photo of an unorganised warehouse

12 Practical Ways To Improve Warehouse Efficiency & Productivity

There’s no shortage of blogs and guides out there on improving your warehouse’s efficiency and productivity. It’s easy to see why. For anyone who runs a warehouse or oversees operations management, those two factors are their job. 

The more efficient a warehouse is, the more productive it is, and the more it can get done in the working day. Business moves faster, revenues are higher, costs are spread across more profitable activity and everyone is happy.

Considering how important a topic this is then, we thought our own warehouse productivity ideas should be both focused and actionable. It is, after all, what we help businesses to do and we’ve picked up more and more ways of doing just that over the years. 

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It’s all very well making blanket statements that will improve things like ‘make use of all of the available space’ and ‘track your products’, but they’re not practical actions that can make a difference immediately. 

To do just that we also think it’s useful when looking at how your warehouse runs to break it down into a series of contributing factors. You’ll see below that that means you end up addressing broad elements, such as the staff in your warehouse, with specific actions.

Here then are our best warehouse efficiency tips and productivity ideas, from our experience working with warehouse and operations managers over the years.

The staff factor – four things to try

1. Consider an incentive program

When it comes to running a warehouse efficiently your staff are clearly going to be one of the key factors to consider. If you do not currently incentivise your warehouse staff based on performance then this is one of the easiest changes to implement. 

The downside is of course that it will increase your cost base. Having said that, the whole purpose of an incentive program is to make the business more money by improving performance, which in turn theoretically means that you can afford to pay your staff more. 

There are multiple ways to handle incentivisation – far too many to cover here – but whatever you settle on, try to make it visual. If it’s monthly then perhaps a chart in the warehouse office with a target line and an actual line would work; you want to give a constant reminder of how your workforce can get to the reward at the end. 

It is also normally a good idea to highlight at inception that the target will be reviewed regularly. If your workforce are constantly exceeding what you set (which is common when incentive schemes are introduced) then you’re going to want to up that figure

2. Implement a regular feedback mechanism

Your shopfloor workforce are likely to be the first people to spot any problems that are impacting efficiency and productivity. Whether they escalate the problem or not depends on how connected they feel to the warehouse and operations management functions. 

If there is no mechanism in place for sharing feedback then it’s less likely that you’ll ever hear about whatever it is that’s holding them back. Sometimes all this needs is the warehouse manager to foster team communication so that he hears about the broken shelf in aisle 12 that means it takes twice as long to load stock. 

Other times you’ll need something more formal like a weekly sit-down or an ideas box-style solution. Whatever the system you put in place you will need direct feedback from the warehouse floor to understand how to improve your warehouse efficiency.

3. Put in place a structure for training

The general step on this topic to improve things is to ‘make sure your staff are trained’. What can work well here is to put in place structure and to make sure that training feels like something that is valued and worthwhile. Consider putting in place a formal certifications structure. Warehouse workers could receive certifications for things like ‘WMS usage’, ‘Picking route understanding’ and more. 

Certifications can expire, so your workers have to renew their training every 24 months. They can also be mandatory or optional and come with rewards. Mandatory certifications allow workers to work in your warehouse whilst perhaps optional ones increase the end of year bonus depending on how many are held.

4. Consistently add ‘little extras’

There is a soft skills element to improving efficiency and productivity. A happy workforce truly is a more productive workforce and whilst you may have created a fantastic static environment, sometimes it is the little added extras that really make warehouse work a pleasure and foster that sense of team. 

Takeout pizzas for lunch paid for by the company on odd Fridays, an early finish every so often, revealing that everyone can take an extra day off in December at the start of the month or replacing the old warehouse radio with a new sound system. It does not need to be big things, but they do need to be seen as a positive for the workforce. Add them in every so often and watch morale and performance improve.

The stock-picking factor – two things to try

5. Review your routes regularly

It’s a fairly common thing, particularly amongst businesses who only rarely sell new product lines, that picking routes are set – either by computer or manually – and then never looked at again. 

This could be because you have the best picking routes in the world but, more likely, it’s because that’s just how the system operates. 

Anything that becomes too static is dangerous. It means picking routes fall into the ‘unknown, unknown’ category of process; you’ll never know if they could be better because you’ve never known anything different. 

You should schedule a review of picking routes regularly, led by warehouse management, with operations involved as well. The point of the review is to test alternative routes and see if the outcomes are expected to be better.

6. Happy that your routes are perfect? Start task interweaving.

Depending on your WMS’s sophistication and your warehouse’s maturity, this may be something you have already implemented. 

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The idea is that workers pick stock based on what the most efficient route is overall, rather than picking stock based on what the most efficient route is for the order in their hand. You are essentially picking a number of orders at once; instead of one at a time there might be five orders picked, with the route assigned based on the whole pick. 

