Have you ever heard of the Pareto principle? You might know it better as the 80-20 rule. In terms of warehouse management, the rule says that 80% of your business comes from only 20% of your stocked products. While the exact percentages may vary a bit, the core of this principle is something you need to follow for maximum warehouse efficiency.
You need to know which items are your top sellers – or in this case, the items that have the greatest velocity or that come and go most quickly – because those items are handled by your warehouse crew every day. If those items are hidden in out-of-the-way places or just in inconvenient spots, it is decreasing your warehouse's efficiency.
The Reality of Picking Orders
What particular task in your warehouse operation takes the most effort?
In almost all cases, it is the picking process. This process involves getting an order and moving through the warehouse to fill it. Since most warehouses involve multiple rows with multiple shelves, the picking process for a single order can take a lot of time. In a warehouse where dozens (or hundreds) of orders go out every day, the effort involved with picking can be intense.
Minimizing the effort involved with picking orders is one way to improve warehouse efficiency.
Easy Access to Top Sellers
What would happen if you were to relocate your top sellers and items with the greatest velocity to a spot close to your shipping dock or move them all into the same location or zone?
You will be reducing the amount of labor required to pick orders in your warehouse, that's what! This will minimize your labor costs while increasing the efficiency of your operations. An added bonus? Your crew will appreciate that you are making their jobs a bit easier.
Implementing this efficiency technique is pretty straightforward.
- Identify what your top sellers are – the items that show up the most frequently on your pick lists and the items that have the fastest velocity. Your warehouse management system or inventory tracking system should be able to identify those items easily.
- Designate a spot close to your shipping dock for these top sellers. This area should be visually and physically easy to access. This will make it easier for your crew to find and pick items to fill an order.
- Start small. Don't make the mistake of trying to go too big too fast. It will disrupt your warehouse operation. Start with just the top 10 best sellers and relocate them to the new designated spot.
- Let the pickers get used to the top seller spot. It shouldn't take long for them to appreciate the fact that they can grab the most commonly picked items without going very far from the dock.
- Get feedback. After a couple of weeks with the top 10 items easily accessible, talk with the pickers. They'll tell you whether it is time to bring some other items into the area.
- Determine if you should add additional top sellers to the designated area. You may find the top 10 sellers are enough to make a significant impact on your picking operations. Will adding more top sellers have even more impact? Add another 10 and measure the impact. Keep doing this to reach your maximum impact. You may end up with 20% of your stock or 5%. What matters is impact, not numbers.
- Monitor the top selling products in your warehouse to identify changes. You may find that a few months after you implement the best seller shelves that the top selling lineup has changed. That's the time to remove the items that are not selling as much and trade them out for the new best sellers.
Minimizing the effort required to pick an order will improve your warehouse efficiency. What items do you need to relocate to your top seller shelves?