SmartTurn Inventory and Warehouse Management Best Practices Series
If your operation is one of the tens of thousands of warehouses in the United States still using paper, Microsoft Excel, or processes first developed in the late 70s/early 80s, we’re here to help. To give you tools, information, guidance, tips, proven methodologies, we offer you the forthcoming "Best Practice Series for Inventory and Warehouse Management."
If your operation is one of the tens of thousands of warehouses in the United States still using paper, Microsoft Excel, or processes first developed in the late 70s/early 80s, we’re here to help. To give you tools, information, guidance, tips, proven methodologies, we offer you the forthcoming "Best Practice Series for Inventory and Warehouse Management."
Best Practices for Putaway
Posted 10-23-2008 at 02:53 PM by Kevin Collins
Best Practices for Putaway
The merchandise has arrived in your warehouse. Receiving is going well with cartons and pallets leaving the trailers and entering your facility. What are you going to do now? Let’s discuss best practices for putaway and some of the processes you can implement to improve how you place received items in bins, cages or on shelves.
Putaway (as part of the material handling function) is the process that moves material from the receiving area to your storage, replenishment, or pick areas (or perhaps even straight into your manufacturing operation). Ideally, you’re managing your putaway space requirements by calculating resource and space requirements based on your estimated or expected receipts, as well as current backlogs. What do you think you are going to receive today, tomorrow, next month or next season?
In a perfect world, product is put away the same day it's received. If you are unable to reach this daily objective, you’re going to generate space and congestion problems. You’ll increase the chances of creating transaction errors. Product will become more susceptible to damage—both from remaining on the ground, as well as being moved multiple times. Observe the inside of a warehouse and you’ll often see picking staff just pushing the items they don’t want aside in order to reach the items they do want.
If you run a busy operation, it can be tempting on those days when everything is going crazy to let putaway fall behind. You might decide to prioritize other tasks such as picking, replenishment, shipping, and loading. While items remain in the receipt or staging area, you might allocate labor resources to other duties. Do this--it can be very tempting some days--and you probably see fill rates drops as pickers are unable to find the product in the pick locations. Congestion develops as putaway slows. You’ll run the risk of having merchandise overflow into the aisles.
Almost every warehouse has some level of difficulty optimizing inventory placement. Some of the reasons why you can fall short of perfection are failing to analyze inventory velocity history, insufficient space in the warehouse, or limitations on storage space vs. special product needs. Overall, however, the biggest source of inefficiency is the fact that inventory is not stored to minimize product picking transit time. You’ll see this often in warehouses where the outbound operation is based on sales order or small package picking and shipping. In these situations, pickers fulfill one order at a time, regardless of the physical location of inventory in the warehouse. It adds up to a lot of unnecessary walking and searching.
Best Practices Examples
Generally speaking, you have three options for handling putaway:
Whenever possible, best practice companies use cross-docking, the process of moving specific products to support an open order or replenishment request. The WMS system flags the product for cross-docking by matching it to an open order or replenishment requirement. This happens at the time of receipt, or after an ASN has arrived. Product may still end up in a special staging area but the WMS system keeps track of it and prioritizes it over other material. By reducing handling and delay, cross docking is a far more effective system to move priority product.
As you’ve noticed during any warehouse tour, technology typically makes life easier and faster. What is common among companies known for their warehousing best practices is that they implement flexible and efficient material handling processes to meet current and future needs. They study their current operational needs, analyze trends to create forecasts of their future business needs and decide what they need for today and tomorrow.
From lift trucks and pallet jacks, to more complex (and more expensive options) such as radio frequency (RF) equipment in fork trucks and portable/hand held RF devices and completely automated systems comprised of customized conveyor systems, automated guided vehicle systems (AGVS) and automated storage systems, material handling is faster and much more efficient. As with most warehouse processes in which technology plays an increasing role, you can do basic blocking and tackling things as well as much more sophisticated implementations. The one-size-fits-all rule doesn’t apply here. Everyone is different. Here are some of the options for next year’s capital budget:
Safety Issues
OK, this sounds basic but all of the technology we’ve just reviewed can be dangerous in the absence of strong corporate policies and programs to ensure worker safety. Appropriately (and regularly) training your staff in warehouse safety when handling materials (during putaway or picking) delivers multiple benefits. Some of the more commonsense rules include prohibitions on forklift passengers (either hanging on the side, or riding forks) and riding pallet jacks (pump trucks) like skateboards. While the latter can be fun, it can also be dangerous and cause injuries. Avoiding injuries–to staff, product and facility equipment–is the major reason to implement and enforce company rules on unsafe behavior. You’ll ultimately avoid OSHA investigations and save money through lower workmen’s comp payments and lawsuit avoidance.
