Introduction to Warehouse Operations

In its simplest form, “warehousing” is the storage of goods until they are needed. The goal of
warehouse operations is to satisfy customers’ needs and requirements while utilizing space,
equipment, and labor effectively. The goods must be accessible and protected. Meeting this goal
requires constant planning and ongoing change.
How does your organization view warehouse operations? Some will say it is an unavoidable cost of
doing business, others that it is a necessary service to our customers. A few will say it is a valued
part of our publishing program. While we all agree that warehousing is an unavoidable cost and that
it provides a necessary service to our customers, do we also agree that it is valued part of our
publishing program? I believe we do. The only question is who should handle warehousing needs:
should we do our own or let someone else do it for us? Either way the effectiveness of warehousing
operations certainly will contribute to how your customers perceive your organization. You can
publish great books, but for them to receive high praise, your customers need to receive them
promptly and in good condition.
Do you know your customers? Do you, for example, consider other departments in your
organization to be customers? If not, there could be trouble. The needs of all of your customers
must be considered in all warehouse-planning activities. Otherwise, rather than meeting their needs,
you probably are reacting to their demands.
How can I solve this problem? How can I meet this need? Those of us in warehousing are
continuously asking ourselves such questions. I have never found a one-fits-all solution to the
challenges I have faced. Each problem can have multiple solutions. Such factors as available space,
equipment, personnel, and investment capital, as well as a willingness to change, help determine
which solutions are available to us. I hope the following information will help you find solutions to
the challenges you face.

Pareto’s Law
At times herein, I will refer to the 80/20 rule known as Pareto’s Law. It is a quantitative guideline
that simply suggests that 80% of the product volume is equal to 20% of the active line products in
inventory. The ratio in your operation will likely vary somewhat. Just determine your own 80/nn
ratio and use it. Do not forget to check it from time to time, adjusting as needed.

Systems Defined
The word “systems” as used herein is defined as one or more pieces of equipment used to
accomplish the various warehouse functions. The “storage system,” for example, might be nothing
more than rows of pallet racks. Or it might include pallet racks, static shelving, and floor space for
storing multiple pallets of a single title.

The Organization’s Impact on Warehouse Operations

Nearly all aspects of the organization have needs that affect warehouse operations, especially if they
are housed in the same building. As previously stated, these needs should be considered customer
needs and handled accordingly. Indeed, three groups (Order Entry, Accounts Receivable, Inventory)
have a direct working relationship with warehouse operations. They are so closely connected that
one, two, or all three actually may be managed under the warehouse umbrella. Although they will
not be treated here as warehouse functions, the relationship needs to be addressed in all warehouse-
planning activities.
Order entry (often part of customer service) takes customer orders and enters them into the system.
The accuracy of the instructions order-entry staff provide directly affects how the warehouse
handles and processes customer orders.
Accounts receivable collects money due for goods shipped to customers. Accounts receivable staff
can perform their duties only if shipping properly completes and turns in the paperwork that triggers
customer billing. In addition, accounts receivable usually handles and/or verifies the amount of
credit customers are to receive for returned goods. The accuracy of these credits is directly related
to the accuracy of information supplied by receiving as customer returns are checked in.
Inventory levels and stock replenishments are not usually monitored or handled by the warehouse,
Yet, each time there is a stock outage, the warehouse will have to process extra backorders when
the stock is received. If there are stock-outs on a regular basis, the warehouse should be asking why.

Business Software’s Impact on Warehouse Operations

All too often the software selected to handle the business functions of an organization does an
excellent job meeting the needs of the office departments but fails to meet warehouse needs. For
this reason, warehouse operations usually must develop its own database. In my situation, the
business software we started with did not meet the need for reports on open picking locations; did
not support the location of stored products or report open storage locations; and did not support the
printing of the counting tickets needed to record the yearly physical inventory.
If your business software lacks the support you need, you likely will need to develop your own
database to meet those needs. If you have someone in your organization who can develop the
database for you, that is great. If not, I suggest you select a software program that can read and
import the type of product-export files the business software can provide, even if it requires you to
get some training. As you begin to develop your database, keep things simple. With the passage of
time, you will have lots of ideas on how you can improve it to help you manage your warehouse.

