Waste of Talent & Creativity

In studying the seven wastes - inappropriate processing, waste of overproduction, waste of transportation, waste of motion, waste of waiting, waste of unnecessary inventory, waste of defects - in a manufacturing environment we constantly disregard or give short change the ‘waste of talent’. 

If your employees are a company’s most valuable asset to ensure that the business runs smoothly, efficiently and constantly improves then why do we continuously fail to put people to good use? 

Without the total involvement and loyalty of employees any company will fail to compete efficiently in this global marketplace. In today’s global market with all of its uncertainty companies need every advantage that they can get to maintain, sustain and improve the business.

The primary cost of waste for talent within any firm is found in time wasted to make improvements and meeting customer requirements. Improvements will be much slower to take affect if your reliance is solely on the “experts” as opposed to engaging the engineers, supervisors and managers.  Though they may be small in numbers they are highly skilled people.  If improvements are not steady your competitors will eventually outpace you, move ahead of you and lead the way in margin and market gains. Your competitors will capture the business from you as they will offer enhanced service and lower costs.

Your employee’s creativity and talent is wasted due to due to a number of reasons but the central one is: having the wrong culture that fails to recognize the strengths and contributions that are made.  Many companies are not that type – they have managers who manage and employees who follow instructions. 

There are a few companies that try to recognize employee contributions but too often it fails. The failure is based in the lack of time and resources allocated to employees to enable them to meet and make improvements.  Company policies are inappropriate to meet employee recognition and too often stifle improvements due to layers of bureaucracy.  Part of this stems from fear: if their employees are well trained and overly involved they will expect higher salaries and or move to other companies.

The remedy for this type of waste is a simple prescription; but one that many companies fail to embrace.  Team working, training and leadership are all that is required to involve all of the employees with your companies. Follow these three and the drive towards perfection and continuous improvement will result.  Performance measures and compensation packages should reflect the companies need for people to work together.  Encourage your employees to take ownership of their areas, processes and products.  This will promote an “air” of pride and involvement.   Your people are your biggest asset, use them wisely and you will reap the rewards.

Performance indicators are measures of a company’s strengths and weaknesses of the business. They should be used in comparison to the external competition and internal customers to improve company’s economic standing.  In Supply Chain the warehouse is a critical function.  Should products not move effortlessly within the warehouse a business could come to face serious challenges to its welfare.  The warehouse must be continually measured by key performance indicators.  In this age of continuous improvements, it is vital to compare against industry standards, and if none to set the tone.

This narrative of a company’s well being is called benchmarking. It is the process by which to measure a business’s internal processes against the competition. The narrative includes productivity, quality, time and cost. The idea is to discover weaknesses, learn from them and to execute better and more cost effective manner.

Warehouse costs are driven by people, cost, space and systems.  Thus KPI’s in a warehouse are based on these drivers and supposed to be tied directly to these usual activities:

1.      Receiving

2.      Put-Away

3.      Storage

4.      Pick-n-pack

5.      Shipping

We shall discuss each activity in detail below.

The receiving activity is basic to any warehousing function. If the merchandise is not properly received, it will be difficult to handle subsequent operations. Merchandise is received against a purchase order and posted to the Warehouse Management System (WMS) through Electronic Data Interchange (EDI).  The most important performance indicators to be ascertained are: cost of receiving per receiving line, volume received per man hour, receiving dock utilization expressed in a percentage, accurate receipts expressed in percentages and time taken to process a receipt.

After properly receiving the goods, it has to be stored in a location that is convenient for retrieval.  This is the put-away process.  The following indicators are needed at this stage: cost per put away line, put-away per man hour, utilization of labor and equipment, quality of the put-away and cycle time for put-away.

At this point is becomes a bit more complex as there are two possible storage systems a warehouse can use: manual storage or automated storage / retrieval system.  If use a manual type of system there are a number of types.

1.      Block Stacking – Units’ loads stacked on top of each other and stored in the lanes.

2.      Stacking frames – self contained units made up of decks and posts. These are portable and can stack several layers upon each other.

3.      Single-deep selective pallet rack – a combination of metal uprights and cross bars allowing for quick picks.

4.      Drive-in racks – merely extend the reduction of aisle space

5.      Drive-thru racks – rack accessible from either side.

The key performance indicators for measuring shipping process are: storage cost per item, inventory per square feet, percentage location without inventory discrepancies and inventory days on hand.

Order picking is the most expensive part of warehouse operations as it is very labor intensive and it is estimated to be 50% of all warehouse costs.  Not to mention this is tied directly to customer satisfaction.  Usually broken into two parts – case picking and then small item picking.  Relevant key performance indicators for Pick-n-Pack operations are cost of picking per line order, order lines picked per hour, picking labor and equipment usage shown as a percentage, the percentage of perfect picking lines and cycle time per order.  Remember, any incorrect pick could lead to an unhappy customer – something we want to avoid if at all possible.

Shipping is not just the goods to the customer. It can be internal shipping between departments, functions, workstations and stock transfers.  The latter being the origin for moving product from point to point to point.  Important performance indicators, but by no means all of them, are cost of each shipping order, labor or man hour for each order, utilization of shipping docks, percentage of perfect shipping and the time order is picked till it actually leaves the dock.

These are general guidelines. The volume of labor used the costs of the operations and equipment earmarked for warehouse activity depends upon the products handled.  Therefore, key performance indicators should be adapted to the product type. The warehouse is the busiest place in any business and the potential in productivity, costs and safety improvements is huge.

To most of us involved in Inventory and or Warehouse operations these may seem obvious measurements to engage.  However, too often they are seen as superfluous to the overall business operation.  This is an error organizations can ill afford (dollar value and inventory issues) to make.