Moving Forward
Putaway significantly affects overall warehouse efficiency. If you’re considering upgrading your putaway processes and technology, here are a few questions to consider:
Unfortunately, many companies don’t attribute the urgency to putaway that would otherwise produce increased efficiency. By neglecting putaway however, companies can well find themselves with lower fill rates, aisle congestion and picking obstructions. Fortunately, automation and an effective WMS can help you prioritize hot receipts—those that need to be immediately replenished or cross docked—and help you minimize and manage congestion.
Kevin Collins,
Director, Product Management
SmartTurn, Inc.
177 Fremont St.
San Francisco, CA 94105
USA
Sales: 1-888-667-4758
Tel: 1-415-685-4200
Fax: 1-415-685-4201
About SmartTurn
SmartTurn™ Inventory and Warehouse Management System is the first true on-demand warehouse management system to provide enterprise class functionality at a fraction of the cost of traditional license and install software. Designed for quick implementation, ease-of-use, real-time inventory accuracy and warehouse performance, the SmartTurn system provides visibility on every item across single or multiple warehouses. Founded on the premise that software should be smart, simple and safe, SmartTurn’s customers span the value chain of most industries to include manufacturers, wholesalers as well as 3PLs. SmartTurn is privately held and backed by leading investors, NEA and Emergence Capital Partners. Website www.smartturn.com
About the Author
Mr. Kevin Collins joins SmartTurn having been in the warehousing and distribution business for over 15 years, where he fulfilled leadership roles for a military distribution company, a third party logistics service provider, a heating, ventilation and air conditioning company, a retail service warehouse and a general merchandise/wholesale grocery warehouse where he also partook in two acquisitions. Mr. Collins has spent his entire career learning the art of warehousing and logistics, and has been in every conceivable role within a warehouse. During his career span, Mr. Collins has also had the privilege of working directly with application developers learning about software from inventory and procurement to transportation and warehouse management systems. Mr. Collins brings to SmartTurn an invaluable background and information about processes, software and logistics, and the intricate balances between them.
The merchandise has arrived in your warehouse. Receiving is going well with cartons and pallets leaving the trailers and entering your facility. What are you going to do now? Let’s discuss best practices for putaway and some of the processes you can implement to improve how you place received items in bins, cages or on shelves.
Putaway (as part of the material handling function) is the process that moves material from the receiving area to your storage, replenishment, or pick areas (or perhaps even straight into your manufacturing operation). Ideally, you’re managing your putaway space requirements by calculating resource and space requirements based on your estimated or expected receipts, as well as current backlogs. What do you think you are going to receive today, tomorrow, next month or next season?
In a perfect world, product is put away the same day it's received. If you are unable to reach this daily objective, you’re going to generate space and congestion problems. You’ll increase the chances of creating transaction errors. Product will become more susceptible to damage—both from remaining on the ground, as well as being moved multiple times. Observe the inside of a warehouse and you’ll often see picking staff just pushing the items they don’t want aside in order to reach the items they do want.
If you run a busy operation, it can be tempting on those days when everything is going crazy to let putaway fall behind. You might decide to prioritize other tasks such as picking, replenishment, shipping, and loading. While items remain in the receipt or staging area, you might allocate labor resources to other duties. Do this--it can be very tempting some days--and you probably see fill rates drops as pickers are unable to find the product in the pick locations. Congestion develops as putaway slows. You’ll run the risk of having merchandise overflow into the aisles.
The Non-Optimized WarehouseTip: Supplying sufficient numbers of trained putaway staff will improve the efficiency of downstream processes such as picking and shipping. The ultimate end result should be better customer order fill rates.
Almost every warehouse has some level of difficulty optimizing inventory placement. Some of the reasons why you can fall short of perfection are failing to analyze inventory velocity history, insufficient space in the warehouse, or limitations on storage space vs. special product needs. Overall, however, the biggest source of inefficiency is the fact that inventory is not stored to minimize product picking transit time. You’ll see this often in warehouses where the outbound operation is based on sales order or small package picking and shipping. In these situations, pickers fulfill one order at a time, regardless of the physical location of inventory in the warehouse. It adds up to a lot of unnecessary walking and searching.
