Walk into many stores and warehouses and everyone is moving. Forklifts cross the floor, pickers push trolleys up and down aisles, someone is on the radio asking where a part is, and the dispatch bench has a queue of orders waiting for one missing line. The warehouse is busy all day. Yet orders still go out late, production lines still stop waiting for components, the system says there are twelve of something when the shelf is empty, and the annual stocktake takes a weekend and produces a write-off nobody can explain.
Warehousing is often treated as an overhead to be minimised rather than a process to be designed. But in a distribution business the warehouse is the product, and in a manufacturer the stores feed every production line. The same principles that improve a production process apply: see the flow, remove waste, make the work standard and visible, and let the people doing the work solve the problems they see every day.
This article explains where waste hides in a warehouse or store, which measures matter, how to slot stock by how often it moves, how to choose picking methods, how to keep pick faces replenished, how to make inventory records accurate, and how to feed production lines without waiting or overstocking. It is general information for owners and managers of distribution businesses and manufacturers with their own stores. Workplace safety in warehouses carries specific obligations, which are covered briefly below.
Where waste hides in a warehouse
The familiar categories of waste translate directly to warehouse work:
| Waste | In a warehouse it looks like |
|---|---|
| Transport | Stock moved several times between receiving, staging, reserve and pick locations |
| Motion and travel | Pickers walking long distances, bending to floor level, reaching to top shelves, searching |
| Waiting | Pickers waiting for replenishment, forklifts or system updates; production waiting for parts |
| Inventory | Slow and obsolete stock filling the best locations; excess safety stock everywhere |
| Defects | Picking errors, damaged stock, wrong labels, inaccurate records that trigger expediting |
| Over-processing | Checking the same order several times, re-keying data, unnecessary repacking |
| Overproduction | Picking orders well before they can ship, creating congestion at dispatch |
| Unused skills | Experienced storepeople who know the problems but have no route to fix them |
Travel is usually the largest single component of picking time, which is why layout and slotting matter so much. A picker who walks half the distance does not need to work harder to pick more.
Measure what matters
Many warehouses measure cost and little else. A balanced set of measures shows whether the warehouse is serving its customers and whether it is improving:
- Order accuracy: the share of orders picked and shipped with the right items and quantities.
- On-time dispatch: the share of orders dispatched by the promised time.
- Stock availability: the share of order lines that can be filled immediately from the shelf.
- Inventory record accuracy: the share of locations where the system quantity matches the physical count.
- Dock-to-stock time: how long received goods take to become available for picking.
- Lines picked per labour hour: a productivity measure, best used to compare the same work over time rather than to push individuals.
- Production waiting time for manufacturers: hours lost on the line waiting for materials.
Display a few of these on a board in the warehouse and review them in a short daily meeting. Visible performance invites problem solving.
Slot stock by how often it moves
Slotting is deciding which item goes in which location. The most effective single change in many warehouses is to slot by pick frequency, how many times an item is picked in a period, rather than by part number, supplier or product category.
- Rank items by picks over a representative period, such as the last three to six months. This is often called an ABC analysis by velocity: a small number of A items usually account for a large share of picks.
- Put the fastest movers closest to dispatch or to the point of use, so the most frequent trips are the shortest.
- Use the golden zone: the shelf heights between roughly waist and shoulder, which are fastest and safest to pick from. Put fast movers there, slow movers high or low.
- Put heavy and bulky items low and near the start of the pick path, both for safety and so they do not crush lighter items in the trolley.
- Keep items picked together close together, such as components of a common kit.
- Move slow and obsolete stock out of prime locations into reserve storage, or dispose of it.
- Review the slotting periodically, because demand changes. Seasonal items and new products need moving.
Note that ABC by picks is different from ABC by value. An inexpensive fastener picked hundreds of times a week is an A item for slotting, even if it is a C item for financial control. The demand forecasting for small manufacturers article covers classifying items for forecasting and stock policy.
Separate pick faces from reserve storage
A pick face is the location a picker takes stock from; reserve storage holds the rest, often in pallet racking. Keeping a small, easily reached quantity of each fast-moving item in a pick face, with reserve stock elsewhere, shortens pick paths and keeps aisles clear. It also creates a new task, replenishment, which must be organised so that pickers never arrive at an empty face.
Keep pick faces replenished
Waiting for replenishment is a common and invisible loss. Set a minimum and maximum for each pick face based on its pick rate and the time replenishment takes. When stock falls to the minimum, a replenishment signal is raised, by the warehouse system, a card or a simple visual marker, and the face is topped up to the maximum. Schedule replenishment for quiet periods where possible, or assign it as a dedicated task so it does not interrupt picking. A picker finding an empty face should be treated as a problem to investigate, not a normal event.
Choose a picking method that fits the orders
| Method | How it works | Suits |
|---|---|---|
| Discrete order picking | One picker picks one order at a time | Small numbers of large orders, or urgent orders |
| Batch picking | One picker picks several orders in one trip, sorted into separate containers | Many small orders with overlapping items |
| Zone picking | Each picker covers one area; orders pass between zones | Large warehouses with many items |
| Wave picking | Orders are released in scheduled groups, for example by carrier departure time | Operations with fixed dispatch times |
Pick paths matter too. A consistent route through the aisles, with locations numbered in that sequence and pick lists sorted to match, avoids backtracking. Pick to a trolley or tote designed for the work, with labelled compartments for batch picking, rather than carrying items by hand.
