5 Best Techniques to Reduce Cost and Improve Efficiency in Warehouse Management

Best-practice warehouses deliver superior customer satisfaction and return on investment by functioning as a tightly-integrated part of an oil and gas company’s value chain.  Supply Chain Professionals need to understand how to improve the operations of any warehouse by implementing lean operating processes, by intelligently managing inventory, and by establishing a performance management program that ensures continuous improvement.

Here are 5 of the best techniques that help professionals to manage warehouses in order to reduce costs and improve efficiency:

1. Lead Time. Most customers want a reduction in the time that they receive their goods; as soon as they perceive a need then they want the product or service.  Often the warehouse is the last link in the chain before the customer receives their product so the warehouse will be blamed if the product does not arrive as expected.

2. SMART. This is a mnemonic that stands for Specific, Measureable, Achievable, Realistic and Time-bound. This technique is used when setting and measuring objectives.  These objectives cascade from the Strategic level of the organisation down to the Personal level where objectives are set for individuals to keep as their standard of performance.  The standards in a warehouse can be picks per hour, despatches per day, etc.

3. Push and Pull. Push is the technique often used by manufactures to make products without having an order from a customer; this can often lead to over production and excess stock though it does mean that there is availability and convenience for the customer as they do not have to wait for a product.  Pull on the other hand is where the manufacturer invariably waits for an order to start the manufacturing process.  This pull technique leads to a reduction in product quantity though there is a delay in the customer receiving their goods; the advantage is that the customer receives exactly what they want in terms of customisation.

4. Warehouse Management Systems (WMS). There are many warehouse systems and these are often based on a computerised system which could be stand alone or are part of a wider organisation system such as an ERP (Enterprise Resource Planning). The advantages of a WMS are that there can be a saving in time and efficiency with stock locations and quantities of stock being known. Reports can be generated through a WMS which supports an organisation’s management information system.

5. Total Costs of Operating. Many people when buying an item or service consider the purchase price as the total cost. However, there are many costs that are extra to that of the price paid.  Delivery, warehousing, actual cost of inventory, installation, in-service costs, de-commissioning and recycling are but a few of the costs that have to be considered when purchasing a product.

Warehouses that operate to a high degree of efficiency deliver superior customer satisfaction and return on investment by working together with the other parts of the organisation’s supply chain. To learn more about these best techniques, you are invited to join PetroKnowledge’s training course entitled Advanced Warehouse Management in the Oil & Gas Industry scheduled in Abu Dhabi U.A.E. Take the lead in your organisation now.