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April 18, 2006 Save $$ by Finding Your Golden Zone One of the most significant benefits of ABC is an improved means of identifying high overhead costs per unit and finding ways to reduce the costs as well as the ability to track the costs of activities and work processes. When it comes to increasing picking productivity ABC can help a warehouse manager discover small low cost improvements that bring in big results. Dividing up your warehouse into individual zones can amplify picking productivity by reducing travel time, but it’s not as easy as using chalk to draw lines on the ground and then calling each section a zone. Lots of planning and inventory analysis are needed to do this correctly. Optimizing warehouse slotting can be extremely time consuming and many warehouses are faced with physical restrictions that limit the quantity of forward pick locations. This is why placing the fastest moving items in the most visible and easily reached position, more commonly referred to as The Golden Zone, is so important.
Upgrading product organizing techniques can lead to a greater impact on cutting down labor costs than investing in $$ expensive technology ever could. Assigning the right locations within the picking area shrinks the searching, walking, and picking that pickers do on a daily basis. Another benefit to improving ergonomics is enhanced employee safety and a reduced number of damages to items experienced during picking and shipping. Every warehouse professional knows that picking can be quite a lengthy process; therefore simply by updating how you slot your products you can affect the four most time-consuming aspects – walking, picking, searching, and handling stock outs. See the chart below:
As you can see from the chart the “cost drivers” in picking are Walking and Searching. Just focusing on those drivers can save you a bundle. The most effective and common gauge for determining the priority of location assignments in a warehouse is Order-line activity. This refers to the number of trips that a picker makes to a location to pick an item. There are two ABC costing calculations to consider here one being the Cubic Velocity Calculation and the second being the Line Activity Calculation. The Cubic Velocity Calculation will not be discussed in this week’s newsletter. The line-activity calculation, used for layout planning and the placement of products within the warehouse, is a formula that determines the number of times a product was visited or ordered. By counting the number of customer orders for an individual product during a historical data period, you will generally find that 20% of the products account for the top 80% of the order-line activity. These products are categorized as “A” products or “fast movers” and are the most important items to consider. While the A classification is the most vital classification, it is also important to understand the mix of · A (fast movers) · B (medium movers) · C (slow movers) · And D (slowest movers or dogs) classifications on orders. The slotting and placement of all of your products will impact the total overall productivity of each picking area. Also consider arranging products by family group or by customer and order commonality. When the characteristic of the products determines the equipment type and the picking method used, Family group slotting is most commonly seen. Items that fall within any such category are better slotted together to accommodate the material handling equipment. Customer slotting is a method often used when specific customers are more dominant than others. This method is suitable if, for example, you supply large restaurants regularly. For example, if “Lorenzo’s Italian Eatery” is one of your larger clients, you might set up a zone for them even if the products are duplicated in another zone. These methods are both tied together with the idea of slotting by product order commonality. Although this technique is often overlooked it is still an important method to consider. Most simply put, if certain items are continuously ordered together, then it is a good strategy to store them together in the warehouse. No matter what way you go about it the definitive objective of product slotting doesn’t change: Organize products within the warehouse to reduce effort during picking. Improved ergonomics reduces effort and enhances accuracy. And the lesser amount of effort a picker has to make, the greater his/her productivity will be. Organize Your “Golden Zone” and Watch Your Productivity Boom! To Unsubscribe
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