Quality in warehouse operations, just as important as productivity

I have written mostly about leadership, WMS, statistics and resource optimization. One topic that I have only written a little about is quality. The quality of warehouse operations is extremely important it does not matter how efficient the warehouse is if the quality is poor.

Never underestimate the cost of poor quality in warehouse operations, it is major costs in man-hours for administration, reverse logistics and financial compensation of missing packages/shipments.

Transport damage is also a major cost. Transport insurance is usually very restrictive, the sender usually has the responsibility for how the goods are packed and transport insurance is expensive. You also have an angry customer who still waiting on the package.

How do you deal with the quality while also increasing efficiency / productivity? You must utilize technology. I have met frustrated warehouse managers who tells me that they quickly provide feedback about picking errors and delivery notes to the staff and constantly remind the staff how important it is that they are focused and doing the right thing. Still the quality of the warehouse is on a low level or worse continues to fall. It is naive to believe that it is possible to increase the quality by constantly nagging on staff. Of course, you must provide feedback on errors especially things that are obvious careless mistakes. But rely on the staff’s concentration and their ability to maintain focus is unreasonable.

You must reduce the number of opportunities to make mistakes, we humans cannot keep concentration ten hours straight per day. The complexity of warehouse processes is much greater than it was before. The demands on performance are also greater.

According to me there are some important things needed to get a good quality in the warehouse without losing efficiency.

  • Good leadership
  • Use of technology, both hardware and software combined.

Leadership is very important because you need standardization. You create standardized routines  for each warehouse process, and then the management must ensure that it is followed. If management and staff standardize a warehouse process because it is optimal for quality and efficiency, all the workers must follow this. It is management’s responsibility to follow up on this. It is not unusual that staff finds “faster” and “easier” ways to perform processes but which may not be optimal from a quality perspective. It is important that the management stop that behavior quickly. It is also the responsibility of management to follow up obvious careless mistakes in the warehouse caused by nonchalance, etc.

A good WMS is essential for good quality. Since we cannot rely on human beings concentration and behavior only, we need to utilize technology. A good way to reduce mistakes is confirmation of processes by scanning barcodes. In warehouse processes there should be an option to scan the location, part number, serial number/batch number, parcel number, transport labels, etc. In a good WMS all of these features already exist, it is up to management to decide which features suits their warehouse and then configure and switch on the scanning in each process.

Another way to prevent mistakes is to use basic data in WMS such as weight and volume. For example, when the order is picked, the goods are weighed and compared to the theoretical weight of the order. If there is a deviation a person must audit the package.

In case an error is committed, many companies use cameras on conveyor systems that take photos of the inside of packages or boxes before packaging. When you receive a delivery note from a customer you can go back and look in the WMS order database if the item was in the actual package.

It is important to analyze where most of the errors are committed in the warehouse and switch on confirmations and audits gradually. You should remember that each scan/audit decreases efficiency. In the end, you come to a breaking point where the quality costs more than what you get out of it in economic terms.

A good TMS (transport management system) is great for the quality and reliability of delivery. When an order or a package is picked, you make a confirmation in WMS (often by scanning) then a transport label is printed or you choose to transfer the contents to a master package (for example, a pallet) to be sent to the specific client. All this should be transparent to the customer/receiver via a web interface for example so the customer can see the transactions and transport packages with content included. Should any error occur in the handling, it is also much easier to trace back what happened and who has done wrong. Losses due to wrong deliveries is significantly reduced. The freight forwarder get in the EDI files very good information about the number of packages, the size, weight and content etc. because data regarding this follow from the WMS. Any doubt between the sender and the freight forwarder is minimized with a good TMS.

It is very important that the management of the warehouse calculate a cost for a delivery note or a picking error, in this way you can calculate what it costs in total per month to handle these errors. This cost is often underestimated. Many people are shocked when they are told what error handling costs in administration, reverse logistics and lost packages. It is very good to have these financial figures when it is time for an ROI calculation for possible investments in WMS and TMS or leadership.

Remember when you are working to improve quality, eventually you will come to a breaking point when quality costs more than it gives the company in economic profit.

Roberth Karlsson

3 thoughts on “Quality in warehouse operations, just as important as productivity

  1. I’m totally agree, some enterprices cannot see the real value of the logistic’s commons errors. But, one thing you need got to considerer: in Latam, our reality is different that Europe or North America, the most WMS and TMS are designed for others realities or kinds of logistics. Our work (best professionals of logistics in Latam is find the best way to develop our operations with the best fit ERP to our operations and move forward on the next step and keep trainning for ours colaborators.

    Like

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