The Physical Warehouse Structure

Whether you are making changes to your existing warehouse or completely setting up an empty
warehouse, there are a few factors that must be considered in your plans. If you are building a new
warehouse, these factors can usually be addressed in the construction contract.

 The floor must have the load capacity to handle the systems and equipment you plan to use.
 Your plans need to accommodate the fixed locations of the structural support poles and if
possible to protect them from damage.

 Interior obstructions such as heaters, drain lines, gas lines, water lines, electrical lines, and
lighting fixtures must be safely accommodated.

 Local and federal building code restrictions and requirements must be addressed and followed
each time there are major changes made in the warehouse.

Develop a Master Plan for Warehouse Operations

A master plan is an essential tool for managing warehouse operations. The larger the operation, the
more important the master plan becomes. Without knowing where you are now, you cannot
effectively plan for where you need to be in the future. The master plan should be divided into
segments that document the procedures, rules, and workflow for each function in the warehouse. It
should have segments that document all space, equipment, and labor resources, and how each is
being utilized by the various functions. To develop your plan, follow these five basic steps in the
sequence listed. Repeat these steps for each function in your warehouse.

 Define the function you want or need to accomplish. (Set goals.)

 Determine how the function will be accomplished.

 Determine the equipment needed to accomplish the function.

 Define the function’s space requirements.

 Estimate the function’s support needs (e.g., personnel, software, and capital). Include changes in
workflow within the warehouse and/or other departments in the organization.
Some functions are common to all of us; some are unique to each of us. Herein I attempt to address
the common functions. I do not address personnel needs, because the size of operation directly
affects the number of staff required. In a small operation one person may be able to handle all the
functions. In a medium-sized operation each person likely will handle multiple functions. A large
operation may need one or more staff assigned to handle each function. The only common
personnel factor is the need to cross-train staff so that everything will be covered when someone is
unable to work or on vacation.
I strongly suggest using computer software to put your master plan together. The software does not
have to be expensive to be effective. I use MS Excel for nearly all my documentation needs. I even
use Excel to prepare my warehouse drawings by resizing the cells into small squares and then
applying the scale I desire to use. Using software will help you make changes quickly, keeping your
plan up to date.
Methodology
“Methodology” is the word used to describe how a function or group of functions will be
accomplished. As we decide how our goals will be accomplished, our reasoning can often become
subjective; it is often based on what we have done in the past. There is no way I can address all
areas and factors you might consider in determining the methodology you will employ. I can,
however, suggest you consider a few functions that follow basic options. To maintain your
objectivity, seek the opinions of your staff. After all, they will have to follow the methodologies
you establish.

Locator Decisions
There are three basic locator systems for storage and picking systems:

 The human location system. This method is strongly discouraged, but it is an option for short-
term/temporary storage.

 The fixed-location system. This system assigns a product to a location. No other product can be
stored in the location, even when it is empty.

 The random-location system. This system allows you to place a product in any open location.

Each of us will need to define and/or change our locator-system codes from time to time. The
locator field in most business programs is a text field with a length of five characters or more. This
allows us to use both alpha and numeric characters in the locator codes. As you define and/or
change your locators, remember these basic rules:

 Text fields are sorted left to right, one column at a time by the computer. Here is an example of
an ascending sort of text fields.
1111, then 1T22, then 21X1, then 2345

 Keep your locators simple and readable. This can usually be accomplished by keeping them
short and by using a consistent mix of alpha and numeric characters. Here are a few examples:
10J, C25, A115, 2F77, A66F6, 25C, J10, B211, 5A12, X11A1

 Your locator-system codes should be flexible so they can be used to define a single large
location or multiple parts of the same large location and still sort in the desired sequence. See
the storage locator code example below for one way this can be accomplished.