The time savings here can be significant, but it is a sophisticated way of doing things that needs both a sophisticated system and a trained and engaged workforce.

The stock management factor – one thing to try

7. How sophisticated is your stock management? Consider which level you’re at and try to move up a level.

Consider the below levels of operation that your stock management could be at right now and give yourself a grade from 1-5.

    1. We consistently (weekly) hold so much stock that it exceeds the number of pick or storage locations we have or we constantly (weekly) run out of stock on key items, delaying despatch times.
    2. We regularly (bi-weekly) hold so much stock that it exceeds the number of pick or storage locations we have or we regularly (bi-weekly) run out of stock on key items, delaying despatch times.
    3. Our stock levels feel about right most of the time, but it’s difficult to tell for certain.
    4. Our stock levels are right most of the time and we monitor the numbers closely. Stock is reordered at the right time and the process works well for us.
    5. We operate a completely or almost completely lean, automated system. Stock is replenished just before it runs out and, as such, only problems with suppliers beyond our control mean that we run out of stock or carry too much stock.

Unless you gave yourself a five then there are things to improve here, with each level showing where you could get to. 

The higher the grade you have now the harder it is to move to the next grade. Grade 1, for example, can be fixed by implementing a better system of spreadsheets and stock counting, whilst getting to grade 5 is going to require some advanced system implementation. 

Consider how much damage your current grade is doing to your efficiency and productivity and whether now is the right time to put the work in to move up.

The measurement factor – two things to try

8. Create a simple plan: what should you measure, what leeway is there and what is the agreed action plan if you exceed that leeway?

You have to measure things to know how you are operating currently and if you can improve anything. The above grading system is a simple way of doing this for your overall operation, but here we’re more than likely going to be considering elements such as pick time, orders picked per day and stock levels. 

For each of these, set a desired target and an acceptable level of slippage. If you exceed the slippage amount then you also need to have actions in place that will occur if and when that happens. This will help with your speed of response to problems. If pick time exceeds a certain amount, for example, then it could trigger a pick route review or a retraining period.

9. Consider gamification

There is a famous business story of a steel factory with two shifts, working to make steel girders. When the night shift came on the manager challenged them to produce 11 girders rather than the normal 10. “Those guys that work the day shift could never do that, but you guys can.” The team produced 11 girders and when the shifts changed over they boasted to their colleagues about their achievement. 

The next day, when the night shift came back in, they found the day shift had scraped a single number out in large figures on the floor of the workspace. “12”. The night shift set to work and on their way out they erased the figure on the floor and replaced it with a 13.

This, in modern day parlance, is gamification; the turning of any task into a measured game and it can work wonders, motivating teams to continually push themselves to get to the next ‘level’. 

Unfortunately, as with any game, there are likely to be winners and losers and you will have to carefully consider the consequences of both positions before putting anything in place. Get it right though and you could end up, not with many steel girders, but with a motivated and engaged workforce whose measure of success is clear and exceeded often.

The physical space factor – one thing to try

10. Set an annual layout review date

This is another relatively easy practical step which addresses the overall topic of your space;

Warehouse spaces tend to only be reorganised when there is a major event; a significant change in the size and shape of stock held, the failure of fixtures and fittings or a location move of the warehouse, for example. If none of those things happen then you can end up with a long-term warehouse layout that’s never reviewed to see if it works for you. 

It should be an annual exercise to examine your layout and test alternatives. If an alternative is found to work then you’ll need to assess any saving or boost it delivers to you versus the upheaval and cost that changing will generate.

The technology factor – one thing to try

11. Use a ‘what am I missing out on?’ model

If you don’t review the technology that’s available to you often then you are bound to end up with a legacy system which misses many of the advantages of modern offerings. 

On the other side of the argument, because technology changes so rapidly, there will probably always be some new feature or function of the latest hardware and software that you don’t have. 

Assessing what it actually is that you’re missing out on regularly is a good way of getting to a point where you’ll know if changing anything is worthwhile. 

If the new function of the software is a graphical interface update then it’s probably not worth changing. If, however, your current system does not have the ability to automatically generate pick routes, and having this would save you several days a month of manual work, then you can start to build a solid case to get hold of the upgrade or change systems

You’ll only know if you assess the technology marketplace regularly, so set aside time on at least a six-monthly cycle to look at what’s out there and see what you’re missing out on.

And finally… 

12. Map and visualise your process

All of the above practical changes will move you towards having a process that really works for you and your warehouse. Through repeatedly doing great processes you will incrementally improve your efficiency and productivity. It can really help teams to see this process visually from beginning to end.

Even if they are only involved for one relatively small stage, understanding the whole can make them better at their one responsibility. Map out your process, have it produced in an attractive visual way and display it somewhere prominently, for all to see. If you’ve worked hard on it then why shouldn’t it take pride of place on the wall!

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