What is lean Warehouse Management? Definition and Examples – OrderCircle

Lean warehousing means managing a warehouse optimally. It aims at eliminating inefficient processes. This helps in maximizing returns and reducing costs.

Lean warehousing aims at increasing productivity. This is done by eliminating wastage (Muda), overburden (Muri), and irregularity (Mura). These three Japanese words form the basis of lean warehousing. The concept of Lean management has emerged from Japan.

Warehouse owners might face challenges due to immense pressure in the warehouse industry to improve. Every warehouse targets to become faster and perform efficiently, as a well-run warehouse can reduce total inventory cost by 40%. That’s where Lean Warehousing comes into the picture.

Managing a warehouse efficiently is the key to a successful business. It helps in timely meeting customer demand while reducing investments. With the growth of a company, inventory/warehouse management becomes more challenging. Businesses follow many established practices for the same. Lean warehousing is one such practice. It aims at efficient warehouse management, which benefits the company.

In today’s world, a warehouse is much more than just storing the inventory. It also includes other processes like packing, dispatch, sorting, etc. Lean warehousing focuses on improving these processes and eliminating non-useful processes. These processes use resources but do not add value to the business. Lean warehousing aims at highlighting the problem areas and solving them.

What is Lean Warehousing?

Lean warehousing is a warehouse management system or approach that limits resource consumption without compromising productivity or service quality. Simply put, lean warehousing emphasizes doing more with fewer resources.

Lean warehousing follows lean manufacturing principles that eliminate waste, improve operational efficiency and reduce inventory levels. This incorporates warehouse management systems, warehouse control systems (WCS), and automated storage & retrieval systems (AS/RS).

This paved the way for modern-day warehouses, allowing various operations for receiving, putting away, picking, packing, shipping, and dispatching. Lean warehousing systems help warehouses eliminate operations or processes with zero ROI. For this, warehouses apply 5s systems that are Sort, Straighten, Shine, Sustain, and Standardize.

In addition, key principles of lean warehousing:

• Reducing the waste in warehouse processes
• Minimizing or eliminating unnecessary inventory
• Increasing operational efficiency
• Better accuracy and data quality
• Customer satisfaction

Benefits of Lean Warehousing

Warehouse management is vital in efficiently managing products, goods, and services within a warehouse and surrounding environment. Here are some of the benefits:

Lower Inventory Costs

The lean approach helps warehouse owners use their space more efficiently, as they can reduce clutter and unused material. Every step of lean warehousing reduces the unused materials kept within the warehouse. This leads to a drastic reduction in inventory cost, as cost is always associated with space. In addition, this also reduces the cost related to heating and cooling the products and cleaning them.

Minimization of Waste

Lean warehousing also helps warehouse owners to limit waste. However, it is vital to know that waste not only means material but also includes time, energy, and resources. Businesses require a clear view of their workflow to reduce waste. For example, know which workflows are efficient and which ones are bottlenecks. A lean warehouse enables the amount of inventory or raw materials required at a particular time. 

Boosted Employee Morale

The lean warehouse approach also boosts employee morale, resulting in satisfied customers. This emphasis on continuous improvement and creating an organized, efficient work environment contributes to a positive workplace culture. For instance, an overfilled warehouse, which is difficult to clean, can not be a good place for anyone to work.

On the other hand, a lean warehouse is smaller and more efficient. This facilitates warehouse workers to have a sense of responsibility and work towards a common goal. Moreover, when employees see the tangible results of their efforts in improving processes, it fosters a sense of pride and satisfaction, ultimately boosting morale.

Enhanced Quality

Lean approaches enable warehouse employees to focus on important tasks rather than wasting time dealing with overstock, understock, or poorly managed inventory. This paves the way for better product quality and customer service. Lean management systems incorporate quality management principles, allowing workers to focus on the quality of the task. This proactive approach ensures that customers receive high-quality products and prevents costly errors that may arise from inefficient processes.

