15 Fundamentals Every Distribution Center Should Master


Vince Lombardi, Green Bay Packers' legendary coach, excelled at winning football games because his teams mastered and executed the fundamentals of blocking, tackling, and passing and leading to the win.  Warehousing and distribution is very much the same, to be successful, we must execute on the fundamentals.  

As we perform operational assessments of various fulfillment and distribution operations, we think Lombardi’s wisdom can be applied to many businesses to improve processes. Many fulfillment and distribution centers need to continually focus and improve on the basics of cost-effective and customer-centric fulfillment before the attempt to add more technology to their operations.

Here are 15 fundamentals every fulfillment and distribution center must remain focused on:

  1. Utilize the cubic space.  Companies must efficiently utilize the cubic feet within each storage location, as well as utilizing the vertical space within a facility.  Only focusing on the use of the square feet of the facility could be a missed opportunity overall.  
  2. Focus on slotting and stock replenishment.  Slotting is the process of analyzing and relocating product so that it is in the optimal stock location, with the right amount of inventory, utilizing the right material handling equipment.   

    Slotting and replenishment frequency go hand in hand.  The less inventory in the bin location will lead to a smaller pick footprint, but with higher replenishment frequency.  More stock on hand will decrease the replenishment frequency but increase the size of the pick footprint and lead to longer picking times. 
  3. Maintain flexibility in the overall layout and design. Companies need to continually review the operational flow looking for bottlenecks and areas of congestion.  The time lost due to overcrowding or congestion is significant. Avoid developing a layout or process that is inflexible or not scalable to meet future needs.  
  4. Use a variety of location storage media and sizes for slotting and bulk reserve locations. There should be no “one size fits all” approach when it comes to stock locations.  The size of locations should be dictated by item sales (velocity reporting) and the item's cubic dimensions.  
  5. Minimize travel and walking time. For most companies, half of the total labor time paid in the warehouse is spent walking or traveling.  Companies must analyze the flow of goods and people through the facility.  Your goal should be to find ways to relocate functions, shorten tasks or eliminate steps and touchpoints so travel time is minimized or eliminated.  An effective layout along with slotting will help reduce walking and traveling time.  Utilize automation to eliminate the human factor throughout. 
  6. Provide adequate accumulation and storage space on docks. Almost all operations encroach on the shipping and receiving docks once space becomes a premium.  By decreasing the space needed on the docks, companies will increase inefficiencies and drive up operating costs. These dock issues will ripple down and can negatively affect other functions.
  7. Use bar codes and scanning as much as possible. Companies that implement barcoding and scanning functionality throughout many functions in the warehouse have a higher level of accuracy, efficiency, and stronger productivity reporting.  If you do not have systems that can support barcoding, consider selecting and implementing a solution that provides for better control of your operations – from receiving goods all the way through shipping and returns management.  
  8. 80/20 rule. The Pareto Principle, more commonly referred to as the 80/20 rule - Indicates that 20% of your SKUs usually account for 80% of your unit velocity, and as such should receive the attention of the warehouse staff to ensure that they are processed as efficiently as possible.
  9. Keep at least 10% of locations open and available. When the available number of locations decreases below this threshold, workers begin double handling products and placing inventory in less optimal locations, etc. This creates significant inefficiencies and congestion.
  10. Measure and report productivity to employees. The fact that most employees want to know what’s expected of them and how they are measuring up to those expectations should guide the reporting process in the warehouse to improve performance.  Start simple with an area like picking, this is often where a significant amount of labor is spent and will provide insight that will allow you to make improvements.
  11. Move as much product at one time as possible. Maximizing the product per trip will reduce the total trips and time required. Applications can be found in the picking, putaway, replenishment, etc. warehouse functions. Remember that every touch is money spent, the least amount of touches the better.
  12. Consider the amount of inventory in a pick location. Try to provide primary pick space for at least one week’s average unit demand for each SKU. Focus on the top 10% of fast-selling SKUs to ensure that they are properly accounted for
  13. Use intelligent batching of orders. An example of this is in the picking of consumer orders.  Creating batches of single-line orders will provide the highest level of efficiency for picking as well as packing.  Consider your order profiles and determine the most effective intelligent order baches to maximize efficiency.
  14. Flow charts. Develop a process flow chart that tracks a receipt through the putaway process and an order from replenishment to shipping, showing the path and number of times the product is touched.  This should become the standard operating procedure (SOP) and be utilized for the training of new hires. 
  15. Staff involvement. Involve your warehouse staff in decision-making relating to facility layout or operations planning. Those closest to the process usually provide the best insight into bottlenecks, congestion, and ideas for improving processes.  

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