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Make sure your warehouse follows these 4 evidence-based best practices

Best in class (BiC) warehouses maintain inventory accuracy levels in the high 90’s by following specific warehouse best practices. Warehouses are able to achieve these levels of accuracy by adhering to strict systems. In today’s article, we’re going to take a look at some of these warehouse best practices and systems reflected in the most effective warehouses.

How would you rate your inventory accuracy level?

The Problem of Inventory Inaccuracies 

To begin, we'll start with an honest discussion of the problems facing warehouses. Many warehouse managers report a 50-60% inventory accuracy level. If this sounds familiar, don’t worry, you’re not alone. That said, if you can’t trust your inventory reports, you have a substantial problem to deal with. For example, how can you maintain successful production and shipment of materials if you are unsure what inventory you currently have? There’s no sense in spending money developing a website or marketing products to drive demand if you’re in this situation. Your store or website is only as trustworthy as the supply of product you can provide it.

Paper records are unreliable. Commit to keeping records accessible for your team in your computer systems.

Problems with Paper 

Next, let's talk about paper. The best warehouses across North America avoid keeping paper records at all cost. Not only is paper-record keeping error-prone, but it also creates unnecessary delays and confidentiality risks. Here's a list of a few risks caused by using paper to keep track of things:

1. Firstly, It’s easy to write a number down wrong. Whether you write the numbers out of sequence or you actually write down incorrect numbers altogether, mistakes happen to us all.
2. Secondly, it’s easy to misread a number. Do your 1’s look like 7’s? Even if you can tell the difference, can your coworkers?
3. Thirdly, it’s easy to lose or damage a piece of paper in a busy warehouse. Spill a cup of coffee and there goes your records!

The Heart of the Problem 

The bottom line is that inefficiencies across warehouses result in inaccurate inventory records. Most WMS providers (including ourselves) report a 1-1 ½ year return on investment on doing away with paper records alone. The cost to add wireless internet and bar-code scanners in a warehouse is also extremely affordable given the benefits provided. The real challenge is to find time to implement these upgrades.  

So now that we’ve laid out common pitfalls warehouses fall into, let’s move on to examine four warehouse best practices. The first step in upgrading your warehouse is to implement wireless technology and bar-coding. 

The Zebra TC70X is a great mobile computer to use in wireless warehouses. Zebra.

A Wireless Warehouse 

Best practice for large warehouses (over 50,000 square ft) is to use wireless warehouse transaction processing. That said, of the 800,000+ warehouses in North America, only about 30% are actually using wireless warehouse transaction processing.

Regardless of what size the warehouse is, bar-coding and a wireless computer system is a must for warehouses (even if it is used in conjunction with paper reports). These systems should reflect not only what’s physically inside the warehouse, but also any materials in the yard, at 3rd party warehouses, in transit, and product on customer’s shelves.

Keeping the lines of communication open with supply chain partners is critical.

Data Sharing with Supply Chain Partners 

Best in class warehouses frequently share data with their supply chain partners. It’s an important first step to achieve inventory accuracy inside the 4 walls of your warehouse first. Next, you should expand your use of the systems you’ve created and start sharing data with your supply chain partners. 

Every time materials are transferred, used in production, or shipped, it should be reflected in your ERP.

Inventory Counts

Successful warehouses also conduct inventory counts a minimum of every month (if you have 12 turns a year). Warehouses that have more turns conduct more inventory counts. Requirements to complete an inventory count are locations, bar-codes on locations and parts, and a scanner (you could even use your smartphone for this in a pinch). Scan the file, download it to a CSV/Excel spreadsheet and reconcile it in your system (with the help of your accountants if needed).

Inventory Moving 

Imagine you’re a librarian in a library with no system for categorizing or organizing books. It would be a nightmare to try to find a particular book! And yet, many people run their warehouses like that. If your product is “somewhere” in your warehouse, but only a certain person can locate it, then you’re reliant on their memory (and them being around when you need them). The best practice for moving inventory is to conduct an inventory transfer and back this up with periodic inventory counts.

