Strategic Warehouse Review

Client: Australian Tile Distributor

Background

The company experienced increased operating costs and reduced service levels following the implementation of a warehouse management system (WMS) and radio frequency (RF) communications at its Queensland facility. The WMS was implemented due to a rapid growth in the region, which necessitated a change from fixed to variable location capabilities to increase storage and throughput capacity in the existing facility.

Challenge

A key objective of this study was to identify short, medium and long term solutions to improve operating performance and establish a blueprint for future facility designs within the company's network. To achieve this objective, a thorough assessment of infrastructure, system and/or process related issues was required to determine their potential impact on warehouse performance, including:

• Configuration and functionality of the WMS
• Operating methods and business rules currently employed
• An evaluation of the 'man/machine' interface
• Impact of facility layout, design and capacity on operating productivity
• Inventory policies and management within facility

Approach

A thorough and fact based assessment of the warehousing operation was conducted, including the following activities:

• Collated throughput, inventory and cost data to establish 'blueprint' activity operating costs and productivity
• Mapped warehouse operating processes and prepared root cause analysis for corrective action
• Completed WMS functionality assessment to confirm system viability
• Conducted analysis of item level inventory data, barcode labelling standards and location management methods
• Defined target productivity levels to quantify potential cost savings
• Completed infrastructure and safety assessment to identify opportunities to improve capacity/space utilisation, storage and handling methods and ensure OH&S regulatory compliance

Outcome

A 12 point action plan identified significant improvement opportunities, including a 40% space savings by re-slotting products within the facility and use of alternative storage and materials handling methods. The action plan also targeted savings of up to 35% in labour costs with a corresponding increase in inventory accuracy through recommended improvements in data quality, location management logic as well as the application of alternative pick/replenishment strategies.