Best Practices Examples
Generally speaking, you have three options for handling putaway:
- Option one is to unload everything from the trailer and, after their receipt, place items on a purchase order list in the same location. As you receive items, match them against the packing list items. Once you can confirm the entire receipt, you can move items to storage or manufacturing. While probably the easiest way for you to receive and identify quantity errors, this method also requires a larger staging area. Items will sit on the ground longer, (see comments about damaged items above). You’ll also keep pickers waiting if the items are needed immediately.
- Option two is to group shipments by item. You won’t have to wait until the entire purchase order has been received to move some of the product to its destination.
- Option three is direct putaway, moving items directly from the trailer to its destination. This process uses the least space for staging and product is handled less and ready for use sooner. While the benefits are faster product speed and reduced capacity requirements in your staging areas, you might need to improve your warehousing operations because this method assumes that your warehousing operations is more sophisticated than the norm. Direct put-away programs require a more sophisticated warehouse management (WMS) system that has can assign locations from an advanced shipment notice (ASN) or upon receipt to the dock.
Whenever possible, best practice companies use cross-docking, the process of moving specific products to support an open order or replenishment request. The WMS system flags the product for cross-docking by matching it to an open order or replenishment requirement. This happens at the time of receipt, or after an ASN has arrived. Product may still end up in a special staging area but the WMS system keeps track of it and prioritizes it over other material. By reducing handling and delay, cross docking is a far more effective system to move priority product.
Material Handling Technology (during putaway and picking)
As you’ve noticed during any warehouse tour, technology typically makes life easier and faster. What is common among companies known for their warehousing best practices is that they implement flexible and efficient material handling processes to meet current and future needs. They study their current operational needs, analyze trends to create forecasts of their future business needs and decide what they need for today and tomorrow.
From lift trucks and pallet jacks, to more complex (and more expensive options) such as radio frequency (RF) equipment in fork trucks and portable/hand held RF devices and completely automated systems comprised of customized conveyor systems, automated guided vehicle systems (AGVS) and automated storage systems, material handling is faster and much more efficient. As with most warehouse processes in which technology plays an increasing role, you can do basic blocking and tackling things as well as much more sophisticated implementations. The one-size-fits-all rule doesn’t apply here. Everyone is different. Here are some of the options for next year’s capital budget:
- Warehouse Management System
You shouldn’t find it surprising that best practice companies leverage their WMS to manage travel time from receiving to storage areas, pick locations and replenishment areas. I’ve already highlighted some of the specific ways. The application helps them map better putaway routes so that travel paths are sequenced based on the shortest product-to-load route. Along with reducing, aisle conflicts and congestion, many WMS programs also support task interleaving; most best-practice companies make use of this capability in their warehouses to reduce non-productive travel time.
Tip: Use your WMS to implement bin location putaway and storage. You will be able to immediately and accurately locate product in your facility. Locating using bins will free you to locate product by sales volume so you can efficiency stock them close to their picking locations. - RF Technology
Best-practice companies typically use either a barcode or an RFID label to identify products, both of which work well. While barcode labels have been successfully used for many years and are more commonly seen today, you can principally thank Walmart for the warehouse industry’s drive to implement RFID technology. One of its key advantages is that RFID works better in harsh working conditions. RFID tags also hold a lot more information that can be adjusted as the item moves through a warehouse, and they can be read from almost any direction.
RF terminals are a great way to reduce data entry errors. Installing the devices in lift trucks and supplying portable RF devices to employees will boost productivity. Assuming that your warehouse management system (WMS) works with RF-inputted data (if it doesn’t, consider upgrading to a more expansive WMS system), you can provide accurate product relocation information to employees. Handheld devices which can receive material move notices will help you implement cross-docking.
Tip: Use product ID labels, zone or location labels and pallet license plates in your putaway process. - Automated Conveyor Systems
If you want to reduce travel time and material handling, and you have a lot of investment capital, you might want to investigate an automated conveyor system that uses sorters and diverters to divert and route product to the appropriate put-away zones. If your budget is sufficient and your warehouse layout large enough so that transit time from receiving to storage could be measurably reduced through automation, your primary benefits of implementing an auto conveyor system will be greater productivity and lower labor costs. If you receive a lot of case-size shipments, you’ll also benefit.