Increased Efficiency

Efficiency is one of the key aspects of lean warehousing. This helps warehouse owners get rid of the items that are not used. Lean warehousing 5S practices that aid with identifying the items, which is necessary. Moreover, this strategy aids in preventing clutter, scrap materials, unused items, and supplies. By doing this, the organization can improve the speed and accuracy while fulfilling the order management. This leads to improved operational efficiency.

Improved Productivity

Lean warehousing principles empower employees to focus on tasks that add value rather than getting bogged down by non-essential activities, like excess inventory storage. This shift increases productivity as non-value-added activities can be identified and reduced. Moreover, the time taken from point A to point B is much less, resulting in better productivity.

Better Safety

Safety is not just a compliance checkbox in lean warehousing; it’s a fundamental consideration. Lean warehousing identifies and addresses safety hazards, like unnecessary product handling, and helps reduce them.

Reduce Downtime

Lean warehousing’s focus on streamlining processes contributes to reduced downtime. Whether it’s minimizing equipment breakdowns, optimizing maintenance schedules, or reducing workflow delays, the result is a more consistently operational warehouse.

How to Apply Lean Warehousing in a Business?

A business can apply this concept using the 5 Ss. These are as depicted below:

Sort (Seiri): Seiri means sorting. This is the first step in lean warehousing. Sorting means removing unwanted inventory items and processes.

One can sort the most, and the least sold inventory. One can also sort the most and the least productive processes. This way, one becomes aware of the bottlenecks in the warehouse operations. These can be removed to improve the functionality of the warehouse. Sorting inventory as per usage also helps in efficient deliveries.

Organize (Seiton): Seiton, or organizing, aims at increasing efficiency. It includes organizing the warehouse functions efficiently. One can place the most used inventory at accessible places. One can also tag the products and the storage containers. Further, one can map the warehouse along with all the products. Signages can be put in the warehouse to guide the employees. This will help save time and effort and provide them directions. One may also put trolleys and carts at many places. This will help in faster movement of goods.

Shine (Seiso): Seiso means shiny clean. It aims at maintaining the cleanliness of the warehouse. A clean warehouse attracts its customers and also encourages employees to work more efficiently. It also reduces the chances of accidents and highlights any damaged goods. One can define a standard cleaning procedure for the same. Dustbins can be allocated at appropriate places. Cleanliness kits can also be made readily available.

Standardize (Seikestu): Seikestu means to standardize. Standardization promotes uniformity. It also reduces stress and quickens warehouse functioning. One can document the best practices and procedures once made. One needs to explain these clearly to the employees. One can also display these best practices clearly, for ease. Posters and charts prove helpful in this. Also, videos and training booklets help in following the standardized procedures. This will help in avoiding confusion amongst the employees.

Sustain (Shitsuke): Shitsuke means to sustain. This is the final step in lean warehousing. This indicates maintaining the standardized processes and making continuous improvements. One should continuously review the procedures for their implementation. Regular audits are helpful in this. One should also incentivize the employees to make further improvements in the processes. Any innovative idea should be rewarded. This will help in sustaining the best practices implemented in a business.

How are Lean Manufacturing and Lean Warehousing Related?

The relationship between lean manufacturing and warehousing is symbiotic, as they focus on streamlining processes and reducing waste. Lean manufacturing sets the foundation by optimizing production processes, and this follows the various lean principles to achieve this: 5S System, Kaizen, and Value Stream Mapping.

Lean warehousing extends this optimization into the broader supply chain, reducing costs and improving efficiency. For this, lean principles, such as Kanban, Heijunka, and Just in Time (JIT) are being used. A seamless integration of lean principles from manufacturing to warehousing ensures a continuous and efficient flow of materials and products, aligning perfectly with the overarching goal of delivering value to the customer.

How can Lean Warehousing Increase Efficiency?

Automate Warehouse Processes

Automation helps to reduce manual labor, eliminate data entry errors, and streamline workflow. Automation means using robots to complete labor-intensive tasks, such as picking and packing. Automation prevents human error, leading to better frequency.

