Learn how to run your warehouse at peak performance, serving the needs of your company and customers effectively.
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An operations assessment is a disciplined and comprehensive approach to analyzing all facets of the operations. While there is some uniqueness across different companies, an operations assessment is typically going to cover all functional areas from receiving through shipping and incorporate all inventory management functions as well.
The goals are straightforward, you must be analyzing all departments and functions and identifying those areas which are inefficient and drive up labor costs, and do not allow you to meet your management’s expectations or customer’s needs. The outputs of the operations assessment should be the basis for developing a roadmap for improving the operations over time.
A methodical operations assessment should take the following aspects into account:
Successful operations have a mindset of continual operational improvements, never allowing problems to slowly build to the point where the operations can no longer be efficient or service the customer appropriately. However, there are certain circumstances where businesses should look at operations holistically on a larger scale. These circumstances generally include the following:
Escalating fulfillment costs – this is another indicator that points to a breakdown in processes, or inefficient labor, that should be evaluated.
With businesses being more competitive and fulfilling customer demand requiring companies to be more agile, the need to continually improve the operations becomes more critical. An operations assessment is a supply chain management tool that will help to identify areas that should be improved.
Many consumer businesses are driving towards two to four-hour local delivery, or even to fulfill small parcel customer orders as late in the day as possible. For business-to-business channels, there is also the need to turn orders quickly for order pickup at satellite distribution centers or for next-day delivery – or even to get a same-day pickup for LTL orders. The reasons for performing an operations assessment generally include the following:
Assessments also identify areas of opportunity to implement different material handling or automation to support the order fulfillment process. With the high-speed nature of many automation options, these can expedite the processing of both B2B and consumer orders. Automation also provides some of the highest order accuracy capabilities to support order fulfillment.
In addition, an operations assessment will help identify gaps within the current ERP or WMS software that is preventing your company from efficiently processing customer orders. Once the gaps are identified, decisions can be made on where and how to improve these systems.
Operations assessment will identify areas for improved cycle counting programs. However, cycle counts only clean up and correct problems once they occur. A thorough assessment will identify the root causes for how and why inventory accuracy problems arise.
These situations require operations to be flexible and scalable to support the changes over time. An operations assessment will allow companies to determine better ways to support the existing and future SKUs.
For many companies, this will include ways to reprofile existing material handling equipment or even a redesign of the existing fulfillment operations. This can also identify opportunities for different conventional racking and storage, or implementation of various levels of automation whether it be for high-density storage options or goods-to-person technologies.
These processes, if not done appropriately, will become costly from a labor perspective, as well as consume more space than needed – not to mention creating bottlenecks and potentially driving up the number of touch points.
Operations assessments will identify opportunities for making improvements and create efficiencies throughout.
Operations assessments are all about controlling or driving down costs as well as gaining efficiencies to handle more throughput and better service the customer – critical aspects to supply chain management. At times, this could also be about heading off future costs – such as being able to push off moving to bigger space. These aspects should be the driving factors in the continual improvement of the processes, systems, and flow in your distribution centers. The following are where most companies save money by performing a warehouse assessment.
A warehouse assessment should be conducted during non-peak volumes, preferably right after the peak season. This will provide time to develop the recommendations, implement the high-priority items, and make changes prior to the peak. There are five key aspects of how to conduct a warehouse assessment, which include:
1. Observe the warehouse operations – While the bulk of the assessment is handled during non-peak times, it is recommended to be observant and documents various aspects during peak times, these would include:
The goal is to observe and notate where there are problems that should be addressed. Doing this during the peak season keeps it fresh in your mind and keeps you from forgetting certain details after the peak.
2. Data gathering of necessary information and metrics – A good assessment will require a fair amount of data based on the functional area being analyzed. Some of the data to consider will include:
Order file data, many different pieces of data can be gleaned from the order file data, such as:
3. Interviews with key staff members – Your staff holds valuable insight as to problems that arise during peak times. The key is to filter through all the feedback and insights and determine the highest priority challenges. It is important to meet with each functional area independently. Be sure to include the day-to-day front-line workers as well as the leads and supervisors.
Start with simple questions to get the discussions going such as if you could fix three items instantly, what would they be and why? You will get a wide range of feedback, from removing bottlenecks to ergonomics which can improve morale and throughput.4. Report analysis to determine current productivity and service levels – Along with the raw data discussed above, there are several system reports and metrics that should be available for analysis, these should include:
5. External benchmarking to look for areas of potential improvement – from a benchmarking perspective, it is always important to understand your own relative performance, accuracy, and throughput – against yourself over time. Once you have a solid foundation, comparing yourself against external benchmarks and other companies can highlight areas of potential improvement.
It is important to understand how external benchmarks are calculated, and what data is utilized. This is critical to ensuring that it is comparable to your operations.
A warehouse assessment initially should be a deep dive into the entire operation. Over time, as you stick to the roadmap generated, each facet can be performed regularly but at different times, not necessarily all at once, deep dive like the initial assessment. The different areas that should always be covered during your operations audit include:
The organization structure. Should additional supervisors on the floor team leads be developed to ensure constant visibility and understanding of the on-the-floor processes and also the culture? Is the warehouse manager the right person to support the “big picture” items or are they too involved with day-to-day activities?
As part of operations assessment projects, F. Curtis Barry & Company helps businesses identify ways to increase efficiency while keeping their team and customers happy.
If your business is considering undergoing an assessment project and you'd like expert assistance considering, planning, and navigating while doing so, we're available to help. You can request information here or click the button below to start the conversation.