Advanced Warehouse Resource Productivity Standard Management

In the fast-evolving landscape of logistics and supply chain management, Warehouse Resource Productivity Standard calculation is a critical factor in ensuring operational efficiency and enhancing customer satisfaction. However, every Warehouse is different in terms of shape & size, MHEs, layout, product slotting, training, order profile etc. Productivity benchmarks is ideally established at the warehouse level. Only Resource wise travel speed and taskwise touch time can be standardized across the warehouses. 

Defining Resource Productivity Standard requires a thorough understanding of various factors that differ from one warehouse to another, including warehouse size, material handling equipment (MHE), order profiles, slotting, layout, labor skill levels and work allocation effectiveness.

Our approach considers these variables and breaks down each task to the activity level to calculate the standard time for completion of a task. This forms a key part of our "Work Order & Resource Management" (WORM) module.

This guide explores the essential components of advanced warehouse resource productivity standard, including calculation methods, task classifications,  and the impact of various operational levers.

Resource Productivity And Losses

There are four types of losses:

1. Idle Time Loss: Worker/Resource didn't have work available for entire duration of the shift.
2. Productivity Gap loss: Resource was less productive compared to the standard productivity levels.
3. Non-Value add activities: Time spent in activities other than value add activities like inbound and outbound movements.
4. Design/System Gap: Standard hours are significantly above ideal/benchmark productivity levels due to in efficient processes and systems.  

‍A. Calculating Resource Productivity:‍

Warehouse resource productivity is segmented into four primary components:

Key Performance Indicators (KPIs) and Impacting Levers:

1. Work Availability (A)

Formula: Actual Work Hours / Available Hours

Definition: Work Availability measures how efficiently the available labor hours are utilized in performing tasks within the warehouse. It indicates the extent to which available time is actively used for productive work rather than being lost due to inefficiencies.

Key Levers & Explanations:‍

• Workload Balancing: Proper distribution of workload among employees to prevent bottlenecks and ensure steady operations.
• Workload Planning & Scheduling: Effective workforce planning based on demand forecasts to optimize shift patterns and prevent underutilization or overburdening of staff.

2. Resource Productivity (P)

Formula: Standard Hours / Actual Work Hours

Definition: Resource Productivity evaluates how effectively the workforce completes assigned tasks within the expected time frame. Higher resource productivity indicates that employees are working efficiently, minimizing idle time and meeting performance standards.

Key Levers & Explanations:

• Resource Quality/Training: Skilled workers perform tasks more efficiently, reducing rework and errors. Regular training improves skill levels and boosts productivity.
• Resource Experience: Experienced employees handle tasks faster and more accurately, improving throughput.
• Working Conditions: A comfortable and safe working environment increases efficiency and reduces downtime due to fatigue or safety incidents.
• Work Pacing, Gamification and Rewards: Encouraging employees to maintain steady work speeds through incentives, gamification strategies and performance-based rewards.

3. Value Add Rate (V)

Formula: (Inbound Standard Hours + Outbound Standard Hours) / Total Standard Hours

Definition: The Value Add Rate measures the proportion of time spent on productive, value-adding activities such as receiving, putaway, picking and shipping. Reducing non-value-adding tasks improves overall warehouse efficiency.

Key Levers & Explanations:

• Internal Movements: Minimizing unnecessary movement within the warehouse to save time and improve efficiency.
• Stock Consolidation: Organizing inventory effectively to reduce handling time and improve picking speed.
• Any Other Non-Value-Adding (NVA) Activities: Identifying and eliminating activities that do not contribute to operational efficiency, such as excessive paperwork, manual data entry, irredundant handling processes.

4. System Effectiveness (S)

Formula: Value Add Benchmark Hours / Value Added Standard Hours

Definition: System Effectiveness assesses how well warehouse operations align with industry benchmarks and best practices. A high system effectiveness score indicates that operations are running smoothly and adhering to optimized processes.

Key Levers & Explanations:

• Layout/Slotting: Optimizing warehouse layout to reduce travel time and improve storage accessibility.
• Putaway Logics: Implementing smart putaway strategies to place frequently accessed items in easily reachable locations.
• Picking Logics: Using efficient picking methods (e.g., batch picking, wave picking) to reduce time spent retrieving items.
• Interleaving: Combining different warehouse tasks (e.g., merging putaway and picking tasks) to maximize efficiency and minimize empty travel time.

B. Productivity Models and Calculation Methods

Warehouse tasks are typically categorized into two primary productivity model type:‍

1. Pick & Drop Tasks: These tasks involve moving goods from one location to another within the warehouse.
2. WorkStation Tasks: These encompass static tasks such as receiving, loading, quality assurance (QA) and packing.

Productivity Calculation Methods:

• Time & Motion Studies: Detailed time and motion studies help establish initial productivity models by calculating standard times for various task.
• Historical Data Regression: Analyzing historical data refines productivity benchmarks and identifies patterns to improve.‍
• Machine Learning and Continuous Improvement: Leveraging advanced technologies like machine learning drives continuous productivity improvements by analyzing operational data and optimizing workflows.

C. Detailed Productivity Standards

C.1. Pick & Drop Tasks

These tasks focus on the movement of goods within the warehouse, with productivity calculations factoring:‍

• Resource Type: Different resources, such as operators using Hand Operated Pallet Trucks (HOPT), Battery Operated Pallet Trucks (BOPT) or Reach Trucks (RT) - have varying speeds and efficiencies.
• Handling Unit (HU) Type: The type of unit being handled, such as pallets or cases, affects the process time‍
• Travel Distance: The distance between pick and drop points plays a crucial role in determining the total standard time for task completion.

Example Calculation:

Pick 10 Cases from Bin 1 and Pick 30 Cases from Bin 2 and Drop to Loading Staging area; Bin 1 to Bin 2 is 15 meters, Bin 1 from Dock area is 48 meters, and Bin 2 to Loading Staging area is 60 meters. Operator is using BOPT.

‍
Total Standard Time = 48/3 for travel from Dock to Bin 1, 3 seconds for processing at Bin 1, 10×2 for pick time at Bin 1, 15/3 for travel from Bin 1 to Bin 2, 3 seconds for processing at Bin 2, 30×2 for pick time at Bin 2, and 60/3 for travel from Bin 2 to Loading Staging area; Total time taken is 127 seconds.

C.2. Workstation Tasks:

Tasks  at fixed workstations like receiving and loading have distinct productivity standards. These are measured by the process time per handling unit and the overall time per work order.

Example Calculation:
Example 3: If 150 Cases to be picked and staged using BOPT. It would take:
150*12 + 240 = 2040 Resource secs (if there are 3 resources – it will take 680 secs to complete the task)

Example 4: If 35 Pallets to be shifted from Receiving to Storage using Reach Truck. It would take:
35*100 + 300 = 3800 Resource secs (if there are 2 Reach Trucks – it will take 1900 secs to complete the task)

Example 5: If 500 Cases to be sorted and stacked using HOPT. It would take:
500*15 + 180 = 7680 Resource secs (if there are 4 resources – it will take 1920 secs to complete the task)

‍Conclusion

Measuring and optimizing warehouse productivity is a multifaceted challenge that demands a nuanced approach to warehouse resource productivity standard, a deep understanding of task classifications and resource efficiency. By implementing detailed productivity standard models and leveraging continuous improvement strategies, businesses can enhance warehouse operations, reduce costs, and improve service levels.

‍

‍

Venktesh Kumar

MD, Co-Founder | Stackbox