New Warehouse Layout, Inventory Zones, & Efficiency

A few weekends back we re-organized the product layout in the warehouse.  When we first moved in we only had one row of products.  Since then we’ve just been adding shelving units as we go, with no real organization other than trying to keep items of a specific brand together.  It grew to the point where pulling and packing a large order took forever.  You’d be running around like a chicken with your head cut off, going up and down rows on one side of the warehouse to get a few products, then back to the other side for a few.  On really large orders the process would repeat itself over and over again.  It could easily take 30 minutes to pull, check, and pack a large order.

For some companies, this might be acceptable.  For us, it isn’t.  We’ve managed to grow without hiring because we’ve always offset our growth with new efficiencies. In this case, the solution was rather simple:

  1. Space out products so that they have adequate room for growth as we expand.
  2. Put the most frequently sold brands closest to our pulling table (this post from last year has a good overview of how we pull/pack orders)
  3. Put the most frequently sold products on the middle three shelves, with less frequent sellers like gallon sizes on the bottom and top shelves.  We have reports in our admin system that tally all of this data for us.
  4. Number each shelving unit as a “zone”.
  5. Record the “zones” for each unique product and size in our database
  6. Display products on invoices according to their “zone” (previously they were just in alphabetical order)

Here’s the chart that we used to number the different shelving units.  The red shelf is TD only, the grayed out shelves are future units, and the row of boxes are for items like buffers that do not fit on shelving units and are left in boxes.

Inventory Zones

Now when the order is printed out on the invoice it prints in ascending numerical zone order, with products in zone 1 on the top and products in zone 85 on the bottom.  As you can tell, we snaked the zones.  So if you need products in zones 2, 6, 9, and 11 you’ll take less steps by snaking down to the next row as opposed to walking back to the start of the rows each time.  Shipping boxes are located in a row before Row 1, so in theory you can pick up your pre-made box for the order (as determined by our box size system and printed on the invoice) and then just plop all of the items into it as you snake through the warehouse.

You can also see how many more steps you’d take previously if, for example, you had an order with items in zones 4, 18, 22, 33, and 80.  You could easily travel the length of the warehouse several times if they were ordered 10, 33, 22, 4, 80 on the packing slip.  Or you could miss an item if you tried to re-arrange them in your head according to location.  Now you can get the items all in one pass.

Here’s a picture of the first row of products:

Pure Adapt Warehouse

Since we’ve put the system in place we’ve been able to pull and pack orders much faster, despite the fact that we’re not familiar with the new layout.  Once a few months go by I can’t even imagine how many steps will be saved.  This also gives us a much more refined process to teach others.  We want to put systems in place that not only help us thrive, but will help our future employees thrive.

**Side note:  if I was doing this project as a Six Sigma initiative at my prior job (or any large corporate job for that matter), I would have had to have spent a lot of time collecting data before and after the project to measure the improvement.  I would have spent a ton of time tracking steps, timing packing time, and then organizing all of the data.  Then I would have had to relate those time savings back into dollars saved for our company – in terms of saved labor costs and reduced mistakes.  However, in our case, it’s totally fucking obvious to anyone with half a brain that this saves a ton of time and cuts down on mistakes.  Since I’m an owner, I don’t have to spend time on “proving” the project value to justify my value to the company.  One of my favorite parts of running my own business.

12 comments on New Warehouse Layout, Inventory Zones, & Efficiency

  1. Nev says:

    I love posts about this stuff.

    It seems you’re pulling orders one at a time. I visited a medium sized retailer and here’s what they did:

    1.) Split up orders for the day into several batches.
    2.) When a new batch was selected, a person would go around the warehouse with a large cart and total product print out and pull every product. Let’s say 10 orders had DooDads on them, so the puller would put a total of 14 DooDads or whatever the orders called for.

    This large batch of items would be placed in the shipping area. This way the packers walk maybe a total of 10 or less steps for an order since everything is in the same place. At the end of the batch every item would have to be gone….kind of like a double-check to make sure everything was shipped out. If you have 5 extra DooDads sitting on the floor, someone screwed up.

  2. Adam McFarland says:

    Nev –

    Great comment. We’ve definitely seen companies that do that and discussed it quite a bit. We’re of the opinion that in our scenario it would create an extra step of work and slow us down. I think that would work better if we had less products.

    DI has something like 300 products, many of which are popular, almost none of which are so popular that they get ordered all the time. So in a batch of say 100 orders you may have 200 products being pulled between 1 and 5 times. You’d end up with a “mini warehouse” of just the products you need in the packing area. Then you have to go looking for the product for each particular order again in the packing area. Our products are still confined to ~2,500 sq-ft so the walking distance isn’t all that far. Might as well just kill that step all together and go get each product as you need it. We really just ran into problems on the huge orders, which I think now we’ve got worked out pretty well.

    Loved the homeless experiment posts btw. I was following them all weekend. Can’t wait to read more of your thoughts. I’m interested to see what comes from it.

    Adam

  3. Dave says:

    Love these types of posts too! I need to get my hands on your box size spreadsheet 🙂

    The way you have it setup seems as efficient as possible given the size, amount of products, and the way you have things setup now. As you continue to grow, make sure and keep rethinking the process for efficiency.

    Nev – I also followed all of the homeless experiment posts, great stuff!

  4. Adam McFarland says:

    Thanks Dave. I think you hit the nail on the head. It’s a fluid process. As a company, as long as you’re constantly re-evaluating things you shouldn’t ever become inefficient or archaic. I think you start running into trouble when you start saying things like “this is the way we’ve always done it”. Hopefully my partners and I will never become those guys.

    Oh, and when/if you think it’s necessary for your sites I’d be happy to share the code we use for the box size system. Drop me an email any time.

  5. Nev says:

    Since I run a drop shipping operation I luckily don’t have to deal with warehousing. I read somewhere that Zappos.com gets an order of shoes out the door within 8 minutes of purchase. DAMN!

  6. Dave says:

    I read somewhere that Zappos.com gets an order of shoes out the door within 8 minutes of purchase. DAMN!

    Damn is right! I’d love to see how they manage everything. I’d assume it’s probably similar to Newegg, and we’ve had some insight into that.

  7. Adam McFarland says:

    If you guys haven’t read it: a great article last month in Inc. about Zappos. They give free tours and they’ll even come pick you up and drive you to their facility. We’re hoping to get out there sometime this year. Would be a great learning experience.

    • Greg says:

      Adam,

      Good to see that IME education paying off. When I stumbled upon this post all I could think about was an animated ProModel simulation running through your warehouse. On second thought, I’m sure with a random bump into Malmborg, you could get some free “consulting” work from some IMEs in training.

      • Adam McFarland says:

        Haha classic. I’d love to let ProModel rip through a simulation of the warehouse! Drop me a line next time you’re in town and we’ll have to meet up for drinks.

  8. […] inspirational and have lead to things that have really helped me out.  Little things like learning how his business setup their warehouse, or opening the doors to Stanford’s Entrepreneurial Thought Leaders podcasts have made bigger […]

  9. […] inspirational and have lead to things that have really helped me out.  Little things like learning how his business setup their warehouse, or opening the doors to Stanford’s Entrepreneurial Thought Leaders podcasts have made bigger […]

  10. […] little over a year ago I wrote a post entitled New Warehouse Layout, Inventory Zones, & Efficiency where I explained our new “inventory zone” system.  Prior to implementing that system, […]

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