Increasing Efficiency of Warehouse Operations

The challenge of responding to the threat of cheap offshore labor is not new to North American businesses. Nearly a hundred years ago, Henry Towne wrote about the need for increased efficiency and productivity:

"We are justly proud of the high wage rates which prevail throughout our country, and jealous of any interference with them by the products of the cheaper labor of other countries. To maintain this condition, to strengthen our control of home markets, and, above all, to broaden our opportunities in foreign markets where we must compete with the products of other industrial nations, we should welcome and encourage every influence tending to increase the efficiency of our productive processes."— Foreword to Frederick Winslow Taylor's Shop Management (1911)

Efforts to improve efficiency over the past century have often focused on the reduction of waste, defined as processes and resources that represent direct costs and opportunity costs but do not add any value.

The elimination of muda, the Japanese term for waste, is at the core of the Lean Manufacturing management philosophy promoted by Taiichi Ohno, the father of the Toyota Production System, also known as Just In Time. He listed the seven wastes: defects, transportation, human motion, waiting, inventory, over-processing and over-production and an eighth waste, underutilized skill, was later added to the list.

Inefficient Warehouse Operations

At least the first four of these eight wastes are prevalent in current warehouse operations. Many warehouse and distribution center operations continue to suffer from significant inefficiencies, as forklift operators waste time and resources hunting and digging because they lack adequate information on the location of items and the optimal route for putaway, replenish and retrieval actions, says Michael Giuliano, the president of Meridian Research and Development LLC.

Giuliano has advised automobile manufacturers and large consumer goods producers on the application of Lean Manufacturing principles to warehouse logistical operations. We all know what it is like to lose your keys and have to search around the house for them. Imagine the inefficiencies and frustrations involved when forklift operators waste time searching around the warehouse. It is not unusual for our analysis to determine, for example, that 2.5 minutes are wasted during the average retrieval cycle, and that figure is multiplied by hundreds or thousands of cycles per week.

On the opposite end of the efficiency spectrum, newly constructed high-tech warehouses are designed from the bottom up to automate most or all operations. Elaborate cranes, conveyor belts and robotic systems are coordinated to perform put-away and retrieval operations with little or no human intervention. These operations are highly efficient, but the high capital requirements make them cost-prohibitive for most types of warehouse operation.

Equipping Forklifts with PCs

A more practical and affordable solution for many new and existing warehouses is to empower operators by installing an onboard computer on each forklift, making the location of items and empty storage space immediately visible.

Rugged PCs, with user-friendly touch-screen user interfaces connect to a warehouse management system (WMS) via a wireless local area network. Some more sophisticated WMS can indicate not only the location from which to pick, replenish and put-away, but also the optimal sequence of these events.

At the 900,000 square foot distribution center for City Furniture, in Tamarac, Fla., all 35 forklifts are equipped with fixed-mount rugged computers with flat panel LCD displays. Our forklift operators perform at maximum efficiency, because they always have real-time access to the information they need,according to Chad Simpson, City Furniture's Technical Support supervisor. An optimized step-by-step routing scheme is displayed on their screens to guide them to their destination.

The WMS is typically interfaced with an existing enterprise resource planning (ERP) system or accounting package. This provides an integrated method of automatically tracking inventory, processing orders, and handling returns. WMS is frequently implemented with automatic data collection using barcode scanners and the increasingly common radio frequency identification (RFID) tags, now mandated by Wal-Mart and other retailers.

The implementation of a WMS along with automated data collection will likely give you increases in accuracy, reduction in labor costs and a greater ability to service the customer by reducing cycle times, according to Dave Piasecki of Inventory Operations Consulting LLC, author of Inventory Accuracy: People, Processes, & Technology (2003). For some warehouse and distribution center operations, the more efficient processes and better utilization of storage space will also result in inventory reduction and increased storage capacity.

Time Saving

These benefits directly address the elimination of wastes at the core of Lean Manufacturing philosophy. Equipping forklifts with computers integrated with a warehouse management system immediately reduces the waste involved in transportation, human motion and waiting.

