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Efficient warehouse management

Supplier: Cincom Systems of Australia
12 September, 2012

Greg Mills, Cincom Systems CEO has put pen to paper to discuss efficient warehouse management in this month's MHD Supply Chain Magazine.

It has been well reported that internet shopping is on the rise and bricks and mortar retail is on the decline.  Research states that the key contributor to this trend has been the consumer's pursuit of the lowest cost, followed by convenience and increased variety.

The role of logistics and distribution has been paramount in this rise as, with the increase of use of the internet we have seen consumers virtually cutting through the supply chain to achieve their requirements of lower cost, convenience and increased variety of products. The prominence of e-commerce today is an example of the market identifying wastes (from a consumer perspective) in a long established supply chain and eliminating them.

This example can also be applied to logistics and distribution in general. Wastes in your supply chain may be costing your consumers time, convenience and money, tying up capital in unnecessary inventory and consequently costing you potential business. This article is about looking at wastes in warehousing and logistics and how we can eliminate them and at the same time improve our profitability, quality and customer service.

The Deadly Wastes of Lean originally identified by Taiichi Ono as part of the Toyota Production System (TPS) are:

  • Defects
  • Inventory
  • Processing
  • Waiting
  • Motion (usually means unnecessary motion of workers or machine during a process)
  • Transportation and
  • Over production

A final but important waste "Loss of Human Intellect" was added later.

The consumer (be that a retailer, wholesaler, manufacturer or end consumer) sees the primary purpose of warehousing and logistics as the delivery of material and services to the right place at the right time in the right quantities and quality. Put more simply, a consumer sees the true value of warehousing and logistics as the satisfying of their goods and service needs at the lowest possible cost- anything that does not add to this value can be considered waste.

Applying the delivery criteria; right time, right place, right quantities and quality as demonstrated by the consumer, we can identify the wastes associated with each.

Right place

The consumer is more concerned about material arriving at the right place rather than the path it takes getting there. So any movement of material that takes place which does not get it to the customer's 'right place,' adds no value. These unnecessary movements could include transport between factory and warehouse, distribution centre and final consumer. Unnecessary movement can also occur within the warehouse. The movement of material from receipt dock to reserve stock to pick face to packing and despatch adds no value to the consumer.

Right time

In terms of logistics, ensuring material is delivered at the right time is just as important as getting it to the right place. How often have we experienced delays because material did not turn up in time? In manufacturing it can stop entire production lines and the costs can be enormous. In retail it could result in a lost sale.

As a supplier we often allow "buffer time" and deliver the material early however this is often just as bad as delivering late. At the destination; there may be no equipment or staff to unload the truck, nowhere to store the stock or even any space to park the truck. We now can see further waste: waiting for equipment and people, wasted movement finding space to park or moving stock from place to place as space becomes available and even unnecessary stock holdings. To eliminate these deadly wastes it is essential that delivery schedules are rigidly enforced and stock is delivered within the agreed time window.

Right quantity

Getting the wrong quantity of material to the customer can often be worse than sending material late. If material is undersupplied; extra transport and time will need to be spent sending additional material and picks may need to be performed multiple times. If material is oversupplied, time and labour will be spent recovering oversupplied material and material that is over supplied can be damaged in return movement or rendered unusable; this also adds to recovery or disposal costs.

Not moving the right quantity means you are looking at waste in material, transport and reprocessing plus possibly wasted movement inside the warehouse.

Right quality

Quality, in terms of logistics and warehousing is not simply about the quality of the material that is delivered to the customer. The right quality in this case refers to delivery method, packing sequence, damages that may have occurred in transit as well as any defects in the material delivered to the customer.

Failure to deliver to the right quality can lead to associated waste in material, transport and movement. The delivery of the material itself is commonly seen as part of the quality of the goods and services you provide and will reflect on the perception of your organisation by the customer

Loss of human intellect

The most important part of any attempt to reduce waste is maximising the use of our human assets. This is about training the people in the organisation to see waste and to be aware and supportive of the need to operate as a lean, waste free business.

"If any organisation wants to achieve successful and sustainable change, then the most important factor is the commitment of leadership to lead the change process to develop a flexible and responsive supply chain," Grant Forsdick explains.

"Getting everyone involved in your Lean initiative from the upper management to the truck driver, through a structured process of continuous improvement, is the only way to change behaviour and locking in a new culture of Lean."

The Wicked Warehouse Wastes

In parallel with Tiichi Ono's Deadly Wastes of Manufacturing, we can refer to the wicked warehouse wastes as follows:

Customer's Wastes

Wicked Warehouse Wastes

Deadly Wastes of Lean

Right Quality



Right Quantity

Overstocking and SLOB Stock


Right Place



Right Time

Waiting – early and late delivery


Right Time/ Quantity

Movement within a location


Right Time/ Place

Unneeded Transport


Right Time/ Quantity

Material Waste

Over Production

All of the Above

Human Capital

Human Capital


Principles, techniques and tools

"Lean Thinking provides many of the methodologies for waste elimination/minimisation through the supply chain," Forsdick said.

"It is however important for leadership to first clearly understand the principles of Lean Thinking and how these can be included in the business strategy to achieve the desired returns. Thereafter Lean best practices such as Value Stream Mapping, Standard Work, Change Over Reduction and even  5S can be applied to the supply chain to eliminate waste and make value flow in order to provide improved quality and customer services at the lowest total cost."

In addition, many logistics operations have adopted various technology tools and systems that can help organisations automate and adopt techniques to reduce wastes. Many are already using Warehouse Management Systems such as Cincom's WMS to assist in optimising Picking and resource utilisation and also reduce defects and material waste. There are Transportation and Delivery tracking Systems that can assist in load planning, route optimisation and delivery Confirmation.

If you want to improve your logistics operations the time to start was yesterday. In the highly competitive environment, getting the logistics side right can be the differentiator that leads to success or failure.

To read full article, please see September/ October edition of MHD Supply Chain Magazine.