've got an example of a bad warehouse practice, send me your story and photo(s) to Kate@scvisions.com. If I feature your example in one of my blogs, WERC will send you a free copy of the WERC Warehousing & Fulfillment Process Benchmark & Best Practices Guide (a $160 value).

Your submission can be anonymous if you like so you don't get your boss or company in trouble! I'll be collecting examples all year and the winner will receive a free warehouse assessment by Supply Chain Visions, a $10,000 value. The runner up will win a free conference registration to the WERC 2011 conference (a $1,375 value).

You Might Have A Bad Warehouse If... The Sign "Keep Door Closed During Audit" is Displayed

This bad warehouse practice is brought to you by Gary King founding partner and chief consultant at Business Fit Associates.   Gary reveals highly questionable auditing and inventory management practices of a company he witnessed during an ISO audit. 

"I was accompanying an ISO Registrar during an ISO 9001: 2000 pre-certification audit," he wrote. "At this particular warehouse distribution location that served fortune 500 companies as a 3PL, we came across a trailer backed up to an open dock door with its trailer door closed. A sign hanging from a chain attached to a light fixture just inside the warehouse read: 'Keep Door Closed During Audit'.

When the auditor asked about the purpose for the sign the response from the dock supervisor was: "This is where we put product that we didn't have time to identify or determine who it belongs to. We didn't want you to include it in your audit."

Gary continued: The auditor's response was can we have a look anyway? The dock supervisor' replied, 'I guess its okay since the trailer is outside of the warehouse you can't count it in the audit anyway, right?'  Without waiting for a response from the auditor, the dock supervisor rolled the door up and exposed a trailer filled front to back with pallets of customer product.

When the auditor asked how long it took to fill the trailer, the dock supervisor said not long, 'We filled it on second shift last night; it took us about two hours. The other three trailers out in the yard took us a couple of days because we were busy cleaning up and getting ready for your visit.'

At this point Gary says he excused himself to use the the men's room, "Where I proceeded to laugh out loud for at least five long minutes before I could compose myself enough to rejoin the auditor on his walk through."

Funny? Yes, but the incident exposed a serious problem at this warehouse. The activity that Gary described defeats the whole purpose of an inventory audit -- or any audit for that matter -- that is, to get the most accurate count possible of the stuff on the shelves and its value.

Not to mention time that was wasted “getting ready” for the auditor’s visit.

And how is it possible for even the most perfunctory of warehouse management systems to have four trailer loads of product laying about that can’t be identified? Plus they were essentially hidden outside of the warehouse. It almost sounds illegal.

This episode reveals not only an unwholesome and resistant approach that undermines the auditing process, but it also leaves money and product off the books and … where? In addition it reveals a shocking and unethical approach to inventory management training.

This was an out of control inventory control system. As The Warehousing Education and Research Council Best Practices Guide notes, “Well-documented and defined processes are the foundation of inventory control. Processes should detail specific tasks and requirements.” Do I need to mention that those specific tasks should not include middle-of-the-night inventory moves to prepare for an audit?

The guide adds that defined and documented procedures “should be the only way inventory is managed and transactions processed,” and employees must have a “complete understanding” of those procedures and expectations.

“Documented processes should be the only acceptable way.” Hiding product ruins any hope of an accurate, documented cycle count or properly measuring inventory activity.

As the guide further explains, it’s also all about achieving the “right company mindset…inventory accuracy must be seen as every employee’s responsibility, not just the responsibility of those who perform inventory transactions.”

In this case keeping the door closed illustrates a cockeyed mindset, leaves money somewhere in limbo, and product in the dark.

I really love your feedback - and love your contributions to share those bad warehouse stories to help educate the profession on what NOT to do, and maybe what to do if you’re not doing it.

If you've got an example of a bad warehouse practice, send me your story and photo(s) to Kate@scvisions.com. If I feature your example in one of my blogs, WERC will send you a free copy of the WERC Warehousing & Fulfillment Process Benchmark & Best Practices Guide (a $160 value).

