October 26, 2016
Increasing Warehouse Efficiency Using Dynamics NAV
Operating an efficient warehouse is critical regardless of size. This is the first blog in a series of blogs that will focus on efficiency ideas and how NAV can be used to help implement more efficient practices. This first blog will discuss some of the efficiency concepts at a high level. To start, let’s discuss the important factors to consider regarding warehouse efficiency:
- Warehouse storage density: One way to reduce warehouse costs is to make sure that your warehouse does not require more space than necessary. Buying a new building is very expensive, so before moving, or contracting outside warehouse space, make sure you have fully utilized all the space you have in your current warehouse.
- Picking accuracy: Maximizing picking accuracy has a huge impact on warehouse costs. The best case scenario is that you have to return items that have been picked incorrectly and re-pick the correct item. The worst case, and far more expensive scenario, is not knowing you had a picking error until the customer calls to return the incorrect item. Now you have duplicated picking, freight, and incurred return and put-away costs as well.
- Travel Time: Travel time is undeniably the most expensive element in most warehouses. The larger your warehouse, the more important it is that you do everything you can do minimize this warehouse cost. The good news is there are several options that can be considered to attack travel time as an issue. In future blogs we will review those options in greater detail.
Warehouse Efficiency Best PracticesEvery warehouse is different, so it is important to remember that what may be a great idea for a 500,000 square foot Gillette warehouse may not make sense for a 5,000 square foot single-item warehouse. There is no best practice that applies across the board. What is important is that you apply the principles to maximize the value for your warehouse. Another important factor to consider is that focusing on any one of these efficiency practices could have a counterproductive effect on one of the other practices. For example, let’s say we focus on the goal of minimizing travel time. We decide to accomplish this by keeping as little as possible in our primary pick slot. This makes sense, because if each pick slot is small, it is logical that it would take less time to walk to the smaller pick slots. The problem with this approach is that it may increase the amount of replenishment I have to do of my primary pick slots. I am not saying reducing primary pick slot size is wrong, in fact we will talk about this as an efficiency option to consider, but done to an extreme it could have a detrimental effect in that you are now spending more to replenish than what you gained in pick travel time reduction. Let’s say your goal is to densify the warehouse, so you decide to store more than one item in the same pallet location. This is a great idea, and something that is done regularly. But, by putting multiple items in the same bin, I have increased the probability that someone will make a picking error. There are now two items in that bin, so if the warehouse person is not focused, they could accidently grab item B rather than item A. Combining products into available bin space may be a great idea, but do so knowing that there is an increased risk of picking error. Managing warehouse efficiency reminds me of my days studying Astronomy Physics. It is a bit like Newton’s third law of motion, for every action you take, there is an equal but opposite reaction. The goal is to balance these “forces” inside your warehouse to maximize your efficiency and minimize your costs. In upcoming blogs, we will look at tactical options that could be utilized to improve the efficiencies in each of the above areas. We will also then look at how Dynamics NAV can be used to implement those solutions, helping you make your warehouse more efficient. For more information on optimizing your warehouse using Dynamics NAV, check out our resource center. And if you’d like to talk to one of our consultants about other ways to get the most out of Dynamics NAV, please contact ArcherPoint today.
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