This is the first in a new series of blog posts on leading practices we’ve observed in best-in-class facilities. I thought we would start with the basics.

Many of you might remember years ago when the Dymo label maker was popular. I had an assistant at the time who loved the gadget and used it for everything imaginable.  Every type of folder, box and storage container had a color-coded label and everything had a place. If something was not in it’s place, she knew it. This same discipline is needed for each aspect of your distribution center and manufacturing site. This may sound obvious, but we’ve seen many companies with unlisted catchall locations in their distribution centers.  If you’ve ever  walked out to your warehouse and observed a stray pallet or carton of goods, you know what I mean. Here are some of the leading practices followed at best-in-class DCs and manufacturing sites.

Inventory Control/Materials Control Policy

How many sites are you aware of that have a formal inventory and materials control policy? In some cases, managers may have an unspoken policy and have not shared the information with their associates. This makes it nearly impossible to enforce. For example, when associates were asked at my DCs what they should do if they see a damaged product in an aisle, the typical response was to put it back in its location.  We learned that it’s common for people to substitute their own policy when one does not exist (or is unknown to them), and it’s human nature to complete a task with the least amount of effort.  My point is that an inventory or materials control policy is not a policy if no one knows what it is.

Recommendation

Write down your inventory/material control policy and share it with your associates. Get feedback from personnel as part of your continuous process improvement efforts.

Movement Analysis

When working with cycle counters, we often encounter secret nooks that are checked when doing SKU verifications in case missing parts happen to have made their way there. You cringe thinking about it but, sadly, it’s not unusual to see this.  Most DC managers won’t admit it or might not even realize it.  Imagine if you walked into a bank and saw money sitting on a desk or over in a corner. I doubt you would have confidence in the bank. I know examples like this are used all the time in inventory training, but these scenarios still exist.

The solution is to implement a movement analysis, which is the process of following inventory as it is moves throughout the DC to determine all locations that it can touch. This normally is done using data from your WMS. When implementing a new process, it is performed as part of the business analysis. I’m gong to make a bold statement here: no unplanned locations should exist in your warehouse. If a location is manually added after your design is complete, this is a trigger that some exception has occurred and it should be reviewed.

For example, a customer working on a automation project integrates a new conveyor system that routes products from picking areas to the packing area and dock. The customer experienced a significant drop in inventory accuracy subsequent to the automation project. The drop had several factors but the main culprit was attributed to catchall areas that developed throughout the warehouse to accommodate exceptions that had occurred.

Recommendation

Incorporate movement analysis with any new DC/manufacturing process. Plan in advance where your inventory will go, paying attention to possible exceptions or audit location creation. These are usually red flags that something was missed. If that happens, address it as quickly as possible.

Basic Numbering and Location Identification

Once you know how your product moves through the DC or manufacturing plant, it is important to properly label or somehow identify what should be placed in those areas. Again, this might seem obvious, but I’m constantly surprised by how many locations in modern DCs, while known to associates, still lack formal signs or other types of identification.

Recommendation

Every location should have a clear, large identifier and no inventory should be placed in a location that is not marked as such.  (Some best-in-class DCs take this a step further and say that if it doesn’t have a bar code, then it doesn’t exist.) Another tip I picked up years ago from a DC friend is that, as a rule, no carton or pallet can exist in a non-location unless it is on a forklift or pallet jack. This ensured that cartons or pallets were only there because someone was moving them and there was ownership.

Pick Facing

This term is more common in retail, but location facing has shown time and time again to improve inventory location accuracy.  Facing is the process of aligning inventory together and forward-facing so that it is easily reached and identifiable. Some DC managers assign associates to a specific group of locations and give them the responsibility of facing locations at the end of their shift.

Facing eliminates the fall over of product in picking locations. It is also a technique for overall location maintenance. The use of facing for gold-zone picking locations is a leading technique for improved inventory accuracy.

Recommendation

Implement a facing program in your key picking areas. Location maintenance will help reduce damage and increase pick face inventory accuracy.

What other recommendations do you have for creating best-in-class facilities?

Advanced Solutions is a leading provider of SAP SCM solutions and offers the Advanced Cycle Count for SAP WM solution to help you achieve best-in-class inventory and process control.

This post was originally published on AdvSolutionPros.com.

Phil Avelar is a Senior SCM consultant at Advanced Solutions, based in Chicago. He shares his passion for solving customers problems in his blog posts, industry articles and talks. When he’s not writing, he’s working with customers to develop and apply innovative solutions to common problems in the supply chain.

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