The warehouse and distribution center is under increasing pressure to reduce cost and increase margins. Recent Intermec (NYSE:IN) research reveals that in the last six months alone, nearly eight out of ten (79%) warehouse managers have been tasked with finding an average 19 percent cost saving from existing operations. Despite this mounting pressure to cut costs and the need to find efficiency gains in every process, managers admit to losing time and money through known inefficient workflows.
The survey base of 250 supply chain, warehouse and distribution managers stated that over an eight-hour shift, each worker loses an average of 15 minutes of productivity in an inefficient process. For a small- to medium-sized warehouse with 50 workers, this quickly adds up to nearly 3,000* hours a year, and could be a significantly higher number in larger organizations.
Although most managers have been tasked with finding cost savings, close to one in three (30%) have not conducted a review of workflow processes in their distribution center within the past year. This is the first step in identifying areas for improvement.
The majority of managers questioned believe the most inefficient workflow in an eight-hour shift to be packing and loading (20%), closely followed by picking and inventory control (both 18%).
This belief is born from the data produced by companies that have recently conducted a workflow process review, who say that inventory control (53%) and picking (47%) are the two areas where cost savings could most easily be achieved.
Strong resistance to change
Perhaps surprising, the research shows that in companies that are yet to take action to improve workflow productivity, there are high levels of resistance to the idea of carrying out a full review.
Managers who have not held a review in the past year say that only compliance (28%) or poor performance (27%) would prompt them to do so today. The latter point is in stark contrast to those companies that have recently conducted a review, and implemented process improvements as a result, who say that they are mostly motivated by compliance issues (26%) or continuous improvement programs (22%) and rate poor performance as a very low (9%) driver for their action.