Most business programs will accommodate a locator code of five characters. The actual length of
the locator code and how it is defined will be determined by your needs. Here are examples of
locators I currently use:

 Storage locator code example: G33F6

> Position 1: the G is a row of pallet rack
> Position 2 and 3: the 33 is a pallet position in the rack row
> Position 4: the F is a full pallet of one title
> Position 5: the 6 is the rack level with level 1 being the floor
(If position 4 were A, B, or C, it would mean 3 titles are stored on the same pallet. A is always on
the north side of the pallet, B is in the center, and C is always on the south side.)

 Picking locator code example: 2V25

> Position 1: the 2 represents picking system 2
> Position 2: the V is a row of static shelving
> Position 3 and 4: the 25 is the position in the row of shelving

Equipment Planning
More than likely each of us has a preference when it comes to the brands of equipment we use.
There is no problem with this if we do our homework and honestly evaluate the alternative brands
and if our choices are based on the projected total cost over the long term. I do have a problem
when the brand preference has the end result of dictating how we utilize available space and/or
accomplish our goals. We also should consider and evaluate the purchase of used versus new
equipment. After all, new equipment becomes used the first time we use it. Used equipment is a
valid choice when it comes with a warranty and when the sum of its sale price plus its projected
maintenance costs over three years is less than the sale price of the new equipment. The overall
savings of the used equipment increases in relation to its age, especially when it is over five years
old.
Before you can lay out the space needs of the warehouse functions, you will need to determine the
equipment and systems you will be using to accomplish each function. The characteristics and
volume of your shipments, the methodology you use to accomplish each function, and the available
investment capital will influence your equipment selections. It may also be influenced by the degree
of risk you and your organization are willing to accept when it comes to operating and maintaining
specialized equipment.

Space Planning
Have you ever heard someone say “the warehouse is at full capacity”? If you can open the door and
walk in, it is not at full capacity. What the person is really saying is that the warehouse systemsare
at full capacity.
The challenge in space planning is to find ways to utilize effectively and/or to increase usable cubic
space in the warehouse. As you plan, always pay attention to unused space above the systems you
install. You might not need it now, but you should set up your systems to accommodate its use in
the future. Aisles are necessary, but they do waste a lot of cubic space. Typically they occupy 60%
of the total cubic space, and they can occupy much more. As you lay out your warehouse, keep the
number of aisles to a minimum. Running aisles the length of the building instead of the width
usually reduces the number of required aisles. How narrow the isles can be will depend both on how
much you can invest in the higher-priced equipment required for use in narrow aisles and on your
opinion of the safety of operating such equipment in a narrow-aisle environment.
One final note about space planning. The time to plan, prepare, and make needed changes is now,
not when the warehouse or one of its systems reaches capacity. You should project your capacity
needs five years into the future and update your projection annually. Because the number of line
items you house is very likely increasing, eventually you will reach the capacity of your warehouse
systems. As a rule, expanding an existing warehouse or finding or building a warehouse takes four
or five years. Simply put, if you fail to project your needs and to plan continuously to meet them,
you could be the person who says the building is at full capacity.