Clear and consistent labelling of inventory leads to an organized warehouse like this one at Paradigm Electronics Inc.

Labeling

Every single inbound item needs to have a scannable bar-code affixed to it. Labelling is extremely affordable. That said, it does require you to rethink your systems and processes (to include things like relabelling items originally containing a label from the supplier). Best practice is to label every item in your inventory with a bar-coded part number that is compatible with your existing schema for part numbers.

Incentives and a Reward System

Incentivising accurate record keeping is a cost-friendly way BiC warehouses use to motivate their workers. For example, a reward system could include a pizza lunch, tickets to an event, or recognition. Using an incentives system is an effective way to reinforce the new system you’re implementing too. Considering that a 5% improvement in inventory accuracy on stock of $200,000 is $10,000, you’ll be saving that amount in what would have otherwise been a write-off.

It's not just hi tech facilities that benefit from systems upgrades. Barcoding technology is a game changer for small and medium sized warehouses too.

Conclusion

In conclusion, common problems face all warehouses and lead to inaccurate inventory records. To keep up with warehouse best practices, start by implementing a wireless bar-coding system in your warehouse. Once you’ve done that, make sure you’re regularly conducting inventory counts, inventory transfers, labeling, and reinforce it with an incentives system.

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Daily Cycle Counts as Risk Management for Your Warehouse

Personal fitness requires a balanced diet, getting enough sleep, and regular exercise. The health of your warehouse isn’t much different. Maintaining order and high performance at your warehouse requires that you perform your own set of daily and weekly habits including labeling and receiving, putaway, cycle counts, picking for production, and of course shipping.

In a perfect world, cycle counts would be obsolete because no inventory would be misplaced or lost. But we don’t live in a perfect world so we have to make plans that include things like risk management. We anticipate risks when we buy insurance to protect our cars and homes. Daily cycle counts function as insurance and risk management for your warehouse.

So let’s break down three approaches to consider when performing a daily cycle count.

Performing cycle counts across all pick locations a minimum of once per month is a must.

Cycle Counts by Pick Location

A generalized approach is to commit to counting every pick location a minimum of once per month. Locations with the highest through-put will logically require more regular counting.

Tip: While this may sound like common sense, you must stop all picking and replenishing activities while counting a picking location. It’s faster to pause and do it once, rather than having to backtrack and recount an area. 

ABC methodology prioritizes frequency of cycle according to revenue generated by product.

Pick By ABC Categories 

With ABC methodology, your inventory is split up into three groups. “Group A” is comprised of products that make up 80% of your sales (which are those that will be most frequently counted). “Group B” includes products comprising the next 16% of your sales and, you guessed it, “Group C” covers the final 4% of products. You can also apply the 80/20 rule with this methodology (20% of your products result in 80% of your sales). Using the ABC method, the frequency of inventory turns for your products determines the frequency of cycle counts.

No matter which approach you choose for cycle counts, it's important that you prioritize performing them regularly and consistently.  Paradigm Electronics Inc.

Values-Based Approach to Cycle Counts

Another approach to cycle counts focuses on the raw materials: materials that are most valuable or those with the highest volume correspond to those counted most frequently. A great hybrid approach is to blend the two: most frequently count items that are most valuable and most frequently used. That said, if you don’t regularly count low-value items, your production process may be affected by unexpected shortages of these materials.

Scheduling daily cycle counts helps ensure that the area you're counting will be free of picking and replenishment activities. 

Best Practice #1: Stick to a Strict Schedule

Regardless of which approach to cycle counting you choose, best practice requires that you schedule and consistently follow through with your daily cycle counts. Avoid scheduling counts during hours with high pick and replenishment rates.

Best Practice #2: Trace

Best practice for performing cycle counts also includes detailing trace information including expiry dates and lot numbers. Oftentimes cycle counts are followed by processing of expired or near expired inventory.

