Order picking, after the passive costs of holding stock, is usually the highest cost centre for most warehouses. How it is approached will decide the leaders and the laggards in a fast-changing supply chain now increasingly governed by online orders and home delivery. One approach, however, even in recessionary times, should not be to cut costs through labour reductions unless the service levels remain unchanged or improved, and that usually means investing in more efficient order picking techniques. Even the biggest of global companies, however, can fall into that trap, with serious potential consequences for permanent sales losses.
A case in point reportedly is Walmart. Following staff cuts since the recession the company is having trouble replenishing stocks on shop shelves from the back end stock rooms so the shelves go unfilled. Over the last five years the company raised its store outlets by 455, or 13%, but during the same period its total US workforce fell 20,000, or 1.4%. The company’s chief executive officer admitted Walmart was “getting worse” at stocking shelves, and that such self-inflicted wounds were the company’s biggest risk.
The parroted response from retailers when told they must invest in people is that ‘It’s just too expensive,’ but ignoring such advice could lead to a vicious circle where too few workers lead to poor shop sales caused by incensed shoppers going elsewhere owing to stock-outs. Such feet-voting also applies to online shopping. Woe betide e-tailers who fail to deliver when promised or deliver the wrong items. This shows how crucial accurate, timely order picking is to keep ahead of the game.
Fortunately, there are various approaches to investment in people that need not always involve heavy outlays, and some of the best advisers are the big MHE suppliers like Dematic, Jungheinrich, Toyota, Linde and Briggs, all of whom use software tools to help prospective customers examine all the what-if scenarios.
A good example of how a modest investment can dramatically impact order picking costs and productivity is the Dutch fulfilment firm, TopPak, which doubled its order picking productivity and slashed its picking error rate by 90% after installing a pick-to-light system from Pcdata. The system is only 20 mt long and each of the five pickers, who work as a team across seven zones, passes his box of picked items to the operator in the next zone. This sequential relay process keeps picking distances for each operator to a minimum, so hours are spent picking not walking.
Excessive walking can be a big issue in order picking warehouses owing to its consequences for staff health and retention. Any pre-investment exercise, therefore, should include data on how much walking is involved and also pulling loaded roll containers or pallet trucks weighing up to 500 kg. Existing racking may also need examination as this could be a source of wasted space and more time spent unproductively walking around.
When veterinary products supplier, NVS, for example, looked at the bulk store in its NDC with the help of Jungheinrich to improve order picking efficiency the room for improvement was eye opening. Results from an analysis showed that during a typical shift an order picker in the bulk store could walk eight kilometres and might have to pull loads weighing up to 500 kg. By re-engineering its existing racking following a stock profiling exercise and introducing high and low level order picking trucks, the company has created an extra 200 pallet spaces and raised picking rates by 33%. The order picking trucks have also led to a sharp fall in absenteeism.
This is a good example of the right approach to order picking where high levels of walking are involved. Too much walking can lead to time off through blistered feet and the easy dismissal of workers because they have been hired from an agency – an odious approach from the wrong end and, alas, a lesson unlearned by some of Britain’s biggest retailers.