An effective warehouse has a clean and orderly layout, maximizing the potential of its square footage. It employs the correct type of racks to increase available storage space, with a racking system to improve productivity and flow. Other devices assist in the day-to-day duties of workers on the floor, optimizing and balancing inputs and outputs to achieve synergy and stability.
An ineffective warehouse is the product of design flaws, which can manifest in numerous ways. The layout of the floor is confusing and chaotic, both challenging and hazardous to navigate. Outdated or flawed technology hinders efficiency more than it helps, and employees struggle to fulfill the responsibilities of their job to the satisfaction of their superiors, causing tension and anxiety.
In viewing these hypotheticals, the adverse effect that mismanaged warehousing would have on a supply chain becomes clear. An operation with the second warehouse would struggle to sustain its operations without making serious adjustments to its processes. However, an operation with the first warehouse would enjoy the benefits inherent to smooth, streamlined facilities.
To explore this contrast with sharper clarity, we'll get an informed perspective on the subject from an industry expert.
Speaking with an industry
Ed Joyce, owner of Equipment Sellers, a warehousing and services company, articulated in succinct language the value of its facilities: "Warehousing allows customers to oversupply their goods and store them until the demand is up. We also have several customers who cannot ship equipment until a job is ready to start, and our storage options give them a chance to store equipment until they are prepared to begin a job."
Many products are only popular during a certain time of the year, within a seasonal context, and Equipment Sellers houses these items until they're relevant again. Their facilities serve a similar function in storing equipment before it reaches a job site, providing access to inventory around scheduling restraints to reduce costs.
The location of his facilities was also a factor in their utility, according to Joyce. "We are in proximity to several large towns and states, which enables our customers an easy place to store goods,” he added. “Several of our customers have branches all over the country, and we can service them easily due to our proximity to the airport."
Beyond its design plan and inherent functionality, the placement of a warehouse also influences its efficiency. Although property near an airport doesn't seem like desirable real estate, it was a sensible option to Equipment Sellers, and their investment reflects keen insight. Companies are looking for convenience in their storage options, and strategic location ensures timeliness.
This model is one that distribution managers can learn from. Clearly, successful warehousing and its positive effect on a supply chain. That said, an overview of standard performance metrics is necessary to understand how efficiency can influence the supply chain on a fundamental level, in a more objective sense.
Efficiency & performance metrics
Common performance metrics of a modern warehouse or distribution center include space utilization, accuracy, damage, service, cost, inventory and handling productivity. We'll provide a concise analysis of several of these metrics and determine their direct relationship to efficiency, beginning with space utilization.
A superior warehouse layout allows for all employees to perform their responsibilities without difficulty navigating the space. "With a nice organized warehouse, workers can save time loading and unloading trucks safely and efficiently and keep the warehouse inventory manageable," Joyce said.
Other metrics include cost and inventory performance indicators. They involve the total DC cost per unit handled, DC cost as a percentage of sales and inventory turnover. Through the implementation of more efficient practices on the floor and in upper management, these metrics are possible to improve.
Concerning the metric of handling productivity, the integration of new technology can assist workers in managing inventory with fewer mistakes. As they acclimate to new systems and software, the efficiency of the facility will see a dramatic increase. By extension, the supply chain will benefit.
Elements of an effective warehouse
There's no perfect blueprint a distribution manager can reference in designing their plans. They can, however, research the elements of an effective warehouse and determine what makes sense to implement. In doing so, they'll have a strong foundation on which to build their warehouse. Efficient and effective warehousing leads to a successful supply chain, and it starts with proper planning.