Car manufacturers are meticulous about keeping records of trace information throughout their whole production process.

Conclusion

When performed regularly, daily cycle counts begin to function as an insurance policy for your warehouse, protecting you from unforeseen problems like material shortages. Not only that, but cycle counts will also empower you to achieve high rates of inventory accuracy.

To learn more about running a high performing warehouse, check out this article on "4 Evidence Based Best Practices for Warehouses."

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Guide to Effective Raw Material Management

Countless issues can derail raw material management strategies. Warehouse managers need to be prudent to avoid the complex issues common in the industry. The intention of this article is to equip you with strategies to manage your raw material handling and save you the headache of encountering these problems.

Warehouse Shark Inventory Count Dashboard displaying in progress and completed counts. Learn more here.

Inventory Cycle Counts

It’s best practice to conduct either monthly or yearly inventory cycle counts depending on the product inventory value (calculated in relation to gross annual sales). A common approach to deciding on the frequency of cycle counts is using an ABC analysis of your inventory. Conducting efficient cycle counts is the most common area of growth reported by warehouses. Read this page if you’re interested in learning more about Warehouse Shark handles cycle counts.

Trace 

Generally speaking, raw materials requiring trace are prelabelled with relevant trace information including serial number, lot number, and expiry dates. This information is useful but often it isn't bar-coded. You'll need to include this information in your bar-code to properly implement FIFO stock rotation. This is also required for inventory counting and pick confirmation.

How many hours a day do you or your employees spend picking and issuing items? Systematizing these processes will streamline your entire warehouse operation.

Picking and Issuing 

Since we’re on the topic of pick confirmation, let’s talk about picking and issuing. It's imperative to keep your labeling and putaway processes consistent to maintain the accuracy of your inventory numbers. Begin picking using the FIFO approach and ensure that the process is captured in real-time as the materials are consumed.

Issue Returns 

Next, we’ll discuss issue returns. The production process often leaves leftover materials that need to be returned for storage. Implementing issue returns requires using a dimensional component in conjunction with raw material tracking information. An example of this is using linear feet track the raw material returned (i.e. 10 feet of a 30-foot pipe was returned for storage).

Physically separating quarantined materials saves a the headache when dealing with product recalls. 

Quarantine & Holds 

There are many different reasons you might use the “Hold” function to freeze your inventory (for example, product recall). A better way to go about this is to create a permanent location in your warehouse as a quarantine. Quarantine is where you physically separate the materials or products in question. Having received and putaway goods, you should ensure you have the ability to put lot numbers and entire locations on hold as needed. 

Relabeling 

Relabeling concerns customizing the bar-code information for your warehouse needs. When you receive goods, be ready to re-label them according to the part # and trace #. Your WMS should support printing of labels while receiving (this will save you a lot of time!). You can read more about relabeling in this article on 5 Best Practices For Labeling In Your Warehouse. 

Repackage material and create new labels for the smaller packaged quantities. 

Repackaging 

Bulk goods will arrive at your warehouse in several forms, often in gaylords or drums. Warehouses generally don't process the materials using the same quantity as they ordered so repackaging is required. This process includes taking bulk materials and repackaging them into smaller, usable quantities. 

Stock Rotation 

Stock rotation is impossible if you don't use strict labeling conventions. Maintaining FIFO picking and accurate inventory records are also part of this discussion. It's imperative to have an inventory management system capable of identifying the correct choice of reserve stock to complete replenishment of pick faces.  

Equip yourself with the best strategies for raw material management and your warehouse will thank you! Paradigm Electronics In.

Conclusion

Consider this guide a list of ‘low-hanging fruit’ strategies for implementation at your warehouse. If you find yourself overwhelmed with raw material management, don't hesitate to reach out to us at info@portable-intelligence.com.

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5 Best Practices For Warehouse Labeling

Good news, if you’re wondering how to label for success in your warehouse’s inbound process, you’re in the right place! This post is all about warehouse labeling for raw materials and goods for production/resale in the most efficient way possible.

