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March 7, 2006 Measurement Tools for Getting Orders Out Faster The following diagrams show the Business order cycle versus the operational focus of an order. In order to reduce order cycle times and therefore save labor dollars we need to focus on the operational aspect of an order. Every dollar saved operationally goes right to the bottom line.
In order to affect these savings we need data. This is a two step process. 1. Use Measurement tools. 2. Analyze Inventory and order dynamics. Measuring without automated tools Is difficult but you need to measure some key metrics, and then track them historically to make sure you are improving, some of those measurements are: · % On Time Shipments · % Line and Order Fill Rate · No. Orders Shipped/Day · No. Lines Shipped/Day · Lines Picked/Man Hour · Lines Processed/Man Hour · Dollar Value Shipped/Day Pick a couple of these set your benchmark and strive to lower it. Don’t get it too complicated. Measure and compare, Analyzing involves understanding the business demands on the warehouse to effect productivity, 3 Analysis areas are required for productivity gains. · Order Profiling: Analysis of daily order and associated line activity for a twelve-month period. This will capture seasonal/cyclical trends as well as unusual spikes. Simply using average lines per order data will mask key order trends. · SKU Velocity: This analysis should divide SKU’s into categories “A” through “E”, based on hit-rate activity, which measures the number of times a SKU appears on an order. “A” SKUs should represent the fastest moving category, while “D” SKUs contain the slowest movement group. “E” SKUs are items with on-hand inventory but no sales activity for the time period being analyzed. During this step, tabulate the lines/units processed by category, to measure the percent of volume each group represents. · Cross Profiling: Completing the two analyses just described helps in understanding SKU and order dynamics. However, it is also important to do a cross profile analysis, where the correlation between the SKU velocity categories and the percent of completed orders are measured. For example, for a catalog type operation, the analysis could indicate that “A” SKUs represent only approximately 2% of the SKUs but 40% of the lines shipped. Further analysis may also indicate that upwards of 70% of the total orders processed can be completed in the “A” SKU class. These types of findings can then be used to determine if current operations are being optimized. Given the relationship just described, the concept of a “Warehouse Within A Warehouse” (WWAW) is applicable, in which mechanization or automation or both is used to create an area/zone within the warehouse where this SKU group is stored, picked, and delivered to the shipping area. Orders that have SKUs in multiple categories can be started in the WWAW, then routed or consolidated or both with picks from other areas in the warehouse. Although this sounds very complex it really isn’t. Start small and focus on those high velocity SKU’s and keep measuring your gains in the long term will be dramatic. SET GOALS AND MEASURE AGAINST TO INCREASE PROFITS To Unsubscribe
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