Your submission can be anonymous if you like so you don't get your boss or company in trouble! I'll be collecting examples all year and the winner will receive a free warehouse assessment by Supply Chain Visions, a $10,000 value. The runner up will win a free conference registration to the WERC 2011 conference (a $1,375 value).

You Might Have A Bad Warehouse If... You Feel Like Indiana Jones When Picking Product

It may be fun to act like Indiana Jones and go on an expedition for that perfect treasure, but if that treasure you are after is an order you are trying to fill or a slot you are seeking out for a replenishment I am probably safe in suggesting you might have a bad warehouse.   I have seen put-away operators who were forced to dismount their fork trucks and in a few cases actually climb the racks (fortunately the racking was only 2 levels high) taking precious time to arrange and re-arrange product to fit. Then the process was reversed when order pickers needed to pull product from inventory to replenish the pick racks. They had a hard time finding the right SKU and pulling the correct quantity. Workers at these warehouses were frustrated with the process, but there was just not enough space and far too many SKUs (stock keeping units) to fit in the stocking locations.

The photo on the left and the photo on the right (click on photos to enlarge) show  multiple SKUs on a shelf. Each of the shelves shown in the photos on the right and left were recorded as single warehouse locations or slots in the company’s warehouse management system and each cardboard bin was a unique SKU. 

If the two examples above don't make you cringe, I've got another example for you. The photo below shows a single cardboard bin with multiple SKUs. Incredibly enough there were bins within bins and multiple bins on a single shelf. Again, this company’s inventory management system only recognized the shelf as a location. When the order picker gets to the right slot – they have to visually sort through the boxes to find the right item, which can (and most often does) lead to picking errors.

 

While these photos represent a company that was fairly orderly (all the boxes were placed neatly in the rack), we frequently see storage areas where SKUs flow over into nearby locations or where the location is not well defined, such as when pallets are stacked in a “bulk” or “overflow” area.

So what can a company do when faced with such a challenge?

• Best practice is to have a single SKU to a stocking location, to have all locations clearly labeled and defined, and to track inventory by a unique location.
• Some near term options might be to split up a larger location into smaller (like the above company did by using the smaller cardboard bins on the shelf) – but to assign each smaller location its own slot in your inventory management system. This would mean placing a location slot label under each cardboard bin so there is a one to one relationship for a SKU and SLOT.
• A longer term solution would be to optimize your cube by aligning your storage equipment to your product profile. For example, a better approach for the company in the third photo might be to use carousels to increase the density of their storage area since the product in each cardboard bin was relatively small.

Good location management will pay dividends in reduced labor costs and improves accuracy. For more benchmarking information read the sections on Slotting and Storage and Inventory Control in the Warehousing Education and Research Council’s “Warehousing & Fulfillment Process Benchmark & Best Practices Guide” available from the WERC Online Store.

With today’s warehouse management systems there is really no reason why most any size business can’t use some form of location management system. There are the major players such as Highjump, Manhattan Associates, RedPrairie and SAP (and many more) as well as a number of new “on demand” WMS systems, such as SmartTurn and SnapOnDemand.

Many consulting firms can help with a warehouse organization. Fortna, Forte and enVista are three really good boutiques that are known for sorting through warehouse operations problems for companies.

I really love your feedback - and love your contributions to share those bad warehouse stories to help educate the profession on what NOT to do, and maybe what to do if you’re not doing it.

If you've got an example of a bad warehouse practice, send me your story and photo(s) to Kate@scvisions.com. If I feature your example in one of my blogs, WERC will send you a free copy of the WERC Warehousing & Fulfillment Process Benchmark & Best Practices Guide (a $160 value).

Your submission can be anonymous if you like so you don't get your boss or company in trouble! I'll be collecting examples all year and the winner will receive a free warehouse assessment by Supply Chain Visions, a $10,000 value. The runner up will win a free conference registration to the 2011 WERC conference (a $1,375 value).

