Maximising factory space to boost production
OPERATIONAL excellence starts with cleanliness and clarity in your facility. However, as time passes by, warehouses and other storage spaces get full.
Factories are moving to a new and bigger location, as they do not have enough storage space to accommodate their business growth. From my experience this is often not necessary.
But, how to free up your storage space? Simply by discarding products you do not need! But this is not as easily as said. Not all products received are registered in information technology (IT) systems as products stored are possibly useful in future.
Discarding products of value is seen as waste, of environmental concern, while some items have emotional significance. We need to adopt a new discarding business philosophy.
Discard strategies
There are various basic strategies to reduce products stored at your facility. A first strategy is to discard products already at gate. Discarding should hereby be part of the receiving process, where certain junk mails, catalogues, incorrect or damaged products and packaging materials are automatically discarded, rejected or returned when received at the factory or warehouse. Products kept should be registered in the IT system.
Secondly, discard products after a selected period of time. For example, finance-related documents after seven years, spare parts five years, and raw materials and finish products with a maximum of three to six month period, etc.
Thirdly, discard products after the product had served its purpose. The function may disappear due to new technologies, change of production methods and new market demands.
Finally, discard products when they occupy more than the allocated space by throwing away the oldest products first.
Lessons learnt
Demand changes over the years, resulting in an inventory imbalance where inventory in days for various stock-keeping units can escalate to many months and even years. A periodic quantitative assessment of each stock-keeping unit is therefore necessary, based on mutually agreed indicators such as revenue, direct product profitability, traffic, replacement available and importance of supplier.
Products with poor scores should be removed from the category while high product scores should be maintained and medium scores should be analysed with relevant departments how to increase the performance t in the category.
Companies should do this at least once a year, but in case the company is involved in e-business four times a year is more appropriate.
The more disposal channels you have, the easier it is to discard items you do not need anymore. Therefore, it is important to establish multiple channels for sale, recycling and disposal of items.
In the facility design it is advisable to identify so-called “clean zones” for production areas, warehouse racks, valueadded logistics areas, etc. Clean zones should not have any items that do not belong there or rubbish. Tools and cleaning materials should have dedicated locations and clean at all times. Finally, plenty of waste bins should in production areas and warehouses to facilitate easy disposal of all kinds of waste.
Make sure discarding tasks are clearly covered in job responsibilities in order to embed discarding effectively in the day-today operations. You will be amazed how much more production is possible or sales you can handle with your existing facility when adopting a discarding business philosophy.
marco@lbbinternational.com The writer is founder and CEO of LBB International, the logistics consulting and research firm that specialises in agri-food supply chains, industrial logistics and third-party logistics. LBB provides logistics diagnostics, supply chain design and solutions and market research in Asia, Europe and the Middle East.
The more disposal channels you have, the easier it is to discard items you do not need anymore. Therefore, it is important to establish multiple channels for sale, recycling and disposal of items.