Are you making the most of your (shrinking) space? Tanel says that most companies do consider adding space. “However,” he says, “it is sometimes necessary to review the presently occupied facilities to determine if one can increase productivity by changing the physical and spatial relationships between operations,” he explains. According to Thomas Tanel, president of CATTAN Services, before you can consider making any changes in your current mode of operation, you have to thoroughly understand how your warehouse runs.
Spaced out are you making the most of your shrinking space--werc sheet (may-june2013)v41
1. Refocus, Renew Safety
Culture Initiatives
Create environment where individuals
accept personal responsibility for their
safety and their co-workers, too.
A
ccording to the OSHA Pocket Guide, “Warehousing,” more than
145,000 people work in over 7,000 warehouses, and are exposed
to a wide variety of potential hazards. Among the potential hazards that
confront warehouse workers: unsafe use of forklifts; improper stacking of
products; failure to use proper personal protective equipment; failure to
follow proper lockout/tagout procedures; inadequate fire safety provisions; and repetitive motion injuries.
However, most disturbing is the
statement that the fatal injury rate for
…the fatal injury
the warehousing industry is higher than
rate for the
the national average for all industries.
Further, addressing those individuwarehousing
als who focus on safety program costs
industry is higher
vs. the potential savings these programs
than the national
can achieve, an APL Logistics white
paper, “Warehouse Upgrades That Pay,”
average for all
reveals, “your payment for workers’
industries.
comp claims might represent as little as
20 percent of what those claims-related
injuries actually cost your company.” It cites a Liberty Mutual survey where
nearly 40 percent of the respondents report that for each dollar in direct
costs they spent on injuries, they spent anywhere from $3 to $5 on indirect costs such as lost productivity and time spent training a replacement.
Bottom line: If you have a profit of just one percent, you’ll need to
earn an extra $100,000 in revenue, according to the white paper, to offset
every $1,000 workers comp injury your employees incur.
continued on page 2
Information for Members of the
Warehousing Education and Research Council
maY –June 2013
In this issue...
It’s Who and What You Know
5
Today’s logistics professionals have more challenges
than ever—here’s how to face them.
Publications from WERC
Consider adding these pubs to your continuous
improvement arsenal.
8
WERCouncil Circle of Acclaim
2012–2013 Recipients
9
2013 WERC Conference a Success
The first highlights from Dallas.
10
Spaced Out
Are you making the most of
your (shrinking) space?
S
candinavian Internet PC and electronics retailer
Komplett recently faced a dilemma that many
companies face these days with its DC: Big growth had
led to a facility that was bursting at the seams. And like
many others in the same situation, expanding the current
facility wasn’t an option, so Komplett had to find another
solution.
For more than a decade, the company had filled
orders manually. This worked until SKU proliferation led
to offerings of more than 10,000. Rather than focus on
more storage, Komplett looked to increase its operational
efficiencies. The company weighed a variety of options
and ended up selecting an automated storage and fulfillment system by Swisslog, called AutoStore, which the
company also provides in North America.
Since implementation, Komplett has added storage
density and now can handle double the throughput it
managed prior and did it with its existing labor force.
Komplett is not alone in the increasingly common
continued on page 6
Conference Highlights, pg. 10
2. faciliti e s
Spaced Out continued from page 1
problem of rapid growth with no option for additional
space. How companies come to this place is varied
and so are the solutions to their problems, but there
are some common guidelines that can be applied in
most cases.
Why the storage shortage?
response times,” says CATTAN Services Group’s Thomas
Tanel, president.
One segment that is particularly hard hit in this area
is processed and frozen foods. “This is an area that has
experienced huge growth over the past 10 years,”
says Leber. “Space is a real premium for this segment
right now.”
What happens to many companies is the need to
manage tradeoffs, says Tanel. “You have to balance transportation, inventory control, warehousing and customer
service,” he explains.
Castaldi adds that many companies are left feeling
torn between traditional warehouse space and distribution space. “If your goal is to pack the most into a space,
you’re looking to maximize your warehousing,” he says.