Tip: If you can afford them, automated conveyor systems that can sort and divert item according to zone and location will help you implement and optimize direct put-away. - Automated Storage/Retrieval Systems
Greater productivity and reduced labor costs are also delivered by installing an auto storage/retrieval system. In addition to these not inconsiderable benefits, you should also realize higher put-away accuracy. The caveat is that these installations are very expensive and generally suitable only for higher volume warehouse and distribution center. If yours is such an operation, this type of automation is worth investigating. Just don’t be put by the price tag.
Safety Issues
OK, this sounds basic but all of the technology we’ve just reviewed can be dangerous in the absence of strong corporate policies and programs to ensure worker safety. Appropriately (and regularly) training your staff in warehouse safety when handling materials (during putaway or picking) delivers multiple benefits. Some of the more commonsense rules include prohibitions on forklift passengers (either hanging on the side, or riding forks) and riding pallet jacks (pump trucks) like skateboards. While the latter can be fun, it can also be dangerous and cause injuries. Avoiding injuries–to staff, product and facility equipment–is the major reason to implement and enforce company rules on unsafe behavior. You’ll ultimately avoid OSHA investigations and save money through lower workmen’s comp payments and lawsuit avoidance.
Moving Forward
Putaway significantly affects overall warehouse efficiency. If you’re considering upgrading your putaway processes and technology, here are a few questions to consider:
- What do you need to do to move items and inventory from the receiving areas to the shelves?
- What benefits does the technology promise or deliver? (Promise is this question as seen by the seller. The question, through the lens of the buyer, is based on what it actually delivers after implementation and fine-tuning. Only after installation will you be able to determine just how well it works. Hopefully, the delta between promised and real-world benefits will be small).
- What is the TOC (total cost of ownership)? What is the upfront cost, as well as on-going training, maintenance, lifespan, etc? Get the big picture, rather than a portion.
Understand (I’ll repeat it) that almost every warehouse falls short of completely optimizing inventory placement. Challenges to “perfection” are due to myriad conditions, including insufficient storage space (you just don’t have enough warehouse space) and the analytical challenges of forecasting based on historic inventory velocity history. What can you do about it? Tap your product sales history data to identify high-volume items. We’re back again to the 80/20 (Pareto) Principle. Note those items accounting for 80 percent of your total demand. How are you going to pick them? By sales order? By zone? Put the highest moving products closest to your shipping areas, with the highest volume product closest. Your picking staff will save hundreds, if not, thousand of steps per day, just by doing this. You’ll reduce labor costs and the time required to get orders out the door.
The Final Word
Unfortunately, many companies don’t attribute the urgency to putaway that would otherwise produce increased efficiency. By neglecting putaway however, companies can well find themselves with lower fill rates, aisle congestion and picking obstructions. Fortunately, automation and an effective WMS can help you prioritize hot receipts—those that need to be immediately replenished or cross docked—and help you minimize and manage congestion.
Kevin Collins,
Director, Product Management
SmartTurn, Inc.
177 Fremont St.
San Francisco, CA 94105
USA
Sales: 1-888-667-4758
Tel: 1-415-685-4200
Fax: 1-415-685-4201
About SmartTurn
SmartTurn™ Inventory and Warehouse Management System is the first true on-demand warehouse management system to provide enterprise class functionality at a fraction of the cost of traditional license and install software. Designed for quick implementation, ease-of-use, real-time inventory accuracy and warehouse performance, the SmartTurn system provides visibility on every item across single or multiple warehouses. Founded on the premise that software should be smart, simple and safe, SmartTurn’s customers span the value chain of most industries to include manufacturers, wholesalers as well as 3PLs. SmartTurn is privately held and backed by leading investors, NEA and Emergence Capital Partners. Website www.smartturn.com
About the Author
Mr. Kevin Collins joins SmartTurn having been in the warehousing and distribution business for over 15 years, where he fulfilled leadership roles for a military distribution company, a third party logistics service provider, a heating, ventilation and air conditioning company, a retail service warehouse and a general merchandise/wholesale grocery warehouse where he also partook in two acquisitions. Mr. Collins has spent his entire career learning the art of warehousing and logistics, and has been in every conceivable role within a warehouse. During his career span, Mr. Collins has also had the privilege of working directly with application developers learning about software from inventory and procurement to transportation and warehouse management systems. Mr. Collins brings to SmartTurn an invaluable background and information about processes, software and logistics, and the intricate balances between them.
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