Arch-fiends, arch-foes of storage efficiency

What are some storeroom and warehouse design strategies and tactics to avoid? Sources from the unofficial “Supply Chain Storage Efficiency Squad” point out the following perilous processes and products.

“Courageous” Christopher Huber, Manager, Supply Chain Consulting, Cardinal Health

• One common mistake in redesign projects is to vertically stack inventory, which causes potential ergonomic challenges. In addition, this can lead to challenges maintaining current inventory levels and conducting routine maintenance to the stocking locations, such as updating labels and adjusting PAR levels.
• Another common mistake when redesigning supply room layouts is not incorporating current workflows, such as restocking and pick paths. During the redesign of physical space, equal effort should be placed in understanding current processes and how the design will impact these processes. Space-saver racks are one example of this; they certainly optimize space, but inhibit the ability of the staff to put away and pick products.

• One tactic to avoid is to only take today’s needs into account, and fail to project the amount of space that will be needed in the future. This will lead to a newly built or renovated SPD being inadequate as soon as it’s completed, and another renovation will be needed sooner rather than later.
• Another is to not make sure that all key departmental personnel are involved in the project from the start so that everyone is committed to the project and there are no unforeseen surprises.
• Yet another is to not find a good equipment vendor that you can rely on, and that can be an invaluable resource for training and recommendations. The best vendor will be a true partner every step of the way, even for the life of the equipment, and won’t abandon you after the equipment is installed.

• Try to avoid moving everything to the lowest unit of measure. True PAR optimization takes into consideration a reduction in touches. There are many low-cost commodity items that it is more efficient to order and pull weekly versus daily.

• At the point of use you will want to avoid focusing on increasing your number of SKUs in the location. Instead focus on providing the proper quantity of your highest velocity products to coincide with your stocking schedule. To gain support for this model you will want to ensure you have efficient ways for clinicians to request and receive products that may not be at the POU.
• At an off-site location avoid filling space for the sake of filling a predetermined space. Utilize volumetric data to determine true space requirements. This will allow for room for growth in the long term and drive productivity by minimizing unnecessary travel time in all warehouse activities.

“Maverick” Mike Maguire, Senior Vice President and Chief Supply Chain Officer, PartsSource

• Try not to overdesign. Instead, keep the layout simple. We have seen numerous corporate logistics centers with all generally using the same layout. Simple works.

• Avoid falling into the trap of allowing holistic unplanned growth within a multi-use area to continue. Question everything! Rationalize what is to be stored and what activities take place in an area before considering them as a single planning group. Different activities and products will have different growth and usage rates as well as life cycles. Stay close to the business product managers you support to understand the strategies involved in the businesses you touch. Engage those product managers during every planning cycle.
• Avoid assumptive planning. Often we hear of teams that delay an expansion with the declaration of “We will improve our product turns!” without a viable plan for achieving that target. Understand how the team managing that task will accomplish their goal as well as keeping you in tune to their success or lack thereof. Otherwise you will bear the operating pain of someone else’s failure.

• Do not stock visually similar items next to each other. It can cause picking the wrong item!
• Do not make operational concessions in the interest of space maximization. The cost-benefit is not there when you factor in the process cost of making inventory harder to access.
• [Bandage] solutions, like extending into hallways or trying to manage unmonitored secondary storage locations, are costly in the long run.
• Lowering your on-hand stock levels to make space without accurate data and analytics to protect against stockouts is simply not a sustainable solution.

• When designing warehouse space, don’t scrimp on the amount of space allocated to receiving, staging and storage of material handling equipment, totes, housekeeping supplies, etc. For a space to run efficiently, a minimum of 30 percent of floor space should be allocated to these activities. The more cross-docking and courier runs you perform, the more this space is required for an efficient, error-free operation.
• If you have the luxury, don’t design your entire space at once. Leave room to grow into the operation. If possible, start by racking 60 percent of the space for startup, leaving the other space for future design. This allows you to more quickly and easily adapt to any technology, automation or business requirement changes that may present.
• If a hospital is undertaking a larger space like a CSC or an ISC, they should think through potential needs for alternative types of storage space such as flammable, refrigerated, freezer or locked/caged areas. It is important to consider what may be required in five years when building or expanding storage facilities to account for new or changing requirements. For example, planning for a refrigerated or freezer space has unique electrical requirements and an outside wall. It is important to factor these items into the plan now.
• For smaller hospital warehouses, storerooms or even case cart picking areas, review current storage configurations that may be inefficient. Storage areas that have dead ends and one-sided picking are two examples. For maximum efficiency, storerooms or warehouses should have two sided picking with the ability to turn at aisle ends so that a serpentine pick-loop can be created. Then, regardless of size constraints, process flow is efficient. Personnel flow is one-way so aisle widths, while they must be functional, can be minimized.

“Joltin’” John Shook, Vice President, Supply Chain Optimization, AmerisourceBergen Corp.

• Do not underestimate the time required to build databases, test the applications and interfaces between
  systems.
• Ramp-up versus big-bang. Consider a go-live that accounts for a much smaller portion than the initial go-live volume to ensure that product, process and people flow to end-user is proven without issue. This may seem rather unnecessary, especially if you have completed all commissioning and interface testing, however, live environments do not mimic testing and personnel who are performing testing are not necessarily the team members on the front line.
• Do not forget about a robust preventive maintenance program. Ensure you have the right critical spare parts and trained staff to support breakdowns and work daily preventive maintenance tasks.
• Don’t overlook the financials. Automation is great, but make sure you can justify it by taking into account the support and service costs that will impact your profit and loss (P&L) and ability to meet your health system’s return on committed capital (ROCC) hurdle rate.
• If you are considering automation for picking or packing, go to vendor reference sites and speak with users about reliability, issues and any costs that were not expected with the equipment.
• Make the end users a part of the design process.
• Validate the rate of the solution that you are looking to install through simulation or quantitative analysis. Other design variables need to be considered, such as operating clock, truck departure time changes, system downtime and order wave release schedule and order consolidation rules can impact the actual throughput versus the design quoted throughput.
• Understand your historical throughput and inventory build volumes to ensure your storage and picking solutions can accommodate peak demands and future growth.