Dock Operations
The dock area may well be the most neglected part of the warehouse plan. All too often we are
expected to make do with what exists, even if no dock is connected to the warehouse. Except in
very small operations, at least one dock door is needed. The number of doors needed will increase is
in direct relation to how long it takes to unload or load a shipment and how many deliveries and
pick-ups you average each day. You should not have more than one carrier waiting for a door at any
given time, and the wait should not exceed thirty minutes.
The basic dock functions are unloading and loading carrier shipments, checking the shipments for
damage, and verifying the counts stated on the delivery receipt. The driver should note all damage
and shortages on the delivery receipt before the receipt is signed. All delivery and/or shipment
paperwork should be routed to the proper department within the organization.
Basic dock equipment usually includes a hand truck and a pallet jack. If there is a high volume of
shipments, the pallet jack may need to be electric or there may need to be a powered lift truck. In
the end, the characteristics of the shipments usually determine the equipment needed.
Space directly adjacent to the dock doors should be sufficient to accommodate the average daily
volume of receipts and outbound shipments. Just how much space depends on the time it takes
receiving to check shipments and move them into the storage systems, your ability to control when
carriers deliver and/or pick up shipments, and how soon outbound shipments start being staged each
day. There should also be space for empty pallets, containers, carts, and the like used to hold
inbound goods. You might save floor space by storing these above and/or between the dock doors.
Unless you expect to receive inbound shipments continuously throughout the day, it usually makes
sense to handle inbound and outbound shipments in the same area of the warehouse. Doing so
usually requires less space, less equipment, and fewer personnel.

Receiving Operations
Receiving duties often include the dock functions. The receiving function is the starting point for
inventory control in the warehouse. It is also the function best suited for gathering information
needed for keeping product details accurate and current. And if copies of the product are to be
routed or stored, receiving should handle their delivery and storage. Any and all essential data
should be gathered at this stage, and it should be documented on the receiving reports.
The basic functions of receiving include verifying product quantity, preparing receiving reports, and
routing those reports to designated departments. Receiving also should prepare received products
for movement into the storage and picking systems. Receiving also should pull the stock needed to
process backorders.
Receiving usually needs a desk, a computer, a filing cabinet, and other furniture or equipment
associated with the duties to be handled. A small office or a designated space near or in the dock
area is all the space normally required.

Storage Operations
Storage functions are usually an extension of receiving department duties. The basic functions of
storage are the movement of products from the dock area to a holding location, the recording of the
location and quantity, and the updating of storage records so that the product can be found easily
when it is needed. Retrieval of products from holding locations may also be assigned to storage
operations and/or may be a function of picking operations.
There are two basic methodologies for setting up a storage system:

 You can simply use the floor, lining pallets up in rows and stacking pallets of like product on top
of each other. This method is usually referred to as bulk storage. This can be a valid option for a
warehouse with a very low ceiling. It can also be a good option for storing many pallets of the
same product.

 You can install pallet rack and/or shelving in rows. This widely accepted method, usually
referred to as rack storage, usually makes good use of available space and is cost effective so
long as the ceiling height allows at least three levels of full pallet storage. The higher the ceiling,
the more cost effective rack storage usually becomes.
Storage normally occupies most available warehouse space. This being so, you might find it best to
lay out the entire building for storage before you attempt to determine space needs for other
warehouse functions. Once the best storage layout is determined, simply remove parts of it to
accommodate the other functions.
Before selecting storage equipment, you must know the dimensions and weights of the unit loads to
be handled. The unit loads will normally be cartons stacked on wood pallets. The pallet used
determines the width and depth of the unit load. The standard pallet is 40 inches wide and 48 inches
deep. The height of the pallet plus the height of the cartons stacked on the pallet determine the
height of the unit load. Because the height of cartons usually varies, you will need to set the height
at a level that best accommodates the various carton heights. Once you know the unit load specs,
you can work with equipment vendors to determine which pallet racks and lift trucks best meet your
needs. Generally it is best to select equipment that somewhat exceeds your weight requirements.
The added degree of safety is well worth the slightly higher cost.
The size of the product received usually varies from a few cartons to a few pallets. If this is your
situation, you might consider setting up your storage area to accommodate the various volumes
because it will make better use of the storage space. I use the 80/20 rule in reverse when it comes to
the size of locations in the storage system. Approximately 20% of full pallet locations have been
reduced in height by one foot, and we store less than pallet loads in them. As previously stated,
locator codes allow the full pallet locations to be split for holding up to three products. These simple
changes add locations to your storage system without requiring additional floor space and enable
you to use existing space more efficiently.

