In the COVID-19 era, warehouse efficiency has emerged as a crucial economic factor. E-commerce has massively scaled up since retail stores closed and the world entered lockdown, and logistics facilities that function optimally are key to success in the “new normal.”
It doesn’t look like the e-commerce boom will fade when the pandemic does, either. The health crisis has intensified a macro-trend toward online shopping that has been gaining momentum for some time now. That trend should continue to redefine retail even after the virus is a bad memory.
Luckily, a variety of technical solutions and common-sense methods can help warehouses process challenging workloads. Barcode and radio frequency identification (RFI) technology can improve the accuracy of workers picking items. Warehouse management systems can send “pick lists” to staffers’ devices and guide them through facilities. Regular cycle counts can ensure that no part of a warehouse falls into disorder. Building enough cross aisles into a facility can make it faster to navigate. Good planning can eliminate empty-handed “deadhead” employee trips around a site.
And then there’s ABC analysis, one of the best methods for boosting warehouse productivity.
In ABC analysis, managers inspect a warehouse in terms of how frequently items move out the door. The items that go the fastest are labelled “A” and are slotted accordingly—in the warehouse’s most accessible bays, for example, and close to its shipping stations. “C” items, those that see the least demand, are slotted in areas that are relatively harder to access. “B” items go somewhere in the middle.
ABC analysis is an effective way for managers to reduce operational friction. Workers will no longer waste time moving pallets of a low-demand item out of the way so that they can access the high-demand items behind them. They will avoid too much travel around warehouses. Order-picking can account for 55% of a warehouse’s operations budget, so simple optimizations like these can have a major impact on an organization’s bottom line.
While ABC analysis is straightforward in theory, it can be hard to pull off in practice. Getting a complete picture of what is located exactly where is time-consuming. Forty-five percent of the operations managers MetrixLab consulted in a recent survey said that analysis at their sites lasts for between one and four hours. Another 40% said that it lasts between four hours and a full day. In a busy warehouse, that can be prohibitive.
So it’s no wonder why managers tend to avoid ABC checks. More than half of managers perform ABC analyses only once a month, according to MetrixLab. Twenty-seven percent perform them once a quarter, and 7% just once a year.