Challenge
In this article, I’ll review how to streamline your warehouse storage practices. I know that in these COVID times, life science organizations are stocking up their warehouses to guard against potential supply risks, and are bulging at the seams and offsite warehousing is becoming more and more necessary.
In this article, we’ll take a look at how a global market leader in the medical device industry went from aisles full of pallets to removing racks due to all the space that they opened up.
When we started, there were aisles full of pallets, material control issues, and major morale problems. Moreover, along with cost and compliance issues, all this congestion gave ample opportunity for injury claims
Solution
After a brief evaluation of inventory data and a tour of the warehouse, we came to 2 key conclusions – they had too much stuff and that stuff was poorly stored.
We led a transformation initiative to identify ways to reduce warehouse space requirements without affecting order fill rates.
Firstly, in order to reduce inventory, we implemented a Kanban system for several materials, included corrugated box suppliers. To do this, we identified the materials that occupied the most space, look at the receipt date and compare to the supplier lead time. If the time since receipt is much longer than the supplier lead time, it shows opportunities for inventory management improvements. If the supplier has a relatively short lead time, then we set up a kanban “pull system,” to limit the maximum space that the items will now occupy.
An analysis of the racks showed that, even though pallets were everywhere in the aisles, the space utilization was only about 60%. There were many pallet spaces with less than a ½ pallet of materials, so the creation of many more ½ pallet spaces and the installation of shelves would make a big difference.
Finally, we observed that many pallets of finished goods accumulated in aisles before they were shipped to another warehouse. We found out that the trucker only picked up once per day, causing all the staged pallets of final product by the end of the day. The trucker was unwilling to increase pick up frequency, so we selected of a new trucking company that was able to perform smaller, more frequent transfers to reduce the required staging space, at no additional cost.
Results
We achieved many benefits with no capital expenditures.
Aisle storage was eliminated, while space utilization improved by 30%. One-third of racking was removed since it was no longer required, which allowed the company to perform final kit assembly in the warehouse. That freed up space in the cleanroom for additional reagent manufacturing. We improved picking efficiency by 28% since kit components were stored adjacent to each other, and aisles were no longer congested. In the end, we helped the client avoid a $2M capital expenditure for an additional warehouse and refrigerator space.
These are only a few strategies to reduce warehouse space needs. I will write another article in the future in which I will share more strategies. If you’d like to learn more, and you don’t want to wait for the follow up article, please feel free to contact me.
