Warehousing Case Study: Massive Improvement in Operating Efficiency
A manufacturing client in the pharmaceutical sector was about to embark on a major uplift in finished goods output and called on us to help them to work with their logistics service provider to help them to prepare their warehouse facility operationally for the throughput volume increase of approximately 25%.
The warehouse operated offsite by the logistics service provider received finished product straight from production for storage and later despatch to markets around the world. Added complexity derived from the fact that the same facility and warehouse team was used to receive raw materials from suppliers and for selection for just-in-time delivery to the production plant on a daily basis.
Initial thoughts on the part of the manufacturer and the logistics service provider were that an additional overlapped evening shift would need to be introduced in order to cope with the increased throughput thus resulting in increased labour and overhead costs.
We carried out an activity sampling exercise on the warehouse receipt and despatch activities to see what proportion of time was dedicated to what tasks and the how the work was structured and organized in time.
We determined that through some minor changes to the warehouse racking and materials handling methods combined with a change in the sequence in which work was done, how manpower was deployed to tackle the work, and the removable of non-value added tasks such as searching for information and equipment there was potential to increase work throughput considerably without any increase in headcount or working time.
Implementation of the changes, in addition to the physical changes to racking and handling, included the introduction of more proactive frontline supervision to direct the work teams in real time based on a daily target plan, improved information transparency between the production plant and the warehouse to allow forward planning of the working day, a formalised daily planning template, and vision board inside the warehouse to track actual work done versus the target through the working day and the working week.
The changes to equipment and ways of working took 12 to 15 weeks to implement and bed in. Six months after the changes were introduced the facility throughput had increased by more than 30% with respect to the original throughput, improving the efficiency of the operation and reinforcing the business relationship between the manufacturer and the logistics service provider.