You Might Have A Bad Warehouse If... Your Cycle Count Takes 23 Years

A few years ago Steve Murray and I did a project which assessed warehousing processes for one of our client’s at 15 US locations. Although this client used a corporate database to define acceptable standard processes and work instructions, most locations actual practices varied greatly from the standards. This was quite obvious when we reviewed the cycle counting process at one Midwestern facility.

The company built and maintained some very large complex products. This location had in excess of 80,000 individual SKUs / Part Numbers in their inventory, many of which were repair parts that did not have much movement. Their practices for cycle counting involved starting at the front of the warehouse and counting bins until they had counted 15 bins, then they would stop, reconcile physical count to book inventory and make any appropriate adjustments.

They felt that with current staffing levels and workloads for receiving and picking that this was the daily limit they could devote to cycle counting.

We did the quick math and determined that with 5 day work weeks it would take roughly 23 years to complete the cycle count. The inventory manager responded that this was not a problem because they did a complete wall-to-wall inventory every 6 months and the cycle count program was used primarily to satisfy corporate requirements that they had one. We noted that the corporate standards suggested a frequency for counting – the manager said “ya, but it’s not a requirement”

We asked what happened after they completed the semi-annual wall-to-wall. The manager said that they would start the cycle count over again at the front of the warehouse! Well, at least they didn’t have to spend a lot of time walking back to the far corners to count parts.

You should review your standard practices to ensure that there is not too much gray area between the letter of the law and the spirit of the law. Clearly this cycle counting practice was mostly a waste of time. The “front of the warehouse” items which were counted every cycle were not even necessarily fast movers, the bins were organized in sequence by part number.

So what is the right approach for doing cycle counts? There are many good books and references on setting processes for cycle counting, but most involve looking at frequency of movement and value of the item to get an “A, B, C” Pareto breakdown for determining appropriate cycle frequency. And, all methods emphasize ensuring that every part gets counted sometime.

For those wanting to learn more on setting safety stocks, I suggest the following resources:

• Start by reviewing the section on “Cycle Counting” under “Storage and Inventory Control” in the WERC Warehousing and Fulfillment Process Benchmark & Best Practices Guide, available from the WERC Online Store
• I would also suggest reading “Guide to Implementing a World Class Cycle Counting Program” by Jeff Rose at Tompkins, Inc. Lots of good information here.

I really love your feedback - and love your contributions to share those bad warehouse stories to help educate the profession on what NOT to do, and maybe what to do if you’re not doing it.

If you've got an example of a bad warehouse practice, send me your story and photo(s) to Kate@scvisions.com. If I feature your example in one of my blogs, WERC will send you a free copy of the WERC Warehousing & Fulfillment Process Benchmark & Best Practices Guide (a $160 value).

Your submission can be anonymous if you like so you don't get your boss or company in trouble! I'll be collecting examples all year and the winner will receive a free warehouse assessment by Supply Chain Visions, a $10,000 value. The runner up will win a free conference registration to the WERC conference (a $1,375 value).

You Might Have A Bad Warehouse If... Your Warehouse Won!

Since my first post in August of last year, I have been looking for those really horrible warehousing practices that continue to take place in the industry. My goal was a lofty one; to help eliminate bad warehouse practices!  For each blog I set out to explain a real story of a bad warehouse practice in action, why it was hurting the company, and provide resources and best practices to help the industry move forward.  The Warehousing Education and Research Council (WERC) joined forces and together we decided to offer prizes for the most bizarre, hilarious, and downright horrible practices we could find.

The result was that dozens of individuals submitted their own bad warehouse practices - many with photos to prove it!  We uncovered warehouses that could live up to the reputation as a "Bad Warehouse."

The winners were selected from those stories that have been submitted and posted on the blog since August of 2009. A team from DC Velocity, Supply Chain Visions and WERC read each of the blogs and voted on their favorites.

