The warehouse performance plateau explained

Incremental ongoing improvement.

Whether you’re in business generally, or warehouses specifically, these three words are at the heart of best practice.

New features are installed, new employees are hired, new processes are adopted, and new premises are moved into. At each stage, things (should) get slightly better. The form of improvement will vary, but whether it’s cost-effectiveness, efficiency, speed, throughput capacity, or some other metric, as time moves on a growing business should be making more money with less effort.

However, as more and more companies are noticing, this is only true up to a certain point.

After a specific but difficult to define stage, it doesn’t matter how cleverly you plan pick routes, how creatively you arrange your stock, or how motivated and professional your picking staff are. Eventually, you simply cannot make your operations any better, and any change you make shifts problems you already have into other areas.

This phenomenon can also be summarised in four words. The warehouse performance plateau.

What is the warehouse performance plateau?

In geology, a plateau is defined as being “an area of fairly level high ground”.

Climbing that high takes a lot of effort, but once you get to that topmost level, there seems to be no more rising. That’s also why the definition of plateau more generally “a state of little or no change following a period of activity or progress”.

The warehouse performance plateau isn’t something that can be simply categorised. There is no single set of statistics or a clear chain of cause and effect. Instead, it can be described in the following terms.

Warehouse performance plateau: When a company’s overall situation cannot be improved by expansion, adjustment, or enhancement

Essentially, this is when a given business model reaches the limits of capacity. Any changes made within that model might solve individual issues, but they can’t make things better overall. Here are some examples to explain:

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Problem – Seasonal order surge cannot be processed fast enough.

Initial response – Hire more short-term staff to process things faster in a specific season.

New problems – HR expenses dramatically increase to deal with all the employee turnover, short term staff are far less reliable in attendance due to an over-competitive market an, inexperienced staff results in increased errors.

***

Problem – Inability to keep pace with current demand in orders.

Initial response – Instruct staff on the most efficient possible walk routes and pick rules and give them new technology to help them keep pace.

New problem – The level of instruction and equipment required increases the overall training time required, resulting in significant training lag times. This problem is exacerbated by rising numbers of short term staff.

***

Problem – Items stored far from the picking stations take too long to pick during certain periods of high seasonal demand.

Initial response – Redeploy staff to regularly rearrange the storage set up, consolidating and moving popular items closer to the picking stations.

New problem – Regular manual rearrangement takes staff away from order processing, thereby delaying other crucial operations and elongating order processing.

***

Problem – Orders are not being processed accurately enough and too many items are being returned.

Initial response – Put more verification processes in place to ensure order accuracy.

New problem – Orders are now going out slower, and it costs more in both staff-hours and equipment. This is because it takes longer to go through all the verification processes and because with more people touching the order there are more stopping points for errors to happen.

How can you surpass the warehouse performance plateau?

It doesn’t take Sir Ranulph Fiennes to work out that once you’ve reached the top of a plateau, you can’t keep climbing. To reach higher, you are going to have to build something new.

Reaching the warehouse performance plateau is not in itself a problem. It just means that the next step your business takes cannot be based on incrementally improving existing practices. That is one of the reasons we talk about the robotics revolution. What is needed is an entirely different approach.

Discover the shape this new approach takes in the form of industry 4.0. Learn from Wise Robotics how the next generation of automation can carry your business past the warehouse performance plateau, into a secure and ever-more-efficient future.