- October 8, 2019
- Posted by: Javier González Montané
- Category: Cost reduction, Supply Chain, Turnaround
Warehouse costs are one of the largest fulfillment costs, and Distribution Centers are a key supply chain process for satisfying the rising logistics needs and expectations of customers. However, it is not easy for supply chain professionals to avoid getting distracted with small warehouse issues rather than focus on what really matters. The good news is that the business canvas is one of the best management tools to help warehouse professionals to see the big picture, apply a holistic warehouse optimization approach, and identify high potential improvement initiatives or programs.
Aligning the warehouse management canvas with the supply chain management canvas
Supply chain is so complex and involves many activities. Execution is essential in supply chain to materialize the potential operational and financial improvements. These two detailed characteristics suggest that at least we need three canvas level in supply chain:
- The business model canvas
- The supply chain management canvas (see the post Supply Chain Management Canvas)
- A more detailed level for the main supply chain processes, i.e., the Warehouse Management Canvas
These three levels need to be aligned and consistent with each other. This alignment is not obvious because the building boxes for the three levels of the canvas are not the same. When we are talking about alignment, I would suggest focusing on Customer blocks (last column in the three canvas levels – see the image below) and the financial performance (last row in the three canvas levels – see the image below).
The Warehouse Canvas
We continue using the idea of fifteen building boxes from the original Supply Chain Management Canvas (see the post Supply Chain Management Canvas) as the maximum number of practical building boxes. However, we are using a simpler and more tactical and operational model on the top, based on the well-known People, Process, and Technology Framework.
Learning to See in the Warehouse
Improving the operational and financial performance of a warehouse is never an accident. It is the consequence of being able to see the big picture of the warehouse and the high-impact potential opportunities. So, let’s review where we are finding some of the most key improvement opportunities when we are analyzing the performance of warehouses:
- Layout: In many warehouses, there is the assumption that the initial layout design is the optimum, even if it was the optimum design at that time, customer needs, and volumes change with time, which means that layout should be reviewed periodically.
- Planning: Any issue or lack of planning will automatically transfer to the tactical and operational warehouse processes. I always suggest checking overtime because overtime is a good indicator of the efficiency of the planning process.
- WMS: Many WMS and ERP implementations are performed without doing enough process mapping work and a detailed business requirement study for all the processes. The consequence is fast but sub-optimized implementations. So, those systems will require complementary Excel spreadsheets and manual processes that will reduce productivity.
- Storage Solution and MHE: Conventional racks are not the only storage solution, although it is the most common and flexible. Customizing different storage solutions and MHEs according to different types of items and volumes will increase productivity and reduce costs.
- Processes: If we do not map processes, it is difficult to identify issues at the activity or task level. All companies are wondering how to improve productivity, and process mapping is one of the key steps in the productivity improvement journey.
- Operational flow: The traditional approach to warehouse processes is a silo approach, which looks at optimizing activities. A warehouse holistic optimization approach based on improving flow and productivity can revitalize warehouses increasing flow +40% and productivity +20%.
- Performance management: To properly perform, businesses need to be able to answer positively two key questions: Do we have a performance hierarchy of KPIs to be able not only to understand the overall health of the warehouse but also the diagnostic and root cause KPIs? Do you have a process to identify why some KPIs are not good enough, and which actions need to be taken?
- Quality: Are you able to track where are quality issues coming to? Most of the quality issues are not people’s problems; they are process problems. Nevertheless, it is important to identify who was the operator that makes a mistake to understand why (lack of training, a badly designed process, etc.) and promote a culture of quality and accountability.
- Inventory: The inventory level and the inventory control process are two of the best indicators to determine how well the warehouse is running.
How to make the Warehouse Management Canvas work
The warehouse management canvas will help warehouse professionals build and accelerate real warehouse transformational plans, which will deliver huge value for their companies and customers. However, the success of any project is likely based on the sustainability of performance improvements.
The warehouse canvas is built on the sustainability of the improvements. Thus, we have five building boxes that will support performance sustainability: planning (less operational issues), technology (simple, robust, and repeatable processes), operational flow (complexity reduction), people (accountability), and performance management (KPIs with action plans.)
It is important to highlight that even the warehouse canvas is built on the sustainability of the improvements. The tool does not substitute the need for a remarkable Warehouse Manager with the skill of change management and making things sustainable and happen.