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Commercial / Industrial Warehouse Set-Up: 5 More Common Mistakes

By Edward Drennan

Real Estate Sales Representative with Century 21 Miller Real Estate Ltd. 4793863

September 09, 2018 07:40 PM

Finding Your Ideal Commercial / Industrial Building - Part X

Welcome back for your newest installment!

5 More Common Mistakes When Setting Up A New Warehouse

In the last post (Part IX) we talked about 5 common mistakes people tend to make when setting up a new warehouse. The five we talked about were:

(1) Incorrect equipment

(2) Ignoring technology

(3) Concentrating on square footage rather than cubic space

(4) Planning for the wrong amount or type of inventory

(5) Seasonality effects

That said there are some other common mistakes in warehouse set-up that we thought to touch upon before moving onto other topics: Following are 5 additional issues that are often found when setting up a warehouse. Again, as with the first list, it is neither complete (we will address some more issues in subsequent posts) nor is the list in any particular order

Below is a list of 5 more common mistakes or issues that often get ignored, usually to the detriment of the organization as they try to bring the warehouse up to full capability.

(6) Off shift accessibility

If you are not already planning to be a 24/7/365 operation, this one can be a killer. No matter what your plans may be, someone is going to need access when the building is not supposed to be open. If that happens have no doubt that they will find a way in and the odds are that since they are already outside the rules they may not stick to proper procedure for recording material transactions. For example, someone in sales needs a sample for the customer RIGHT NOW as they are getting on a plane and cannot wait. Given the pressure, someone just grabs the part and does not record it. Now you have an incorrect inventory and no record of how it happened. This type of inventory grab is particularly common if you have MRO stock in hand (maintenance, repair and operations). A better idea is to plan for the necessity of access (even if the warehouse is closed), ensure procedures are in place & followed, and finally, create metrics (to track what happened, when, & how often).

(7) Metrics

The issue above serves as a perfect segue for Metrics. Management and staff need to understand what metrics are for – specifically, they are there to enable you to understand how the business is running and use that information to improve your processes. (Metrics are not there to identify the guilty in order to punish them.) If you are going to use metrics to improve your processes then you must measure / analyse the right things and ensure that the right people have that information available to them.

As an example if you have a strategy of customer responsiveness which is expressed in the warehouse tactically as always being in “tour ready status” you need to consider how you can use metrics to reinforce this? One possibility is measuring “junk” on the floor such as parts of wooden pallets or stray plastic. You could set 3 levels (green, amber, red) then have someone do a count a couple times a shift. Put up a big sign (or better yet a screen that can be updated remotely) that shows the current and historical ratings where everyone in the warehouse can see it. You could even split the warehouse into sections, each with their own ratings and history posted which would allow everyone to identify what areas are doing well and others not so well for analysis and process improvement changes. Use the same idea for inventory accuracy, on time/in full orders, etc.

(8) A Plan for Cleaning (5S)

Staying with the theme of “Tour Ready Status”, this is not just a good idea for customer interactions: Cleanliness and organization is critical for safe, efficient, effective work. It is much easier to keep any area clean & organized if some thought is put into how this will be done before you actually start using the area. 5S is a specific tool to help you do this. Please refer back to Part 8 in this series (Proactive 5S) for more information on the how and whys of this 5S.

There is also a psychological aspect to this which affect company (and departmental) culture. It is called the “broken window scenario”. If people see a clean area they will tend to keep it clean, but if they see a messy area they tend to go with the flow and the area just gets messier. If you want more information on this and specific examples we would suggest you check out a book called “The Small Big” by Steve J Martin, Noah Goldstein, Robert Ciadini. The book talks about a number of small changes that can have very big effects on companies and is on our personal list of the top 10 must read business books.

(9) Signage

When this is brought up with management we usually get a funny look from them. Then they start into the questions about why this is so important. It is actually pretty simple and relates back to the previous point about cleanliness being self-perpetuating. More importantly it is about understanding people. People want to do a good job but are often uncertain about what that means. Usually they worry most about getting all the work done so when they get “busy” they tend to take shortcuts. In a warehouse, that usually ends up with material becoming unorganized when they do not take the time to consolidate or put material into the best location. Signs take away any debate on where a given material belongs and highlights anything that is out of its correct location. For example: If the sign says A but the material under it is B it becomes pretty obvious that it is in the wrong spot! It also means that people do not need to think about every little detail and it becomes a procedural habit.

One other point here, signage does not have to mean signs with writing on them. Signage also covers pictograms, color locators, painted lines or areas, or anything that identifies an area or spot as being for a specific purpose. For example, blue colored bins for recyclable material, green bins for compostable material, red bins for reusable material, black bins for garbage… Other examples would be yellow lines to mark pedestrian areas, the metric boards that we talked about in issue 7 above, KanBan lights, etc. All of these serve the same purpose, to allow people to understand what and where they should be doing something.

(10) Security

The final issue ties back to the one started with – Accessibility. These two are the Ying & Yang of warehousing; you cannot have one without the other and still be successful. Lack of security will make it impossible to maintain safe working conditions, accurate inventory, quality products, etc. Paradoxically, too much security can make it more difficult to maintain safe working conditions, accurate inventory, quality products, etc. How can that be, you say? As with so many of the other points it comes down to people. They want to do a good job and if the conditions get in the way they will find a workaround which generally leads to multiple ineffective processes for each task.

Your task is to consider the best balance of security and accessibility to allow people to do their jobs effectively without the process getting in the way of their effectiveness and efficiency.

That brings us to the end of this topic. We hope the various points around the discussed issues and mistakes has given you something to think about and, hopefully, some ideas on things to implement at your own site. While it is certainly easier and cheaper to start applying these at the planning stage rather than after the facility is already in use, there is nothing stopping you from applying them wherever they can help improve effectiveness. Also, please remember that working with professionals to help you address these issues and possibilities will make your life far less stressful as time goes by. Give us a call and let us help you help yourself!