Why and how to prepare a warehouse operations manual
Monday, December 14, 2015
It is possible to operate a warehouse in the absence of written procedures or a manual, and we have seen many that function well without them. Some employ seasoned operations people who carry the procedures between their ears, a phenomenon that we call "the biological database."
The problem occurs when an individual with the know-how is absent unexpectedly. Other people, not having the procedures memorized, then struggle to do the job properly. As we review reasons for developing an operations manual, the most important is to eliminate the possibility that important procedures are stored only in the memory of key people.
A second reason is to standardize best practices. In our examination of warehouse operations with more than one branch location, we frequently find a different "best practices" at each, for receiving, order picking or other functions. In this situation, there may be a wide variance in the productivity of each of the local practices.
But there can be only one "best" practice. Identifying and adopting the best practice at all locations will result in an overall productivity increase. The operations manual provides a means of making the best practice the standard practice.
Most operations have a constant need for training because expanding work volume, or the need to replace departing workers, brings new staff to the workplace. Provided in an operations manual should be a single standard for training. In the absence of such a document, there could be wide variations in training, simply because the practices used also are subject to variation.
Finally, companies that supplement in-house warehousing with logistics service providers will be able to use the operations manual as a guideline for both outside contractors and the internal warehouses. The reasons indicated here more than validate the value of a detailed operations manual for most warehouse operators.
No company is too small. One of the best procedure manuals we noted was installed in a small distributor usually having only one warehouse employee. The manual was used when the full-time employee was absent, and an inexperienced employee was assigned to the warehouse.
The first step in preparing an operations manual is to decide what topics must be covered. This becomes the basis for the table of contents.
Nearly every warehouse is involved in the basic functions of receiving, put away, order picking and shipping. A growing number of warehouse operators complete some value-added features, such as packaging, assembly, or price marking. Such features frequently are complicated, and unique to a particular operation; therefore, the table of contents will be unique to each warehouse.
A sample table of contents is shown here:
Where more than one method exists, it is important to identify the best practice. In the absence of a standard procedure, workers will adopt their own methods for doing each job. Most often, one of the methods used is better than the others, and that one should be adopted for the operations manual.
The topics to be covered can be divided into four groups. The first group consists of conventional warehousing operations, beginning with receiving and ending with shipping. Included in the second group are operations related to information technology, or actions taken under the direction of a warehouse management system or an enterprise resource planning (ERP) system.
The third group contains operations dictated by environmental factors, including the procedures governing security, safety and sanitation, as well as risk management and disaster or contingency planning. Environmental factors will vary widely, depending on the specific commodities and the location in which they are stored.
The fourth group includes special operations procedures that are not applied in every situation. Damage — both transit damage and warehouse damage — and handling of customer returns are special operations. Cross-dock procedures are needed in some situations. Value-added services may be included as special operations. Pallet management is an issue in many warehouses.
Handling of hazardous materials and controlling cross contamination risk are two additional special situations. Where temperature controlled warehousing is involved, a set of procedures focused on the critical nature of maintaining proper temperatures must be developed.
Included in some operating manuals are job descriptions for all tasks performed in the distribution center. A typical job description is shown below. Others include information about labor standards, and the use of productivity data for making staffing and scheduling decisions.
The operating manual must be related to the objectives of the warehouse. Why does the facility exist? What are management's performance priorities, and which parts of the operation are of secondary importance?
For most warehouses, the first priority is the provision of superior customer service: to deliver perfect orders to every customer, and to deliver them more rapidly than competition. However, in some cases the primary purpose of a warehouse is to reduce logistics costs. The objective of the warehouse will influence each operating procedure.
In what order are the jobs performed? While receiving precedes shipping, job sequence is not always obvious. For example, if some of the goods being received are damaged, steps for handling the damaged merchandise must be included.
The best way to understand and communicate sequence is through the development of a flowchart, in which the work to be performed is illustrated.
One picture is worth a thousand words. The same can be said for operations manuals. If pallet management is critical, an illustration of the ideal pallet can be helpful.
Flowcharts can be used to help clarify sequence and highlight the points at which decisions are necessary. Pictures of materials handling equipment can be helpful, as can drawings of ideal storage layouts and illustrations of layout errors.
If the building you operate is relatively inexpensive, space utilization may be a lower priority than labor and equipment. Should labor be scarce and costly, materials-handling methods will be a higher priority.
Measurement is critical. What needs to be measured, and why? Emphasize why each measurement is necessary, as well as how to measure.
Remember that most managers thirst for useful information, even while they are drowning in irrelevant data. Consider which performance indicators are critical for your operation.
As you develop the manual, consider all of the questions that are asked by people working in your warehouse. Here are a few examples:
- What do we do when we cannot find an item that shows on inventory?
- What if we cannot find space to put away an inbound shipment?
- How does the date coding system function?
- If stock rotation is necessary, what do we do when older stock is not shipped through error?
- How should we handle overages or shortages?
- Because our operation is highly seasonal, how do we deal with the resulting peaks and valleys of activity?
- How do we handle changes, such as new items, discontinued items, and seasonal merchandise?
The critical importance of good communication
There are two primary reasons that some warehouse operations manuals are ineffective.
First, those who prepare the manual have spent insufficient time testing their ideas with the people who do the work. Because they are unfamiliar with operations, the procedures they write fail to describe the way in which the work actually is done.
Second, procedures are written in language that is not readily understood by those who use the manual. Many of us have struggled to understand instruction manuals for electronic gear, written by individuals whose first language is other than that used in the writing. The words are there, but they are confusing.
The manual should be tested as it is written. Ask workers to read each procedure and let you know whether it is clear to them.
Finally, begin the process with the end result in mind. The goal of a good procedure is to identify and standardize the best practice. An effective manual should become a useful training tool and a readily understood guide for everyone.
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