The winner of our grand prize, the warehousing assessment from Supply Chain Visions, is John Craig. John contributed two bad warehouse practices. You may recall the posts about Carlos and Joe and their cross-docking and replenishment adventures. As you could easily tell from the pictures in both posts, it was indeed the same warehouse and always an adventure.    The real twist on this one is that when we contacted John he was pleased to give us an update that his bad warehouse, a Coca-Cola Enterprises warehouse, was so bad it went out of business!  It seems they discovered their bad warehouse was beyond hope and the best fix was to simply close up shop and consolidate the work with another warehouse in the region.   

I had said my goal was to eliminate bad warehouses....and that is indeed what happened to our winner!   The good news is that John reports he was liberated from working in the bad warehouse and has joined PetSmart where he is pleased to report he has escaped the perils and adventures from his warehouse.   The moral of the story?  Even big, well known companies can have bad warehouses.  And I am glad to see that this one realized it and did something about it!   And we are glad to see John is happy at work in his new warehouse!

The runner-up was Noreen Ryan CLP, Vice President of First Logistics, LLC, for her story about the witty and quick thinking manager who uses the ALTO system for locating inventory in their warehouse.  Maybe you haven’t heard about the ALTO system… It stands for “Ask Lift Truck Operator” and may have been an industry best practice during the dark ages of warehousing. However, not anymore!   Noreen wins the conference registration to the WERC Annual Conference in Anaheim, CA.

To everyone that has contributed a bad warehouse story, thank you!  If you have submitted a bad warehouse story and it has not been featured on the blog, do not worry. You are still in the competition for next year.  Every other week I pick the best ones to blog on. 

I really love your feedback - and love your contributions to share those bad warehouse stories to help educate the profession on what NOT to do, and maybe what to do if you’re not doing it.

If you've got an example of a bad warehouse practice, send me your story and photo(s) to Kate@scvisions.com. If I feature your example in one of my blogs, WERC will send you a free copy of the WERC Warehousing & Fulfillment Process Benchmark & Best Practices Guide (a $160 value).

Your submission can be anonymous if you like so you don't get your boss or company in trouble! I'll be collecting examples all year and the winner will receive a free warehouse assessment by Supply Chain Visions, a $10,000 value. The runner up will win a free conference registration to the WERC conference (a $1,375 value).

You Might Have A Bad Warehouse If... Forklift Driver Klaus Works For You!

Sometimes it is not the warehouse that is the problem, but the people in the warehouse that do not use their top noggin when making decisions. Since the beginning of the blog, we have showcased several incidences where the people working in the warehouse have made bad decisions.

You may recall the forklift driver in Moscow who couldn’t help but test the product. Then there was the other forklift driver, who should have been an Olympic athlete. Either way they made poor choices while at work.

In the spirit of there never being too much of a good thing, visually speaking, here‘s another video on making bad decisions. This time it is courtesy of German film makers who created a parody of 1980’s work safety videos. The video, title “Forklift Driver Klaus – The First Day on the Job” (in German, GabelStaplerfahrer Klaus – Der erste Arbeitstag), is about a forklift driver named Klaus. The video walks the viewer through all the potential pitfalls a forklift driver has to watch for while operating in the warehouse.

Please be advised the film is rather graphic and may not be for those with a weak stomach!

Making bad decisions do not happen just in German warehouses. The Occupational Safety and Health Administration, or OHSA, records show that about 100 employees are killed and 95,000 are injured every year in forklift accidents in the United States.  According to Martin Murray, OSHA issues more citations for bad forklift practices within the warehouse than for any other area. For best practices, we will defer to the OSHA guidelines for forklift training, as outlined by Mr. Murray:

• Train, evaluate and certify all operators to ensure that they can operate forklifts safely, follow safe procedures for picking up, putting down and stacking loads
• Drive safely and never exceeding 5 mph and slow down in congested areas,
• Maintain sufficiently safe clearances for aisles and at loading docks or passages where forklifts are used
• Train employees on the hazards associated with the combustion byproducts of forklift operation, such as carbon monoxide.

Just in case you are wondering how they use forklifts in exotic locales around the world, maybe this picture will give you a clue. The picture was sent to us by Paul Delp, President of Lansdale Warehouse Company.

