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Optimising internal goods flows with simple logic

27 August 2018, Manufacturing, 5 min leestijd

Customers expect to receive their orders quickly. And that’s why organisations in the manufacturing industry need to organise their internal goods flows as efficiently as possible. And yet this all runs into trouble at one specific link in this process: the coordination between the warehouse and the production floor. How can you change that with one very simple solution? You can read the answer in this blog.
 
In my last blog I wrote about the cause of the problem: the coordination between the warehouse and the production floor often lacks structure. 

The solution

How can organisations change this? How can they organise their internal goods flows – and especially those between the warehouse and production floor – as efficiently as possible? The answer to those questions is as logical as it is simple: just by making good agreements. There are three benchmark moments in the coordination between warehouse and production floor. In this blog, I want to walk you through these moments and give some tips in order to improve the coordination.

First moment: receiving goods

Not every organisation makes agreements with their suppliers about labelling. That makes it even more important for warehouse staff to provide information on incoming goods and raw materials themselves.

Pitfall: warehouse staff expect that everyone will recognise the packaging and will know what’s inside.

That’s why you should make agreements about:

  • Consistent inbound labelling 

  • What information should be on the labels

Result: everyone will immediately see what is in the packaged raw materials and its components, and which batch it originated from.

Second moment: from warehouse staff to production

Depending on the production planning, the warehouse staff will prepare the right raw materials and components for the production department.

Pitfalls:

  • Warehouse staff bring the necessary raw materials and components for multiple orders to the production floor at the same time, thus creating a lack of overview.

  • Warehouse staff do not always know what is happening on the production floor (e.g. in the event of a malfunction), as a result of which they supply raw materials on the basis of assumptions.

  • Production staff do not know which materials are meant for which orders.

  • If a certain raw material is not available, the production staff themselves decide which alternative raw materials they can process in a product.

That’s why you should make agreements about:

  • Who will prepare the daily list with raw materials and components that are required for production orders. What information is in it? Also information about the alternative raw materials?

  • Who is responsible for the preparation of raw materials and components for production and who is responsible for the correct dosage.

  • At what times of the day the warehouse should prepare the raw materials and components for production.

  • How and to whom changes in the production planning are communicated, for example in the event of a breakdown in production.

  • How production staff know about which raw materials are meant for which order.

Result:

  • Warehouse staff will know exactly when the production requires a new supply of raw materials.

  • Production staff will receive the right raw materials in the right order from the warehouse so that they can produce goods quickly.

Third moment: from production to the warehouse

Once the raw materials and/or components have been processed into a product, production staff will report that the order is ready.

 Pitfalls:

  • Production staff will assume that the warehouse staff will know by themselves when an order can be picked up.

  • Warehouse staff will gather the notified end products at established times, but they won’t know how many products will actually be standing ready on the production floor.

  • It is unclear for warehouse staff what needs to be done with the remnants of the supplied raw materials.

That’s why you should make agreements about:

  • Who is responsible for the removal of notified end products from the production floor, and at what interval it should happen.

  • How production staff can make it as clear as possible for warehouse staff which products can be picked up.

  • How an additional post-processing or extra inspection of the end product is requested or indicated.

  • How the production department will communicate any changes in the production planning so that the warehouse can anticipate this for the collection of end products.

Result:

  • The production department will always run a properly organised workplace because it is never too full with end products.

  • Warehouse staff will know exactly when they have to pick up which end products.

Who is responsible?

It is the job of the manager to formulate the agreements, but of course in consultation with the production department and the warehouse. Once there is a basis for good agreements, reliable information and the prioritisation of tasks, there is then only a need for periodical consultations between the parties in which the exceptions are dealt with. Everyone now knows what is expected of them and everything then revolves around a higher purpose: satisfied customers due to shorter delivery time and lower error margins. 

What is the next step?

Organisations that work in a reasonably steady environment don’t necessarily need a next step. In their case, having a basis of good agreements and reliable information is sufficient. But organisations that have to deal with rapidly changing customer needs, a changing range assortment, and customer-specific configurations, should take the next step in process optimisation: obtaining real-time insight. In that way, both the warehouse and production floor will know directly when raw materials need to be supplemented or end products have to be collected. 

Want to know more?

On Thursday, September 20, my colleague Bram Rikken – Senior Consultant Supply Chain – will tell you all about this topic during a webinar. How do you create real-time insights and what does it deliver? Sign up today.