Picking Operations
Picking operations is defined as the assembly of products ordered by customers. This is a simple
function, yet it is time consuming. As you evaluate and/or setup your picking operations, efficiency
should be a major goal. After all, customers expect their orders to be processed quickly, not just
accurately.
Experts suggest that there are two basic ways to set up a picking system. At the same time, parts of
both concepts can be combined. Thus there are three ways:

 You can move the picker to the stock. This usually means the picker will pull the products
directly from the storage locations. This method works best when the products are shipped in
case quantities or when most orders include a lot of full cases. For reference, we will call this a
storage picking system.

 You can move the stock to the picker. This usually means the picking system is a stand-alone
system, but it could be in a defined section of the storage area. For reference, we will call this a
stand-alone picking system.

 You can combine the above. This usually means that the picker pulls fast-moving products from
storage locations and slow-moving products from a separate picking system. For reference, we
will call this a hybrid picking system.
The equipment needed to hold the products will vary according to the picking method you use.
Pallet racks likely will be used in a storage picking system. Static shelving, carton flow racks, and
pallet racks might all be used in a stand-alone picking system. (The use of other equipment, such as
a carousel, is also possible.) A hybrid picking system might use all the equipment mentioned above.
Before you decide how to set up your picking system, you must decide how you will assemble
customer orders. There are two ways to accomplish this:

 You can batch pick, pulling multiple orders at one time. This method is common when pickers
must travel long distances to assemble orders.
 You can pull one order at a time. This method is common when travel is not a major factor and
when customer orders average one to a few products.
Note: When batch picking is selected, large orders are picked one at a time. The definition of a large
order is determined by the specs used to batch the orders. If the specs used equal 10 orders and 100
total products, a large order would be any order that has 100 or more products on it.
If you have been involved in publishing any length of time, you likely have your preferences when
it comes to setting up and operating picking operations. How, then, can we objectively evaluate the
need to change our ways? I suggest that an evaluation of the following order characteristics offers
the best solution.
(1) Determine the percentage of orders that contain a number of full cases:

 If the percentage exceeds 50, a storage picking system may be your best option.

 If the percentage is 25 to 50, a hybrid picking system should be considered.

 If the percentage is less than 25, a stand-alone picking system is likely your best choice.
(2) Evaluate the line-item characteristics of the orders:

 Determine the percentage of orders with one line item. If you pick one order at a time, these
orders can be sorted by zone, regardless of the picking system used.

 Determine the percentage of orders with two or three line items. If you single pick, most orders
can be assembled without your having to travel through the entire picking system.

 Determine the percentage of orders with four or five line items. If you single pick and use a
stand-alone pick system, approximately one-half of the orders can be assembled without your
having to travel through the entire system.

 If the sum of the above percentages is 60 or more, picking one order at a time makes good sense.
If the sum is less than 40%, batch picking should be considered. If the sum is 40%-60%, single
or batch picking can be equally effective. I would single pick if I use a stand-alone or hybrid
picking system, and I would batch pick if I use a storage picking system.
After evaluating your order characteristics, you should know how you will pick orders and which
type of picking system you will use. Before you make your decision, consider these facts to see if
they have an impact that causes you to change your mind.

 The physical equipment that makes up your picking locations should be set up in accord with the
80/20 rule. This means that at least 20% of picking locations should hold larger numbers of
product.

 The pick location assigned to each product should be based on the 80/20 rule. This means that
fast-moving products should be in picking locations that hold more stock.
 You should be able to move a product into or out of its picking location easily as the level of its
activity moves up or down over time.

 The long-term cost of equipment to be used in your picking system will be a major factor. Fixed
and non-powered equipment usually require very little maintenance and most will continue to be
functional many years into the future. Mobile and powered equipment usually require some
level of ongoing maintenance and most will need to be replaced at regular intervals.

 The physical setup of the picking system should minimize the travel time of the pickers
whenever possible. The same is true with the method of picking used.

