Agile warehouse management

Goldman et al. introduced agility as a concept in 1995. It means “readiness to change”, If we look at the warehouse logistics challenges with for example e-commerce and e-grocery, I think everybody understands that we must be prepared for change. As I have said before, the static state belongs to the past. Actually, both B2B and B2C markets is getting more and more volatile and when using agility your goal is to get your warehouse logistics responsive and demand-driven.

 Agile mindset has many similarities with some parts of lean philosophy. Abundance of resources is a big no no. Many parts of a warehouse logistics budget are fixed costs. That is why it is so important to work actively with the items that can be influenced. Labor costs is the most important post. Even if I work mainly with B2B I have to use work agencies and hire temporary labor in the peaks to achieve good cost efficiency over the year, it is impossible to staff with only a permanent workforce. There is too large fluctuations in inbound and outbound flow in order to be agile.

When I network, I still often meet colleagues who have problems accepting above mindset. They have too much labor over the year in order to manage peaks and almost “inventing” tasks when they have less pressure in the flow. It is strange senior management accepts that.

To stimulate agile mindset you need KPI’s in warehouse production that is connected to financial figures. Especially labor costs. You need to compare the costs with turnover. The KPI’s should include working hours. For example, how many orderlines per hour, how many goods receiving’s per hour etc. The more detailed the better. That is why I repeats the importance of a competent WMS being able to measure hours and have statistics codes for every process. Preferably per department also to avoid sub-optimizations in larger warehouse operations. With the right KPI and the right tools for measuring, every unnecessary hour will be visible.

Agile mindset also means quickness and responsiveness, quick reactions to changes in the flow like in e-commerce. The warehouse need staff with competence in all processes in order to move workforce from one department or task to another. No silos at all if you going to be agile. The goal is to improve efficiency, consistency, and quality control in warehouse processes in order to move goods through your warehouse at maximum speed, improving every stage of the fulfillment process.

If you invest in automation, you also need to add agile mindset. For example, is it possible for one warehouse assistant to control more than one picking station during periods of low order flow in order to keep the KPI at acceptable level? Can you handle peaks in the automation flow without delays? For example, by having parallel manual flows.

In order to achieve agile warehouse management, high levels of employee engagement is a necessity. That is why a competent leadership is so important. I have written several articles on my blog about that. Engage your employees at all levels by involving them in process improvement activities, It works perfectly fine to combine lean with agility in order to achieve that. It is all about making operations more efficient and reduce waste, in order to improve agility from a cost perspective, leveraging the best ideas in the organization.

Communication is also very important in an agile organization. You want to avoid “ad hoc” as much as possible. Digital control towers is a product of volatile flow in supply chain and will be an important part for warehouses. You want information about changes in your outbound and inbound flow as early as possible in order to react. For most of us who work in warehouse logistics, digital control towers do not exist yet. Therefore, it is extremely important to work cross-functionally with both purchasing and sales organizations in order to plan as much as possible.

Agile warehouse management is here to stay. Customers’ demands regarding better service makes it impossible to run a warehouse as we did before. Accept and adapt is the way forward.

Roberth Karlsson

2 Comments

  1. Hello Roberth, your way of explanation is very good. Updating ourselves and our business is a need of this time. We can’t run a successful logistics business with an old pattern. Thanks for sharing, keep writing!

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