Friday, November 20, 2009

Affecting Warehouse Efficiencies, Part 4: Product Flow

Last week, I talked about the three main categories of warehouse efficiencies. These were operational, stocking, and fulfillment efficiencies. In this series of four posts, I am presenting the levers available to an organization to enhance these warehouse efficiencies. There are four main levers to target and affect these efficiencies. These levers being Labor, Inventory, Slotting and Product Flow. Each of the four posts discusses one of these levers and expands upon the functional capabilities that must be developed to enhance warehouse efficiency. In Part 1, the role of Labor was covered, part 2, inventory management was covered, part 3 covered slotting, and here is final and concluding part of this discussion: Product Flow Analysis.

Flow Analysis:

Product flow analysis within the warehouse allows the warehouses to optimize the product flows through a warehouse. The objective of such an exercise may be to reduce the cost of handling within the warehouse by reducing the manual touch-points and increasing automation, determining the most efficient disposition of incoming inventory or finding cross-docking opportunities for quick pass-through. Like slotting, flow-path analysis should be conducted as part of warehouse planning to determine the best flows for product categories using demand patterns and other product attributes, some of which are discussed below. Determining optimal flow-paths and re-evaluating them as demand-patterns, product-mix, or product-attributes change ensures that the warehouse operates at its best, making most use of the available automation and other handling equipment.

  1. Product Handling Attributes: Product handling attributes determine what kind of equipment will be needed to handle the flows. Conveyable products may be easier to automate while others may require manually operated fork-lifts. Flow-path analysis considers these constraints to determine the best disposition and flow of the product within the warehouse from receiving until it is shipped.
  2. Flow-velocity Attributes: The demand and promotion attributes can affect the flow-paths to efficiently handle the products based on their flow-velocities. Fast moving products must be able to flow quickly to their stocking, staging, or shipping areas. If product is on promotion, an efficient handling within the warehouse will ensure that replenishments are most efficient and increased volumes due to promotion can be effectively handled.
  3. Inventory Consumption Policies (LIFO/FIFO) and shelf-life: The inventory consumption policies of first-in-first-out (FIFO) or last-in-first-out (LIFO) affect the flow-path decisions since they directly affect the disposition and shipping of the product based on their receiving order. Similarly, if the products have expiry-dates and must be shipped within a fixed number of days after receiving, they may be required to go to a specific area of the warehouse. These areas may be climate controlled or otherwise monitored for perishables to maintain product quality.

Improving product-flows in the warehouse directly improves the operational and fulfillment efficiencies in the warehouse. This fourth and the last part of this series concludes the discussion on the levers to drive the warehouse efficiencies.

© Vivek Sehgal, 2009, All Rights Reserved.

Want to know more about supply chain processes? How they work and what they afford? Check out my book on Enterprise Supply Chain Management at Amazon. You will find every supply chain function described in simple language that makes sense, as well as see its relationship to other functions.

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