 The picking method should minimize the number of times the products must be handled before
they are placed into the final cartons used for shipping.
I must admit that I am set in my ways when it comes to picking operations. After many years in
publishing and warehouse operations, I prefer to pick orders one at a time because I believe it
reduces the time required to turn orders. I prefer to use a stand-alone picking system, because it
accommodates and allows me to apply the 80/20 rule in determining its set up and product location.
I also prefer a stand-alone picking system because I like to use a gravity conveyor, not carts, tables,
and such, to transport orders through the picking system. In fact I like to use conveyor to transport
orders from picking to the packing and shipping areas. Now that you know my preferences, I must
note that my pickers have the option of pulling full cases directly from storage, if the volume of
cases so warrants.
One final note about the picking system. All too often the capacity of the picking system is ignored
when it comes to storage planning. It holds stock too, and if carefully planned and managed, it can
often be set up to hold all stock on low print-run products. This can help reduce the pressure on the
storage system, and it eliminates the need to pull stock from storage at a later time.

Packing Operations
Packing is the process of packaging for shipment the products ordered by customers. If you batch
pick, orders are separated and checked for accuracy during the packing phase. If you single pick,
orders are checked only if you do not hold pickers accountable for accuracy of the orders. As a
general rule, products are packed into shipping cartons, the air space is filled with a packing media,
and the cartons are sealed. If the shipment mode requires it, cartons are stamped, labeled, and
otherwise marked as needed.
If packages are poorly packed, the possibility of damage increases greatly. The shipping carton
should be of such strength that it cannot be bent or crushed easily, and it should be packed so that
the products will not shift during transit. If you want to know how and how not to pack, spend a few
days in your customer-returns area monitoring the condition of packages and their contents in
relation to how they are packed. Pay close attention to packages refused by the customer and
returned to you unopened. If your packages are damaged when you get them back, you are not
doing an adequate job in your packing area.
The equipment needed in the packing area includes tape machines, box knives, and various stamps.
If you do not use a conveyor system, you will need a packing table. If you do use a conveyor, you
will likely pack on the conveyor itself. You might also need some equipment to apply or affix labels
to the cartons—although I assume most of you are using peel-and-stick labels as much as possible.

Shipping Operations
Shipping operations is where the final steps are taken to prepare orders for shipment via the
requested mode of transit. The tasks performed usually include weighing each carton, recording
shipment information in a manifest system, and applying address labels generated by the manifest
system. If the shipment is going by mail, correct postage is applied. If the shipment is going by
truck or air-freight carrier, a bill of lading is completed. After packages are processed, they are
sorted to pallets or tubs so they can be moved to the shipping dock for carrier pickup.
It is usually considered shipping’s responsibility to ensure that all shipments are picked up the day
they are ready to ship and that all shipping paperwork is routed to the correct departments at the end
of each shipping day.
If you ship many packages a day, it is also essential that you acquire your own manifest system. The
manifest system should support all the modes of shipping you normally use, including truck and US
Mail. It should also allow you to import shipping data from an export file generated from your
business software. Setting up your own customer database in the manifest system is not a good idea
because addresses change on a regular basis. Using the export file from the business software
ensures that the address information is correct when a new order for the customer is processed. This
eliminates the need to check all addresses generated by the manifest system against the picking
documents, saving you both time and incorrectly shipped orders.