Shorter, more direct routing reduces travel time and, therefore, the demand for forklifts and the associated labor, capitol, maintenance and energy costs. Travel time is reduced because operators always know their precise destination. After a put-away, a warehouse management system can direct a forklift to do a pick at the closest available location in situations where like items may be stored in several different areas.

By giving operators better information about the location of items, human motion is also reduced: Operators no longer need to continually get on and off the forklift to check three or four labels before finding the location of the intended item.

The Japanese industrial engineer, Shigeo Shingo, famously explained that a bolt with 15 threads on it cannot be tightened until the last turn, and therefore the other 14 turns are wasted. This observation led to the development of fasteners, tools and methods designed for one turn, one-motion installation.

Similarly, the forklift operator provides a necessary function only when he or she picks the correct item. Any searching activity leading up to the locating and retrieval of that item represents a waste of time and resources waste that should be eliminated. Thom Raddatz, the Warehousing Manager at Seaquist Closures of Mukwonago, Wis., estimates that he would need 50 percent more forklifts if he did not equip them with an onboard computer tied to their SAP software system.

Better Response Time

More efficient warehouse operations also means better response times (less waiting) for dependent production processes and for customer fulfillment. According to Raddatz, Other departments at Seaquist Closures can request materials from a desktop PC, and that request immediately appears on the forklift operator's computer screen. When loading a truck for delivery to a customer, the forklift operator types in the PRO number (pick up record) and confirms that all items are loaded. Immediately, the billing process is initiated. If the customer calls a minute later, our customer service representatives can respond with up-to-date details about the shipment.

Nicholas Hanke, the MIS Systems administrator at Minnesota Corrugated Box Inc. of Albert Lea, Minn., says that automated forklift operations using computers to help improve customer relations. We have a number of customers that maintain inventory in our warehouse. By automating the record keeping of our forklift operations, our customers can use a Web interface to instantly check their own inventory levels.

Shorter lead time not only provides better service, but it can also result in a reduction of inventory and floor space requirements.

Reduction of Defects

Shingo, the Japanese industrial engineer, is also known for his concept of mistake-proofing, or poka yoke, that he developed as part of the Toyota Production System. One example of such a behavior-shaping constraint is the shaping of the top-right corner of 3.5 inch floppy computer disks to ensure that the disk cannot be inadvertently inserted upside-down. Another poka yoke is the inability to remove a car key if the automatic transmission is not first put in the "Park" position, thereby preventing an unsafe parking condition.

Onboard computers connected to a WMS are poka yoke devices that reduce the incidence of retrieving and shipping the wrong item by matching the item with information on the item's location. The use of automated data collection (barcodes and RFID) virtually eliminates such errors and significantly improves inventory accuracy.

And operators are happy to give up the tedious and error-prone task of searching for items and manually checking and recording ID numbers. Onboard computers, with barcode and RFID readers, remove guesswork and force better habits, allowing workers to achieve higher productivity. Simpson of City Furniture says, Some of our forklift operators do not use computers at home, but they really enjoy having state-of-the-art technology at work. The graphical user interface of the computer is easy to use, and it allows them to work smarter, not harder.

WMS reduces defects in another way, by reducing the wasteful disposal of spoiled perishable goods. The WMS can automatically direct the operator to retrieve the particular units with the shortest remaining shelf-life, in a FIFO arrangement, without the operator having to engage in the time-consuming process of manually checking and comparing dates. Some companies shipping perishable goods will use FIFO for closer destinations and LIFO to overseas destinations with longer in-transit times.

Quantifiable Results

For these reasons, onboard forklift computers integrated with a warehouse management system provide a good return on investment for many traditional warehouse and distribution center operations. These warehouse logistical systems produce results, especially in the area of labor savings, which are easily quantifiable and go directly to a company's bottom line, according to Giuliano. Giving forklift operators access to useful information technology produces success stories for Lean Management and Six Sigma programs, but you do not have to have faith in any particular management theory to recognize the excellent payback that can be achieved.

About the Author: John Geary is the co-founder and vice president of Sales, Glacier Computer. Geary has 23 years of experience in the electronics industry. Twelve of those years were spent specifically in the rugged computer data collection hardware segment. He can be reached via e-mail at johng@glaciercomputer.com.

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