“If you are looking to get the most out quickly, you’re
talking about distribution. It’s a battle of realities for
most companies.”
Komplett’s issue was the one that causes the majority of space issues today: growth. Chris Castaldi, manager
of business development at Carlstadt, NJ, based W H
Systems, says that SKU proliferation is behind much of
what companies grapple with these days. “Companies
just face more offerings and diversification than ever
before,” he says. “For instance, you’ve got a retailer who
goes direct to consumer with very seasonal items. As it
grows on the Internet, the company can no longer control what people buy and when. So the product is being
ordered year round rather than seasonally, which means
the company must now keep the product in stock at all
times.”
The addition of e-commerce to traditional retail
It would seem that when faced with space conoften puts company’s space availability over the top as
straints the knee-jerk reaction would be to add more
well. “This leaves companies with more SKUs to make up
space via an expansion or a new facility. But for most
their sales, but their sales revenue remains the same,”
companies, that’s not the number-one choice.
says Swisslog’s Bill Leber, director of business developWhy not? It all comes down to capital. According to
ment. “The result is needed space but that can be cost
Leber, “capital investment casts a long shadow. You have
prohibitive.”
to buy land, a building, and new equipment.
British fashion
You need to be very sure about your business
“You have to balance
retailer River Island
needs for a long time to come if you are going
transportation,
found itself in just this
to make that choice.”
inventory control,
situation. When it
added in e-commerce
warehousing and
to its traditional storecustomer service.”
fronts, the added
Tom Tanel
volume put a strain on
its DC. Rather than
investing valuable capital into additional space, the company sought out
high-density storage solutions, which
opened up some 5,000 SKU locations.
There’s also the challenge of
higher volumes of orders. “With an
ambiguous and volatile business
environment where sales are
expected to or will grow, preparing
the product offering for sale becomes
more complicated as the corresponding need for distribution to operate
with higher throughput volume
demands and shorter order cycle
When more isn’t more
6
/ May–June 2013
3. Space Management Guidelines
at a Glance
Tanel says that most companies do consider adding
space. “However,” he says, “it is sometimes necessary to
review the presently occupied facilities to determine if
one can increase productivity by changing the physical
and spatial relationships between operations,” he explains.
Which usually brings a company back to that
big capital investment. “It’s not only looking at the structure investment, but also the internal operating systems
managing material flows,” says Tanel. “Each of these
systems comes with an added cost, and depending on
how advanced the facility is, the costs can be very high.”
In addition to the costs, says Castaldi, there are other
factors that can make adding space unattractive. “There
are often limitations on labor, tax laws and land, all of
which play into how attractive or unattractive a location
may be for building,” he explains. “So you need to ask: do
you need more space or do you need more efficiency?”
More often than not, the answer is efficiency.
How to gain space efficiency
Leber says that even if a company is not crunched for
space, most DCs have areas where they can improve in
space efficiency. “Most companies don’t use what they
have efficiently—they don’t look in the right places,”
he says.
To figure out the proper space utilization, Castaldi
recommends looking at processes first. “Why do you
need the extra space?” he asks. “What brought you here?”
Tanel recommends conducting a thorough space
survey. He’s designed a system for doing that, which
includes the following columns across the top:
Available at present (sq. ft. and attainable height)
According to Thomas Tanel, president of CATTAN
Services, before you can consider making any changes in
your current mode of operation, you have to thoroughly
understand how your warehouse runs. To do this, you have
to do the following:
Understand your company’s business by quantifying
present requirements and forecasting future growth
potential.
Know your square feet requirements by:
1. Function
2. Material flow
3. SKU volume and velocity
4. Inbound/outbound throughput characteristics
Establish true priorities by employing Pareto’s Principle
and ABC Concept to basic warehouse flow patterns.
Employ aisle layout and allowance that maximizes movement efficiency and maximizes available floor space and
cube loss.
Design your space plan for the rule, not the exceptions,
for smooth, efficient, quick, and direct in-out material and
work flow.
