25 Nov The 9S Principles of Agile Warehousing
During the corona pandemic, companies faced major logistical disruptions. Most warehouses failed to respond adequatly. They were way too lean. In order to overcome the turbulent years ahead, warehouses should become more agile so that they can adapt more easily to changing circumstances.
Not long ago, in the 2010s, companies were able to manage their supplychains perfectly. Digitization and globalization resulted in extended tightly orchestrated supply chains. Lean and Six Sigma were popular techniques to eliminate unnecessary activities and errors from processes. In the old normal, companies could deliver their stuff in a cheap and predictable way from distant countries to people’s front door.
The 2020s put an abrupt end to it. A virus and a war shut down the aerodynamic supply chains. Countries went into lockdown. Factories and ports closed down. Container prices skyrocketed, as did energy prices. Staff massively called in sick. In the new normal, companies had completely lost control over their supply chains.
A decade full of logistical surprises awaits us. How can you prepare your warehouse for it? The proven Lean and Six Sigma methodologies offer no solution or even have the opposite effect. The counterpart of the lean supply chain is the agile supply chain (Hau Lee, 2002). Agility is the capability to quickly and easily adapt to changing circumstances. It helps you to better handle large or small disruptions.
For the coming years, I advocate the principles of agile warehousing. The following 9 principles lay the foundation:
You will not get there by haphazardly tackling some issues. Before you start, consider how you intend to make your warehouse agile. Put a dot on the horizon and describe the strategy to get there. Use the remaining eight principles to frame your strategy. Get support for your agile strategy from your management and other departments.
Of course, your strategy should also be supported by your colleagues on the work floor. In the 2010s, the frontrunners in e-commerce showed us how to continuously adapt their business operations. However, in the majority of warehouses, people are not used to change. When suddenly everything is turned upside down, it may cause resistance. Ensure a positive spirit in which people are open to change, motivated to think along and able to shape changes themselves.
Good software is essential in turbulent times. Up-to-date information helps you to timely identify problems and find alternatives. In addition, you need an easily adaptable warehouse management system (WMS) to quickly introduce new ways of working when circumstances ask for it.
Give someone a handheld and they can get started within fifteen minutes
It is difficult to find qualified warehouse employees in the tight labor market. Still, you want to be able to deploy new people quickly when the workload increases. Simplifying work procedures makes it easier to find qualified staff and shorten training times. Give someone a handheld and they can get started within fifteen minutes. This requires a user-friendly WMS with clear control logic and conclusive checks. However, not all processes can be simplified. For example, goods receipt requires knowledge and accuracy from employees to get stock information correctly into the WMS. Experienced workers are still needed here.
In turbulent times, there is the temptation to come up with a quick fix for every need from a customer, supplier or product. However, all those exceptions are difficult to manage. Especially when there is pressure on the operation. It is therefore wise to standardize processes as much as possible. Exceptions often arise due to poor cooperation or missing information. The key then lies in the collaboration between departments.
Unfortunately, standardization is not always possible. Customers have special wishes. Products require additional checks. Regular suppliers do not have stock and alternative suppliers send shipments without the necessary information. Exceptions will continue to exist, especially in the coming years. A practical solution is to add workstations to the inbound and outbound warehouse processes where these specials are handled without disrupting the standard process. At these workstations you can perform quality checks, add information or provide value added services.
Warehouses suffer from the extreme fluctuations in supply and demand. Scalability is the extent to which one can increase or decrease warehouse capacity. Determine how much “scalability” you expect is necessary and explore how you can stretch the boundaries of the warehouse. Can you deploy more/less people or extend/shorten working hours when necessary? Are there enough workstations, vehicles and handhelds to handle the peak traffic without major congestions? Can you increase the capacity of mechanized systems? And if storage space threatens to overflow, can you easily resort to external warehouses? Or vice versa, can you temporarily make warehouse space available to third parties when it is vacant?
During the corona outbreak, there were companies with sky-high stocks due to “poor” inventory management. They were lucky. They could deliver, while competitors had to say no. So avoid being low on stocks and assets in the near future. Make sure you have enough permanent employees. Keep multi-supplier relationships to maintain contingency capabilities. Moreover, some extra storage space might come in handy. In short, make sure you have slack in your warehouse so that you can take a beating.
Sustainability will leave a heavy mark on business operations of the 2020s. Environmental laws, as well as customers or the company’s own corporate strategy, will set far-reaching demands for sustainability. New-build warehouses are increasingly receiving the sustainable Breeam certificate. Existing warehouses can also save on energy and packaging material and reduce the amount of waste and stock depreciation. Make your sustainability goals specific and measurable so that they become a natural part of your business operations.