Advanced Warehouse Resource Productivity Standard Management

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Venktesh Kumar

MD, Co-Founder | Stackbox

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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  approachconsiders these variables and breaks down each task to the activity level tocalculate the standard time for completion of a task. This forms a key part ofour “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.

A.  Resource Productivity And Losses

There are four types of Losses:

1. Idle Time Loss: Worker/Resource didn’thave 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 hrs issignificantly above ideal/benchmark productivity levels due to inefficientprocesses and systems.  

‍A. Calculating Resource Productivity:‍

Warehouse resourceproductivity is segmented into four primary components:

1. Work Availability (A): This metric assesses whether there is sufficient work to match the available resources. It is calculated as the total actual work hours divided by total available hours.

2. Resource Productivity (P): This measures whether resources are performing at or above benchmark productivity levels, calculated as the ratio of standard hours  to actual hours worke.

3. Value Add Rate (V): This evaluates the percentage of efforts dedicated to value-added activities versus non-value-added ones, offering insights into areas for operational improvement

4. System Effectiveness (S): This evaluates the degree of gap between ideal/benchmark  productivity numbers and standard productivity numbers.

A. Key Performance Indicators (KPIs) and Impacting Levers

 1. Work Availability (A)

 Formula: Actual Work Hours / Available Hours

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

Key Levers & Explanations:‍

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

 2. Resource Productivity (P)

Formula: Standard Hours / Actual Work Hours

Definition: Resource Productivity evaluates how effectively theworkforce completes assigned tasks within the expected time frame. Higherresource 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, improvingthroughput.
• Working Conditions: Acomfortable and safe working environment increases efficiency and reducesdowntime due to fatigue or safety incidents.
• Work Pacing, Gamification & Rewards: Encouraging employees to maintain steady work speeds through incentives, gamification strategies, and  performance-based rewards.

 3. Value Add Rate (V)

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

Definition: The Value Add Rate measures the proportion of time spenton productive, value-adding activities such as receiving, putaway, picking, andshipping. Reducing non-value-adding tasks improves overall warehouseefficiency.

Key Levers & Explanations:

• Internal Movements: Minimizingunnecessary movement within the warehouse to save time and improve efficiency.
• Stock Consolidation: Organizinginventory 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 excessiv 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 warehouseoperations align with industry benchmarks and best practices. A high systemeffectiveness score indicates that operations are running smoothly and adheringto optimized processes.

Key Levers & Explanations:

• Layout/Slotting: Optimizing Warehouse layout to reduce travel time and improve storage accessibility.
• Putaway Logics: Implementingsmart putaway strategies to place frequently accessed items in easily reachablelocations.
• Picking Logics: Using efficientpicking methods (e.g., batch picking, wave picking) to reduce time spentretrieving items.
• Interleaving: Combiningdifferent warehouse tasks (e.g., merging putaway and picking tasks) to maximizeefficiency and minimize empty travel time.

 D.  Productivity Models and Calculation Methods

 Warehouse tasksare typically categorized into two primary productivity model type‍

1. Pick & Drop Tasks: These tasksinvolve moving goods from one location to another within the warehouse.
2. WorkStation Tasks: These encompassstatic 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 dentifies patterns for improve‍
• Machine Learning and Continuous Improvement: Leveraging advanced technologies like machine learning drives continuous productivity improvements  by analyzing operational data and optimizing workflows.

E.  Detailed Productivity Standards

a. Pick & Drop Tasks

These tasksfocus on the movement of goods within the warehouse, with productivitycalculations 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 efficiencie
• 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.

b. 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 Optimizingwarehouse productivity is a multifaceted challenge that demands a nuancedapproach to warehouse resource productivity standard, a deep understanding oftask classifications and resource efficiency. By implementing detailedproductivity standard models and leveraging continuous improvement strategies,businesses can enhance warehouse operations, reduce costs, and improve servicelevels.

Discover moreabout optimizing your warehouse operations with cutting-edge solutions at stackbox.xyz.

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