Understanding the components of a label will help you make the most of your warehouse’s labeling system.

Components of a label

Okay, let's review the components of a label. Labels must have at least one of the following:

  1. Part number
  2. PO (or purchase number)
  3. Sales Order
  4. Production Date
  5. Lot # and/or serial #
  6. Quantity
  7. Unit of measurement (for example: each, pieces, lb, kg)

    Okay, so once you’ve received products and labels at your warehouse, what’s next?

Which label should you use, and when? Alias tables help answer that question.

Alias tables and support for the supplier’s part number

Your warehouse labeling system is going to need to include an alias table which functions to cross-reference the manufacturer’s part number to yours. In some scenarios, you can request that the supplier put your part number on the label, though this isn’t typical (large businesses like Walmart implement this). In the case that you use the same part number as the schema manufacturer, you can ignore this.

Using barcodes that are difficult to scan will create nothing but trouble for your warehousing team. 

Create legible barcodes only

Using a barcode font that isn’t readable by your barcoding equipment will cause you problems immediately. There are two particularly important points here:

1. The symbology of the barcode.
2. The width of the black and white lines (as measured in 1000ths of inches or millimeters).


Tip: A good rule of thumb is that a 10-15mil* barcode = 1-foot scanning distance.
We’ve experienced suppliers sending labels with part # half that size and it causes lots of scanning issues.


In terms of symbology, be aware that Europe and Japan use different fonts (EAN-13) than the
UPC-A standard in North America.

Parsing your barcode keeps your labels clear and concise.

Parse the barcode

Parsing a barcode includes separating and analyzing the various parts of a barcode. Many traditional barcodes are simply one long uninterrupted list of numbers. An example of this is a 42-character UCC label. The numbers in these barcodes correspond to all sorts of product details like:

1. Part #
2. Weight
3. Date of manufacture
4. Expiry date

Manufacturers often don’t use all the data included in a barcode, so to simplify things, you should only include the data you really need in a barcode.

Overwhelmed with relabeling? Ensure you cover up the old label with the new one to avoid confusion.

Re-labeling

Maybe this sounds familiar: You receive an important shipment from a manufacturer. You need to be able to trace the material through all the stages of production – so you need to create new labels and relabel the goods.

If you require traceability or QA tests this is going to be a concern for you. Here are a few things that may save you some headaches:

1. Portable printers will reduce travel time
2. Using ASN to print the labels beforehand will save you time
3. Ensure your WMS supports printing labels while receiving (this is important!)
4. Print the minimum information required because there are already lots of details included on the supplier’s label.
5. Lastly, if you aren’t going to use the supplier’s label, then cover (or remove) it. You don’t want to confuse your team, so ensure that it is fully covered with your new label.

A team with a diverse skill set is best suited to implement barcoding in your warehouse.

Create a label’s action committee

Often the responsibility of figuring out barcoding requirements falls to a project manager. The problem with this is that they generally don’t have the expertise to understand the full extent to which the labels can be used. To get the most bang for your buck with barcodes, build a team with people from various departments to tackle labeling in your warehouse. The best practice is to build a team comprised of at least one individual from each of the following departments:

1. IT
2. Operations
3. Purchasing
4. Sales

Inbound materials being received and processed.

Conclusion

Your inbound process is extremely important as it is where everything begins in your warehouse. Labeling efficiently ensures that your warehouse operations start off on the right foot. Keep your inbound process consistent with these five steps, and your team is sure to benefit!

For more reading on best practices for warehouses, check out this "Guide to Effective Raw Material Management.

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5 Actionable Customer Service Tips For Your Warehouse

Are your customer service representatives (CSRs) aware of your warehouse operations? Do they understand how the warehouse affects the rest of the business? Chances are, they’ve got some learning to do. These customer service tips for your warehouse are an excellent place to begin!