Customer-Returns Operations
No publisher likes having to issue credit for customer returns simply because a customer wishes to
return the products. And as a result many publishers assign a secondary priority to customer returns,
taking the attitude that we will process them in our spare time. I suggest that such an attitude not
only is improper but also will cost you money. By not keeping customer returns current, you
directly increase the workload in accounts receivable, because the customer is going to take credit
for the return even if the warehouse has not yet processed it. This increases the number of charge-
backs that must be addressed.
The primary warehouse functions associated with customer returns include verifying what was
returned, deciding whether credit should be issued based on its condition and status, and placing the
numbers of products and associated quantities into a returns report that can be used by the office to
apply the credit due. The report may be entered directly into the business software, a stand-alone
software package, or handwritten.
The returns area needs to include such basic equipment as a large table, a box knife, trash
containers, and, usually, a computer with a barcode scanner. In addition there needs to be a means
of sorting and holding the products until they are returned to salable inventory, and a place to hold
no-credit products until they are returned to the customers or destroyed.
The accuracy of return reports is as important as that of reports covering stock receipts. Both have a
direct impact on the accuracy of the inventory available for sale. Following this concept, many
publishers consider customer returns a receiving function. However, when the receiving department
is assigned the duty of processing returns, the priority given to that project tends to be “as time
allows” because stock receipts must be processed as they are received. For this reason, I strongly
suggest you handle customer returns independent of other receiving functions and give it a high
daily priority. At least one staff member should be assigned returns as his/her primary duty.
Returned products need to be moved back into salable inventory locations, usually the picking
system, on an ongoing basis. For this reason, it is usually best to process returns in an area near the
picking system. You might consider handling customer returns in an area next to the starting
location in your picking system. As noted earlier, I use conveyors in the picking system. I also use
conveyors to move returns to their picking location. We tub returns by zones before placing them
on the conveyor. The pickers restock returns as time allows, but at least once per week all
warehouse staff will take time to restock any returns that remain.

Other Operations
There can be other operations, functions, or guidelines that impact warehouse operations. Listed
below are some for you to consider:
Backorders. Under receiving operations, it was suggested that stock for backorders be pulled. I
also suggest that backorders not go through the picking system. Whenever possible, have receiving
deliver the backorder stock to a special place in your packing area, and process them without
involving picking operations.
Order Printing. Consider giving your warehouse the ability to print their own picking and shipping
documents. This reduces the down time caused by waiting for another department to fit printing the
documents into their own schedule.
Time Goals or Standards. You should set time standards for handling all functions in warehouse
operations, and you should make those standards well known to your staff. The goals you set must
be realistic but challenging, not easily achieved on a daily basis. For example my goal is to turn all
customer orders within 24 hours of receipt. With the up and down volume of orders received, we
meet this goal 80% of the time, and we consistently turn all orders within 72 hours of receipt.
Storage and Picking Capacity. As a rule of thumb, you should plan to increase your storage and
picking capacities once you are at 80% capacity. Once they reach 90%, you should implement your
plan. When capacity exceeds 90%, you will use more and more labor to maintain your open
locations. This is especially true in the storage system, because you will need to move and
consolidate partial pallets to have enough full pallet space available for the incoming stock.
EDI and Pubnet. If you do not have EDI and Pubnet capabilities, you may find your larger
customers going elsewhere to make their purchases. More and more customers are placing their
orders electronically. It is no longer a question of if you should install, but when.
Advanced Shipping Notice (ASN). ASN is essentially a file containing an electronic packing list
for each carton being shipped. Scanning the products as they are packed into the shipping cartons
creates the file, and it compares the contents for the file to the original order file to ensure accuracy.
The files created during the day are sent via EDI to the customers on a daily basis. As with EDI and
Pubnet, the number of customers desiring ASN is increasing. Unlike EDI and Pubnet, however,
ASN will not reduce your labor costs. In fact, it probably will increase labor costs by increasing the
time required to turn your orders. In my situation, where I hold pickers accountable for accuracy, it
adds a checking step, and it stops the picker from packing orders as they are assembled. The one
positive aspect of ASN is accuracy. Using ASN capabilities to scan-check all orders should result in
virtually error-free shipping.
Technology in General. Many of us have been slow to accept and implement new technology in
our operations, even though our customers have been requesting new capabilities for several years.
We have dragged our feet in part because of the cost, but also because we lack the expertise to
analyze or implement it. Whether we like it or not, the time has come to create and staff a full-time
information and technology (IT) department, and it would be best if this department serves the
whole organization.