When was the last time you reviewed and analyzed whether your present warehouses network is correct? Are you getting the on-time order delivery that your customers require? Are your freight and warehouse and inventory costs consistent with your service requirements? Given the importance of warehouses to logistics performance, your warehouse network should be reviewed at least every five years. Changes occur in companies; only the rate of change is at issue. There have likely been changes in customers, customer requirements, sourcing/vendors, transportation costs, products sold, and other key company aspects not to regularly and thoroughly review your warehouses. You should analyze it with the view of a blank sheet of paper.

Look at--

• your supply points
• lead times for supply replenishment to the warehouses; analyze the complete cycle from order placement at suppliers through manufacturing to receipt at the warehouse
• products and product mixes
• sales requirements
• inventory needs to meet customer order/ship performance
• seasonality, sales forecasting inaccuracies or other vagaries
• transportation costs for trailer loads from supply points into the warehouse and for order shipment freight from the warehouses to your customers
• cost for warehouses and for inventory (both for stocking and intransit)
• time required from order sending by the customer until order delivery receipt at the customer and how much of that time is consumed by outside agents, internally or wherever before the order even appears at the warehouse for picking and shipping

How well does your present system compare to the "optimal" system developed with your blank sheet model, both as to service and cost?

Do you have too many orders shipped incomplete or which must be held too long in order to receive missing inventory items? Are these distribution problems, sales forecast problems, purchasing problems, order problems, sales personnel not knowing their customers orders plans, or other problem? Or is it a combination of these problems, each contributing to the total problem? Are your operations in a constant crisis/expedite situation? If so, why?

It is almost mandatory now to have a warehouse management system, which should include barcoding, for accurate inventory information. It should be a system which helps manage the day-to-day activities and to manage the overall performance of each warehouse. And, very importantly, it should be integrated into the company system for orders, sales, manufacturing, purchasing and accounting.

The system should be able to quickly record incoming inventory and to place the products in the proper area for inventory picking. It should also quickly adjust on-hand inventories as orders and picked. This system should be integrated into the customer service/order entry system. Your inventory should now be so accurate that you do not have to do cycle counting, except in certain very exceptional situations. And given your situation, you may want a system which allocates and prioritizes inventory to orders or perhaps to certain customers. The system, as orders are shipped, should also tie into customer invoicing and into customer and transport carrier EDI systems.

It should be able to track and age inventory and should assign inventory to orders based on first in-first out. If inventory aging is an important issue, the system should also be able to provide aging alerts to avoid having to unnecessarily dispose of out-of-date inventory.

You should be able to somewhat easily be able to manage inventory placements, especially if inventory items can change their A, B or C status during the year. This could occur with sales promotions, seasonality or other factors which accelerate or decelerate the shipping priorities of items. When this happens, the system should help "redesign" inventory placement for the new A, B and C items. Travel time is a big waste factor for warehouse productivity; being able to reconfigure inventory placement can help control travel time losses.

How well does your warehouse pick orders? Do orders go out on time? Does each and every warehouse personnel perform his responsibility? How long does it take to pick orders and prepare them for shipping? How many orders are picked per day in a regular shift? Do you need overtime to manage orders? Is this inventory a result of order surges, lack of sufficient personnel or improper warehouse operations which limit its output?

What about shipping orders complete? Do you have backorder problems? If so, do your customers permit it or do they penalize you? Why do you have problems with having the correct inventory items and quantities on hand?

In some companies, the only time they know they have a warehouse is if there are problems with customers receiving his orders accurately, completely and ontime. In these companies, the appropriate way to resolve the problem is to blame the warehouse. Easy, solved. You don't need a lot of executive time placed on it; you don't need a lot of facts. But as we have discussed external and internal topics above, warehouse performance depends on many factors. Some companies respond to symptoms and do not address the underlying problems.

Burying the warehouse function and responsibility deep in the organization may be a sign that there is a lack of appreciation and understanding within the company on how critical warehousing is to their success. Or conversely, recognizing the importance of the distribution/warehouse function and its role in customer satisfaction is a sign of a company who is aware of what customer service is about.