I really love your feedback - and love your contributions to share those bad warehouse stories to help educate the profession on what NOT to do, and maybe what to do if you’re not doing it.

If you've got an example of a bad warehouse practice, send me your story and photo(s) to Kate@scvisions.com. If I feature your example in one of my blogs, WERC will send you a free copy of the WERC Warehousing & Fulfillment Process Benchmark & Best Practices Guide (a $160 value).

Your submission can be anonymous if you like so you don't get your boss or company in trouble! I'll be collecting examples all year and the winner will receive a free warehouse assessment by Supply Chain Visions, a $10,000 value. The runner up will win a free conference registration to the WERC conference (a $1,375 value).

You Might Have A Bad Warehouse If... You're Knock Knock Knocking on Container's Door

Knock-knock. Who’s there? Empty. Empty who? Empty trailer, boss.

This edition adds an example of a highly questionable yard management activity to our roster of bad warehouse practices, courtesy of Michael Cole, Director of Transportation, Kraft who recently shared his story at Lehigh University's Center for Value Chain Research forum.

Mr Cole shared his former yard management woes with attendees at the conference.  “Kraft’s yard management solution used to involve a person who rode around on a bicycle and would knock on each trailer in the yard. They could tell if the trailer was empty or not by the sound the trailer made when they knocked.”

How very basic! Not very scientific - and definitely not efficient.  It’s certainly not best practice. It’s also not all that unusual apparently.

Upon hearing Michael’s story someone commented, “As a college student I did something similar as a yard checker for a year with Walmart. Except I didn’t have the bike! I had to walk, at night, through the yard. The yard was almost a mile long in one direction at the main site. We could tell whether the trailer was empty or full by the sound of a knock.”

Knocking around the yard may be okay for children playing in back of the house, but not at a warehouse facility. The good news is that there are much easier ways to get the information you need about what is often the least talked about and addressed bottleneck in the logistics system – the yard.

The good news?   Kraft has since adopted PINC Solutions’ Yard Hound management system, which provides real-time visibility of all yard activities and eliminates the need for manual yard checks, all on a web-based platform.   You can read about their efforts by download this PowerPoint presentation.

In a recent white paper, Finding the KPIs for Yard Management, the Berkeley, CA-based PINC says that while yard management is a critical link in logistics management, with a significant impact on the efficiency of the supply chain, many yards “still rely on manual processes to manage operations, creating a visibility gap such that accurate and timely data cannot be ascertained.” This hampers management’s ability to assess the operational performance of the yard, the paper continues.

Companies make significant investments in systems and technologies to track transportation assets, PINC says, but “few realize that transportation delays often take place not on the road, but while the assets are still in the yards at distribution centers, warehouses and manufacturing plants.” Because goods often go through multiple yards throughout the logistics lifecycle, “any inefficiencies or errors in the yard are amplified as the effects propagate through the supply chain network.”

Yard management challenges cited by PINC include long gate check-in processes, multiple or redundant moves, time-consuming yard checks, unproductive administrative time due to ineffective communications and a general lack of actionable information.

With apologies to Bob Dylan, knock-knock knocking at containers’ door from a bicycle just won’t do it.

I really love your feedback - and love your contributions to share those bad warehouse stories to help educate the profession on what NOT to do, and maybe what to do if you’re not doing it.

If you've got an example of a bad warehouse practice, send me your story and photo(s) to Kate@scvisions.com.

If I feature your example in one of my blogs, WERC will send you a free copy of the WERC Warehousing & Fulfillment Process Benchmark & Best Practices Guide (a $160 value).

Your submission can be anonymous if you like so you don't get your boss or company in trouble! I'll be collecting examples all year and the winner will receive a free warehouse assessment by Supply Chain Visions, a $10,000 value. The runner up will win a free conference registration to the WERC conference (a $1,375 value).