Implement a Warehouse Management System (WMS)

Technology has paved the way for streamlining and optimizing their operations. The warehouse industry can also incorporate WMS software to manage operations and optimize inventory levels. It helps workers monitor the warehouse, track inventory, and automate processes, improving efficiency.

Use Lean Practices

Lean practices help businesses streamline processes and mitigate waste in warehouses. These practices reduce cycle times and improve flow. 

Utilize Technology

New-age technology, such as voice picking, automated conveyors, and RFID technology, help increase accuracy. 

Optimize Space Utilization

Warehouse owners can optimize space by reducing clutter and increasing efficiency. This also reduces the need for labor to move items in the warehouse. Better optimization of space also reduces the requirement for additional storage space.

The 5S Methodology of Lean Warehousing

Sort

This is a critical step in lean warehousing. In the sorting step, one can break down warehouse operations to eliminate unnecessary items from unnecessary ones. This focuses on reducing the warehouse operation by taking guidance from aboard. This emphasis on decluttering the workspace creates a foundation for a more organized and efficient environment.

Streamline

After reducing the number of operations, the next step is to organize or rearrange warehouse storage, inventory, and equipment more effectively. This helps warehouse workers to search for anything in less time, maximizing all the processes. This ensures that heavy-duty objects or delicate items are closer to loading docs, ensuring safety.

Shine and Clean

This step involves maintaining cleanliness and ensuring that equipment and workspaces are well-maintained. A clean and well-organized environment contributes to operational efficiency.

Standardize

This step involves creating and maintaining uniform work procedures and training all staff about processes. This also ensures consistency in processes, reducing variability and improving overall efficiency.

Sustain

Warehouse owners need to sustain lean warehousing operations. So, they need to create a culture for continuous improvement. Moreover, continuously evaluate these five criteria for efficient and successful warehousing operations.

Best Practices for Lean Warehousing

• Utilize lean tools to detect and eliminate waste in the warehouse
• Incorporate automation to improve efficiency
• Organize cross-training within your warehouse organization
• Set key performance indicators (KPIs) and monitor them regularly
• Collaborate with suppliers to streamline inbound supply chain
• Incorporate a continuous improvement culture

Advantages of Implementation Lean Warehousing

Cost Savings 

Lean warehousing enables the reduction of waste, leading to significant cost savings. This contributes to a more profitable operation.

Improved Customer Satisfaction 

Lean warehousing approaches focus on efficient order fulfillment, accurate deliveries, and a reliable supply chain, enhancing customer satisfaction and building long-term loyalty.

Adaptability

Lean practices create an organization that is agile and adaptable to changes in demand, market conditions, and unforeseen disruptions. This adaptability is a valuable asset in a dynamic business landscape.

Competitive Advantage 

Organizations embracing lean warehousing gain a competitive advantage by operating more efficiently and effectively than their peers. This advantage extends to responding quickly to market demands and changes.

How Can Lean Warehousing Help Manufacturers?

• Streamline Process
• Cost Saving
• Customer satisfaction
• Reduced inventory

How Can OrderCircle Help You?

OrderCircle offers end-to-end enterprise solutions that help manufacturers save time and money by upgrading their business to the cloud. OrderCircle is an expert in the B2B Ecommerce space, assisting in visualizing and managing your inventory. Moreover, you schedule production and leverage other resources using OrderCircle.

Conclusion:

Lean warehousing focuses on optimization. It aims at maximizing output with minimal use of resources resulting in efficient warehouse management. It reduces order process time, saves costs, and helps in faster deliveries. It also helps in the optimal utilization of the warehouse space. It provides direction to the employees and keeps them motivated. All this improves the financial health of the business.

To implement this concept, one needs to follow the five principles. The first is to sort the inventory and processes based on their importance. Next is to organize the warehouse functions. The third is to maintain the cleanliness of the warehouse. Fourth is to standardize the best procedures, and fifth is to focus on continuous improvement.

Concepts such as Kanban prove useful for lean warehouse management.