Picking Efficiency: Factors that Affect Your Operations, Part 1

Companies must always strive to become more efficient and reduce operating costspicking-efficiency-part-one in their distribution and warehouse operations. We are always focused on ensuring those functional areas that consume the most labor dollars are as efficient as possible.  Picking is an area where a substantial portion of labor dollars are invested.  

According to various industry reports, labor costs typically constitute around 50-70% of the total operational costs in a distribution center.  Estimates suggest that picking labor alone can represent approximately 30-50% of the total labor costs.  This percentage can translate to around 15-35% of the total operational costs, depending on the efficiency and automation level of the picking processes.

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Ensuring that picking is as efficient as possible is important to handling the throughput and increasing order volumes.  This two-part guide will allow you to evaluate your picking operations and consider potential changes.  

This guide covers all types of picking, including paper based, scanning each pick and those companies that utilize automation.  Sometimes it's important to think about the fundamentals of picking, as we forget about these at times. 

Companies may find that many of the problems address in this guide may highlight the need to improve your warehouse management systems. 

1. Not Properly Slotting Items
One of the biggest impacts affecting picking efficiency is not slotting inventory appropriately.  Slotting is the disciplined process of evaluating item movements and physical characteristics to determine:
•    What size location the item should go into.
•    How many units of inventory should be in the bin.
•    Where, geographically, the item should go in your picking footprint. 

The idea behind slotting is that the faster moving items require fewer steps to pick, and slower inventory goes into less easily accessible locations.  When companies do not slot appropriately, pickers spend more time walking to pick fast moving items. 

Additionally, in the absence of slotting, the picking footprint tends to become larger than it should be.  This increases picking walk distances.  Companies should analyze velocity, using the Pareto Principle.  This will help to identify the fastest moving items and the quantities over time.  

Developing a heat map will also let companies understand where there is potential congestion in their new slotting plan. This is an essential aspect of a warehouse assessment.

2. Wrong Amount of Stock in Pick Location
This one goes hand in hand with item slotting.  Even though companies may slot appropriately from a geographic perspective, they may not be stocking the right amount of inventory.  

This problem leads to excessive inventory replenishments overall.  More importantly, this tends to lead to picking stock outs that require a hot replenishment so the order can be filled. 

There is no set rule for how much inventory every company must stock in the pick location.  However, companies that have significant constraints on picking locations should have at least a 2-3 day supply on the low end. On the upper end, this should be 5-7 days.  At 5-7 days, this means that companies would only perform a replenishment once per picking week. 

Companies that have more latitude from a stock location perspective, they could go as high as 30 days on stock on hand.  Companies should develop an analysis that looks at each item, and the picking velocity for peak times.  Companies should also consider inner pack and case quantities as this will make for more efficient replenishments. 

3. Not Picking Large Quantities from a Pallet
A challenge for many companies is handling consumer orders and larger dealer orders, or wholesale orders.  These dealer and wholesale orders can require picking larger quantities that would deplete all the inventory in the pick location.  Further complicating this challenge is that these larger orders may not always happen every day.  

By directing these larger pics to a pickable pallet location, companies can reduce the frequency of replenishments – and the highly inefficient hot replenishments. This may require that the fastest moving items have a separate location to pick from pallet.  You do not want to drive picks to a pallet that is in the air, this will become even more inefficient.  

4. Discreet Order Picking
Discreet order picking, or picking one order at a time, is the most inefficient picking method for most consumer and smaller dealer and wholesale orders. This is one of the hardest to fix as it most always means a more sophisticated warehouse system.  However, eliminating discreet order picking is one of the strongest justifications for a new system.  If you can't replace the system you must focus on these other aspects to improve efficiency. 

5. Keeping Like Items Side by Side
Picking errors also lead to picking inefficiencies.  As these miss-picks are caught during a packing verification, additional time is spent correcting the problem.  Worse would be that these errors aren’t caught, and the customer receive the wrong item.  

It's not uncommon for companies to slot almost identical items side by side.  This is most common with apparel companies that but the same style, color and sizes side by side or one over the other.  This can lead to replenishments going into the wrong bin as well as pickers accidentally picking the wrong item. 

Companies that pick from paper must rely on workers to stop and double check labels etc to ensure the right item is picked.  This can greatly slow down the pickers.  FCBCO has seen companies that utilize scanning still have difficulties.  Companies that struggle with systems and attention to detail should consider splitting up these styles and colors to mitigate the inefficiencies. 

6. Not Picking to a Standard
Parkinsons Law is an axiom that states “Work expands so as to fill the time available for its completion”.  Essentially, if pickers are not held to a standard they will go at a pace that suits them.  

This leads to management asking how did it take 8 hours to pick 1,000 orders one day and 10 hours to pick 750 orders the next day.  This is also seen when there is an hour left in the day and the picking pace slows down so that more orders aren’t released. 

Instead of allowing pickers to go at their own pace, hold pickers to a standard.  By holding workers accountable to a standard, companies can more easily handle the increased demand.  Additionally, companies can better plan labor needs based on forecasted order demand.  

There can be different standards for a variety of reasons, including:
•    Single line orders vs multi line.  
•    Consumer vs dealer and wholesale orders.
•    New or seasonal pickers versus seasoned pickers. 
•    Ship alone orders vs small cube picks, etc. 
•    Picks by equipment type – i.e., cart bin picking, pick to pallet jack, pick from stock picker etc.

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