Ensure accurate location, proper identification and good
illumination of all SKUs in storage.
Plan storage space for easy inventory rotation to permit
FIFO or LIFO inventory valuation control.
Review material handling and storage equipment compatibility, adequacy and reliability in space plan analysis.
Develop standard pack and unit load hierarchy for all
SKUs material handling efficiency and material location
storage philosophy.
Needed at present (sq. ft. and required height)
Future needs (sq. ft. and required height) for
1-2 years and 4-5 years
The operational activities that are measured against
this include:
Receiving and inbound
Staging and processing
Put-away and storage
Value-added services
Picking and replenishment
Shipping and outbound
Offices and miscellaneous
After going through the facility space survey, Tanel
recommends companies ascertain whether they have
properly slotted the DC. “If so, it should optimize
your space utilization and minimize the time and
effort required to efficiently receive and store incoming
products,” he says. “This determines the most efficient
placement of products and improves the speed and accuracy of picking and replenishment. Each DC is unique, so
proper slotting depends on factors such as your distinct
product, movement and storage characteristics, product
seasonality, turnover, promotions, and sales or usage
projections.”
Castaldi recommends that you have a leader to
spearhead the assessment process. “You need someone
who can bring everyone together and figure it all out,” he
says. “This might be a consultant or it might be someone
from within.”
The assessment team should include people who
buy, people involved in processing, and people who set
future plans for the company, according to Castaldi. “You
have to pull all the information together and understand
why and when you ran out of space,” he says.
continued on page 8
/ May–June 2013
7
4. Spaced Out continued from page 7
Upon assessment, many companies will learn that
they’ve grown up piecemeal and have added small bits
and pieces over the years, says
Leber. “This happens because it’s
Upon assessment,
impossible to just shut down and
reorganize a DC,” he explains.
many companies
“So companies end up adding in
will learn that
new equipment and processes here
they’ve grown up
and there and you become fairly
piecemeal and have inefficient compared to a new comprehensive integrated facility.”
added small bits
Once all the operations have
and pieces over the
been assessed, a company needs to
put a plan of action into place.
years.”
Options for improved space utilizaBill Leber
tion include right-sizing locations
through improved slotting; using
un- and under-utilized space like floor-to-truss and
closer pallet beams. Get rid of obsolete inventory that
might be clogging up shelves.
There are also higher tech storage density solutions
available, like those from Swisslog. “All of our products
use space better than manual operations,” says Leber.
“You can go higher and use full vertical space as well as
bring goods to people rather than the other way around,
freeing up the travel path.”
Castaldi’s W H Systems works as a systems integrator, helping companies source products and bring it all
together via software. “We take measure of where a
company is and has been and help them figure out
where they can make improvements in their operations’
efficiency,” he explains. “Most people have reached a
point of diminishing returns when they come to us.”
Even when not feeling space constrained, most
companies probably can do better with the space they
have, says Tanel. “I guarantee that a thorough assessment of your facility will turn up a few surprises,” he says.
“And the biggest surprise is going to be this: “You are not
effectively using space.”
Chris Castaldi, W H Systems, www.whsystems.com
Bill Leber, Swisslog, www.swisslog.com
Thomas Tanel, CATTAN Services Group, www.cattan.com
Publications from
2013 DC Measures
WERC members can download the newest report on warehouse metrics for NO CHARGE.
Go to the WERC home page and click on the link you’ll find there.
You might also consider adding these pubs to your benchmarking
and continuous improvement arsenal:
Warehouse and Fulfillment
Benchmark Best Practices
Learn about qualitative warehousing best practices.
Helps identify process strengths and weaknesses in
an organization so a roadmap for improvement efforts
can be crafted.
Warehouse Manager’s Guide
to Benchmarking
Read about the different kinds of benchmarking,
why it’s important to benchmark, how to choose
the right metrics, how to analyze your company’s
performance and techniques for communicating to
get the results you need. 2nd Edition, 2010
www.werc.org
8
/ May–June 2013