5 Methods for Reducing Product Loss in Your Warehouse

Written By: Scott Ichikawa

Reducing product damage

As part of an engineering integrator for automation systems, I find there are a few major concerns in distribution system design that need to be consistently addressed. One of the most critical cost concerns is financial waste through damaged product.

In a post-recession era when companies are working to “stay lean”, managing product waste is a tangible area where capital investment can lead to great returns. Recently, I was having a discussion with the facility head of an e-commerce company who mentioned that he was satisfied with their level of product loss. He said they kept it, on average, at one percent.

One percent does not sound significant; however, if a facility is shipping out $10,000,000 a year in product, that amounts to $100,000 left on the table every year! Granted, not all of that is always fully recoverable, as there will be operator related issues or accidents, but if you could invest a small sum of capital to consistently reduce product loss by 50%, that could amount to a $50,000 return per year! But before we get too excited, let us focus on some of the major topics on how product loss can be avoided:

1) Operator Training and Involvement

With all the talk of how employees are the lifeblood of a company, there is often a surprising lack of consistent training for new or veteran employees. Something I appreciate about my current employer is the amount of focus and resources placed into making sure I have the tools to do my job. Why should it be any different for a machine operator or a warehouse picker?

A dollar investment into training is always a risk should your employee leave, but it shows your team that you take their positions seriously, and more importantly that you take them seriously. Training need not always be complicated or lengthy. It should be consistent, easy to access, easy to remember and relevant to a position. Sometimes a simple onboard training program or a periodic operational review is enough to increase productivity and reduce inaccuracy.

For more complex machinery, it is even more critical that management considers a proper formal training program. There is a reason people use the phase “I know just enough to be dangerous”. Either way, if investing company money into a full-time training manager is too costly, one could always consider a consulting group or bringing in the machine manufacturers to run training sessions as a solid alternative.

2) Continuous Improvement of Process

Another area that is related to quality is CIP or continuous process improvement. I spent a few years as a quality engineer, and it helped me understand the importance of CIP. Entire programs are dedicated to the art of CIP such as the Six Sigma training program and Kaizen methodology.

With that in mind, it is hard to argue that maintaining the status quo keeps a company competitive when many top-tier companies embrace CIP so ardently. But CIP programs and trained employees can be expensive in both time and human resources, so what does that mean for smaller business or companies that are looking to grow with less capital? It means you can start small! Take a look at your distribution process and ask yourself some of the following questions:

  1. Does an employee touch the product more often than necessary?
  2. Do multiple employees have to manage tracking the product manually?
  3. Does the product sit on a cart unlabeled for extended periods of time?
  4. Does the product have the proper labeling?
  5. Does the product have the potential to be crushed, stacked improperly or hit during storage or transportation?

These questions and many more can help identify when you may need to consider process improvement to help reduce inaccuracy and damage issues. Need more ideas on process improvement and how to identify weak points in a procedure? Check out this article by Bill Bastian II, an engineer and entrepreneur: Standing in Line for 2.5 Hours: Tips for Process Improvement

3) Correct Material Handling Equipment

As a material handling integrator, of course I have an opinion on who to use for your material handling needs! But how do you know what equipment is right for your application? Why do you even need equipment when you have people? These are complicated questions which more often than not gets replaced by “which is less expensive?”

Unfortunately, as with any capital expenditure, if the person with the buying power does not understand the equipment in question, the purchase becomes an exercise in price rather than an exercise of application. While I cannot cover the gambit of how and when to choose the right equipment in this article, I can say that choosing the right equipment is imperative to a successful system. Its importance lies in choosing the best way to move your product efficiently and safely. Additionally, you need to consider the lifetime cost of a system which, on top of upfront cost, includes: maintenance costs, installation costs, future modification costs, and a number of other considerations.

For example, line shaft conveyor is known to be one of the cheapest types of conveyor in terms of upfront cost. It is easy to forget, however, that in terms of installation, maintenance and man hours, it far exceeds the cost of its counterparts such as the 24-volt DC powered conveyor. If material handling is not a strong point for someone in your company, I highly recommend approaching an engineering firm willing to step up and take a close look at your application and data. Check out this article here from Rodger Katter, a senior application engineer: 5 Critical Items to Share with an Integrator When Requesting a Proposal

When it comes to a material handling integrator, anyone can hand you a quote. It is important you seek out a partner for the project, not just a supplier with the lowest cost. A partner will understand your business process and design a system that can be scaled or modified to fit changes in your growth or product. Flexibility and forward thinking are key when it comes to choosing the right system and the right partner.

4) Reducing Manual Touch Points

While reducing manual touch points could be seen as a derivative topic of CIP and choosing the correct material handling equipment, I feel that it deserves a category of its own since I am specifically addressing reduction in product loss. Every time someone touches a product, there is a danger of it being damaged. This can be from a drop, an improper placement/storage, or a variety of other reasons. There is a danger of it being misplaced or inaccurately packed. This can be from a misread of a label or forgetting where to place the carton.

Finally, there is the inefficiency of manual handling. Equipment can be designed to work in a specified manner to safely move a product efficiently and accurately. People need to be trained, reminded and supervised. People also do not work at a consistent rate, they need time off and do not work 24/7.

By transitioning the majority of manual work to material handling equipment, a company can save on basic labor and use that freed capital as a return on investment for the machine expenditure or to invest in more skilled labor for other areas of business. More importantly though, you remove much of the human element from the material handling and reduce your product loss.

5) Making the Decision to Move Forward

The final method to reduce product loss is to take the step forward and actually put together a game plan. There is a considerable knowledge base regarding material handling and product loss prevention available through educational articles such as this one and through system integration and engineering firms.

This is your call to action to sit down and put together a plan, because reading about it and filing it away will not reduce your product loss. Check out this great article by Jesseca Lyons, an engineering consultant, about walking through the decision making process to help identify whether a change is right for you: The 5-Step Decision Making Process to Improve Your Supply Chain

Questions? Comments?
I would love to hear feedback on how you view these topics. Feel free to email questions or constructive comments to sichikawa@bastiansolutions.com

Scott has been with Bastian Solutions since July of 2013. An avid believer in educational blogging, he enjoys the challenges of the material handing industry and how to engage both customers and fellow engineers alike. He began as a robotics engineer for Kawasaki Robotics Division and continues to see industrial automation as being an exciting and innovative field.

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  1. Dews says:

    I thoroughly enjoyed this post

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