You Might Have a Bad Warehouse If... "Safety in Numbers" is Your Safety Stock Strategy

I am reminded of an episode of M*A*S*H, where Hawkeye Pierce went to the main supply depot in Seoul, Korea to requisition a new microscope. The supply Sergeant was not willing to give up one even though he had three on the shelf. His logic, “If I give you one, then I’ll only have two.”

This week’s bad warehouse was witnessed by Mike Ledyard.  The President of a large company hired Supply Chain Visions to do an assessment because he had spent millions of dollars implementing a new Warehouse Management System and Advanced Planning System - but his inventory turns stayed at exactly 12 inventory turns a year despite the technology investments in improved systems.  How could the company spend so much money on the latest and greatest technology and still be getting such poor results? He asked us to do an assessment of their inventory management practices to uncover the problem.

The problem? The company's inventory analysts did not feel comfortable working in the fancy new software – and they would export key inventory information into an Excel spreadsheet where they felt more comfortable looking at the data. The software was making a recommendation for quantities to buy, but the analysts often questioned the numbers. To help them sense check the quantity the system was recommending, the analysts created a few extra columns where they would calculate the monthly average usage. When in doubt, the analysts would update the system’s recommendation with their “sense checked” number which was typically 4 weeks of inventory on hand. Over time – the analysts had overridden virtually all of the systems recommendations and replaced the “system’s math” with the analysts’ 4 weeks on hand rule of thumb. The result – inventory had stayed steady at 12 inventory turns – despite the investment in the advanced planning software!

On the other side of the coin we see examples where safety stock is put in place to mitigate a real risk, but the level is not revisited when the risk is gone. When we asked one company why the safety stock level was set at 120 days, we were told “it is there to cover possible disruptions while we change suppliers”, when we asked how that process was going, we were surprised to hear that the change took place well over a year earlier and the new supplier was performing well. A light turned on, and they changed the safety stock level that day.

Safety stock can also be used to cover peak or unplanned demand acting as a buffer between the supplier’s ability to replenish and customer demand. It can be especially difficult to manage when supply chains are stretched to the other side of the globe, but we have seen cases where the math is just wrong. One company added up all the lead-times, the supplier’s manufacturing lead-time plus the transit time from Asia, they even included a few days for order processing and receiving, when setting the total safety stock. Yet the material was a common part available from multiple suppliers and held by their supplier in a local warehouse, deliverable within days. Understanding how each component flows through the supply chain is an absolute requirement to setting your safety stock level.

Bottom line – if your inventory analysts act like the supply Sergeant in M*A*S*H and think there is safety in numbers – their behaviors to feel “safe” are likely costing you thousands if not millions of dollars. For all you inventory folks out there – please take this time to review your safety stock strategy and ensure it has a purpose.

I’d recommend you start by reading “Inventory Strategy” under “Storage and Inventory Control” in the WERC Warehousing and Fulfillment Process Benchmark & Best Practices Guide, available from the WERC Online Store.

For a good review of setting safety stock levels read “A New Look at Safety Stocks” by Jon Schreibfeder of Effective Inventory Management. Remember that your safety stock should be related to the element of risk as opposed to simple historical data.

For an alternative approach, try working with your suppliers to Purchase Capacity Rather Than Product. This approach can help your supply chain be more flexible – a key to reducing a company’s reliance on safety stock. Bob Parker provides an excellent overview (article is free to CSCMP members or you can subscribe).

I really love your feedback - and love your contributions to share those bad warehouse stories to help educate the profession on what NOT to do, and perhaps what to do if you’re not doing it.

If you've got an example of a bad warehouse practice, send me your story and photo(s) to Kate@SCVisions.com.

If I feature your example in one of my blogs, WERC will send you a free copy of the WERC Warehousing & Fulfillment Process Benchmark & Best Practices Guide (a $160 value).

Your submission can be anonymous if you like so you don't get your boss or company in trouble! I'll be collecting examples all year and the winner will receive a free warehouse assessment by Supply Chain Visions, a $10,000 value. The runner up will win a free conference registration to the WERC conference (a $1,375 value).