Over 25 years in the warehousing business I’ve observed the gap between CSRs and warehouse teams again and again. The gap causes misunderstandings and often frustrated customers. Closing that gap and getting the CSR and warehouse teams to work together more closely brings meaningful benefits to yourself and your customer. This article gives an overview of how to address this problem and 5 actionable tips you can implement to upgrade your customer service to the next level.

Knowing how much inventory you have on hand is a must. Paradigm Electronics Inc.

Send weekly inventory reports

Problem: Communication gap between CSR and warehouse employees leads to frustrated customers.

Symptom: Customers saying things like, “Why don’t you have that in stock?!”

We’ve all been there: an exasperated customer is giving your customer service representative an earful because they tried to order something on your website (it said it was available) but the actual product has been EOL (end-of-life) for over 90 days. So now the CSRs must deal with the aggravated customer and offer a better solution.

Situations like these could be avoided if warehouse workers would send weekly (or daily in some cases) inventory reports to the CSRs. Not only does this help the CSRs prevent customer service nightmares, but it also functions to open up the lines of communication between the warehouse and the CSRs. 

Customer service shouldn’t end at the call center, it should continue to the warehouse too.

Give your CSR employees a voice in the warehouse

Problem: CSRs have insights to share about feedback (quality or defects, for example) from customers but have no opportunity to share it.

Symptom:
Spike in a particular product being returned due to defects.

The trusted adage goes, “You can't understand someone until you've walked a mile in their shoes.” This is true of CSR and warehouse employees too. If possible, invite the CSR employees for a walk through one of your warehouses. End the tour with a general discussion and Q&A time.

The CSRs get daily feedback from customers and can share valuable insights to your warehouse managers. CSRs could share information about a product that has been returned often due to defect or damage. That way, the warehouse manager could address the problem and save everyone a lot of trouble.

Warehouse team hard at work. Paradigm Electronics Inc.

Cross-train your warehouse team

Problem: Warehouse staff that are unengaged with the utility of the products manufactured and company vision.

Symptom: High warehouse staff turnover rates.

It’s an obvious step to train your CSRs when a new product is launched. That said, your warehouse staff are often not included in any of this product training. Let’s change that! Start by teaching the warehouse staff how the product works and what value it brings to customers. If the warehouse staff are excited about the company vision and the products being manufactured, you’ll experience a surge in efficiency and employee engagement. ​

Understanding the shipping game is key to satisfying your customer’s needs.

Become logistics experts

Problem: CSRs playing hot potato with customer shipping order issues.

Symptom: Frustrated customers calling many times about their shipment.

How often have you heard, “Please call UPS if you have any questions about your shipment?” That phrase does not inspire customer delight. Upgrading your CSRs knowledge of shipping processes translates into customers that feel taken care of.


Start by training your CSRs on the ins and outs of traces, brokerage fees, and international surcharges. Next, form a relationship with your courier (a good way to do this is to sign up for their preferred services). Empower each other to serve the customer as best as possible.

Bridging the gap between warehouse and customer service team is a powerful step towards building teamwork.

Teamwork for the win

Problem: Warehouse and CSR staff that feel like they are on opposite teams rather than the same one.

Symptom: “Us” vs “them” talk.

Friendly competition aside, teamwork creates synergy. You want your CSR and warehouse staff to feel like they’re pulling in the same direction. For example, this becomes critical during product launches and holidays. During these periods your staff needs to know they have each other’s backs. It will give you peace of mind if you know that customers are receiving friendly support and their shipments are going out on time. Consider ways you can foster understanding between your CSRs and warehouse staff and do everything you can to keep the lines of communication open.


The importance of this point is difficult to overstate. Once your two teams start integrating, you’ll notice an overall improvement in team culture.

Conclusion

If you’ve experienced any of the symptoms listed in this article, believe me, it gets better! Over your next quarter decide to implement what you've read today about customer service tips for your warehouse. This will improve your customer’s experience and will boost your organizational health.

To dig deeper and learn about how best in class warehouses run, read this article on "4 Evidence Based Best Practices Best In Class Warehouses Follow."