Rules of thumb have been enormously helpful throughout recorded history. Especially if you were a carpenter in the Middle Ages, where it is thought the term originated.
In warehouse management, rules of thumb are still alive and well. They thrive because everybody “knows” that finding an optimal restocking strategy is impossible, and any theoretical optimum today will be wrong tomorrow anyway.
Probably the most popular rule of thumb is to allocate space so that all the fast-moving SKUs will be replenished in approximately the same cycle time (so many times per day, week, month). In fact, this is so popular a method that it is sometimes thought of as a strategy: the Equal Time Strategy (EQT).
Many experienced operators consider EQT to be more sophisticated – and a lot more efficient – than the obvious analogue, which is to allocate equal space to each SKU and let the restocking cycle time take care of itself. This might just as well lay claim to being a strategy, even if many are disparaging about it. Let’s pin a formal label on it: EQS.
Which is actually better, EQT or EQS, and by how much?
And what if there was actually a demonstrable, provable, optimum strategy? Let’s call it OPT. How much better might it be?
The answers to these questions are not so hard to find as you might think, although they are surprising to most operators, even after years of experience.
In any steady state, where your order profile is pretty consistent (which is what you assume when you apply your rules of thumb) your fast-pick operations are equally efficient under either scenario, EQT or EQS.
And equally inefficient, if you’re a glass half-empty sort of person.
Just how inefficient will depend on the nature of your operations; the product you move and the constraints with respect to family-grouping. But it’s not uncommon to find that EQS and EQT are as much as 30% less efficient than OPT.
Of course, the maths behind this is challenging for most of us. But thankfully the proofs are clearly explained by Bartholdi & Hackman, of the Georgia Institute of Technology, Atlanta GA. Their work spells it all out for anybody who paid real close attention to their differential algebra at school.
You might be thinking that it’s all very well in theory, but how on earth can you optimally allocate your SKUs in the forward pick area in practice: that’s the really tough question.
And it has the easiest answer of all.
You simply get in touch with us, and we’ll demonstrate the mathematical optimisation software that can show you in minutes how to improve your efficiency and reach out for that 30% of cost that you may be wasting right now.
Best of all, our solutions will pay for themselves in months, not years.