It starts by agreeing that there are only 3 elements that drive a well-run warehouse.
These are Safety – Productivity – Cost, I believe in that order but all are clearly linked, if we measure these 3 elements and there are multiple KPI’s to do so you and your team will know if you are winning or losing.
I believe its better to be a Leader than a Lagger, LITFR (Lost Time Injury Frequency Rate) tells us what has happened. Whereas Leading indicators like Hazard reports, near – misses, safety walks all are proactive aimed at fixing things before accidents happen.
This is a very simple viewpoint and clearly it has to be underpinned by a business wide safety culture, where everyone working in the organisation has to recognize that they have a responsibility to be safety focussed in everything that they do.
PRODUCTIVITY & COST
The measurement metrics will change based on the industry you are operating in. e.g. Retail will be all about inventory accuracy, DIFOT or DIFOTA because if stock is not on the shelf it becomes an opportunity for lost sales.
We can measure Indirect and Direct work rates, usually efficiency based, if you have a combination of these measures you can find out Overall Work Rate (OVR). You can then compare this to budget and even compare operator to operator or shift v shift performance. Familiar measures will be cost per carton or cost per pallet.
3PL’s will charge for their services based on a number of options, ABC (Activity Based Costing) – Open Book – Closed book to name a few, there are pluses and minuses for each, you have to choose what works for you.
My experience is that many supply chain professionals (Operators) can tell if a site is operating well simply by going for a walk around it, (GEMBA).
They look for cleanliness, everything has a place and everything in its place, the w/h operating floor, the amenities, canteen, and washrooms included. Waiting times, dock line ups, truck waiting times, how the staff react to simple questions (New View Report).
The operational Buzz, usually if people are happy and the place is tidy, KPI’s will usually be on the mark.
Having a good WMS is key but it must be interfaced with overall business systems ERP/MRP as well as how it interacts with transport providers either by a TMS or at least measurable SLA’s (Service Level Agreements) with each provider. Now a lot of this information is managed in real time via mobile smart phone apps.
Automation in Warehouse operations is progressing at pace, smaller more frequent orders are driving the switch from person to goods to goods to person. Installation of robots and cobots starting to gain momentum as ROI numbers become more favourable.
The basics must be operating, you must have sound SOP’s (Standard Operating Procedures) that reflect what is required to run the operation efficiently and are convinced your teams are operating to them, if not then spending money to operate faster will only get you in trouble quicker.
There are no magic bullets or a one size fits all solution, but if you have the right people, who enjoy the job they are doing and believe they have a voice that will be heard, supported by the smarts that technology can bring and a good understanding of your customers wants and needs, you are definitely on track to What Good Look Like (WGL2).