Receiving and put-away
Problems that start at receiving propagate through the warehouse. Practical improvements:
- Agree labelling standards with suppliers, including barcodes, part numbers and quantities on cartons, so receipts can be checked and booked quickly.
- Check receipts against the purchase order at the dock, and record discrepancies immediately.
- Scale inspection to supplier risk: full checks for new or problem suppliers, lighter checks for proven ones.
- Put away directly to the correct location, rather than to a holding area that becomes permanent.
- Measure dock-to-stock time, because stock that has arrived but cannot be picked causes shortages and emergency orders.
Make the inventory record trustworthy
When the system cannot be trusted, people build workarounds: personal stashes, phone calls to check shelves, extra safety stock and emergency orders. Accurate records come from good processes, not from counting harder once a year.
- Give every item a location, and every location a label.
- Scan or record every movement at the moment it happens, not at the end of the shift.
- Use cycle counting: count a small number of locations every day, so that every location is counted several times a year. Count fast-moving A items more often than slow C items.
- Investigate the cause of every significant count error, such as unrecorded issues, wrong units of measure, mixed locations or transactions booked to the wrong item, and fix the process.
- Measure record accuracy and display it.
Many businesses that move to well-run cycle counting find they no longer need a full annual stocktake, although this depends on their auditors’ and accountants’ requirements.
Feeding production lines
For manufacturers, the store’s real customer is the production line. The aim is to deliver the right parts to the point of use, in the right quantity, just before they are needed, without leaving operators waiting or surrounding them with excess stock.
- Point-of-use storage: small quantities of frequently used parts held at the workstation, in labelled bins.
- Two-bin systems: for low-cost, high-use items such as fasteners and consumables, two bins are kept at the point of use. When the first is empty, it is returned to the store as the signal to refill it while the second is used. Simple, cheap and effective.
- Kitting: the store collects all the parts for one assembly or job into a kit. Useful for large, varied or expensive parts, but it adds handling, so use it where it genuinely helps the operator.
- Line-side supermarkets: small, controlled stocks of standard parts near the line, replenished by kanban signals.
- Milk runs: a material handler follows a fixed route at fixed intervals, delivering parts and collecting empty bins and signals. Regular, predictable replenishment replaces ad hoc requests and emergency trips.
The small, frequent improvement on the shop floor article covers point-of-use organisation and keeping workplace standards from fading.
Layout and flow
A warehouse layout should support a simple, one-directional flow from receiving to storage to picking to packing to dispatch, with as few crossings as possible. Two common arrangements are a U-shaped flow, with receiving and dispatch on the same side, which suits sites with one dock area, and a through flow, with receiving at one end and dispatch at the other. Items that are received and shipped quickly may not need storing at all and can be moved directly from receiving to dispatch, a practice called cross-docking.
Keep packing and dispatch areas big enough for peak periods, and mark staging lanes on the floor so overflow is obvious.
Safety in the warehouse
Warehouses combine heavy loads, moving vehicles and people on foot. Under work health and safety laws, businesses must manage these risks so far as is reasonably practicable. Common controls include a traffic management plan separating forklifts and pedestrians, marked walkways and exclusion zones, suitable racking that is installed, load-rated and inspected regularly, safe stacking heights, and manual handling controls such as keeping heavy items at waist height. In Australia, the standard for steel storage racking, AS 4084, covers design, installation and inspection, and Safe Work Australia and state regulators publish guidance on traffic management and manual handling. Many lean warehouse changes, such as slotting heavy items low and reducing travel, also reduce injury risk.
Systems support good processes; they do not replace them
A warehouse management system or the inventory module of an ERP system can direct put-away, generate pick lists in path sequence, trigger replenishment and support scanning. But a system installed on top of a disorganised warehouse automates the disorder. Sort the locations, slotting and processes first, then use the system to reinforce them.
A worked example
This is an illustrative example. A 60-person manufacturer of agricultural spray equipment runs a central store of about 1,800 items, serving two assembly lines and a spare parts counter. Assemblers often wait for parts, the system’s stock figures are unreliable and the storepeople are constantly busy.
Seeing the problem. A week of observation and a few simple counts show that storepeople spend much of their time walking, that fast-moving fasteners and fittings are spread across the store by part number, and that assemblers raise urgent requests several times a day. A sample count of 200 locations finds that about 85% match the system. Production records show about six hours a week of assembly time lost waiting for parts.
Changes.
- Slotting by picks. The 300 items picked most often are moved to shelves nearest the issue counter, in the golden zone, grouped by assembly.
- Two-bin supply. About 400 low-cost fasteners and consumables move to two-bin systems at the assembly stations, removing them from the store’s daily picking altogether.
- Milk run. A material handler runs a fixed route every two hours, delivering kits for the next jobs and collecting empty bins.
- Cycle counting. Twenty locations are counted every day, with fast movers counted monthly, and each discrepancy over a set threshold is investigated.
- Daily board. A short meeting at a whiteboard each morning reviews yesterday’s urgent requests, count accuracy and late kits.
Result. After three months, record accuracy in the sample counts reaches about 97%, urgent requests from the lines drop to one or two a week, and assembly waiting time falls to about an hour a week. The storepeople pick more lines per hour, mostly because they walk less, and the time saved goes into improving the parts counter’s service.
Applying this in an Australian business
- Observe the work and measure travel, waiting and searching.
- Track accuracy, availability, timeliness and record accuracy, not just cost.
- Slot by pick frequency, using the golden zone for fast movers.
- Separate pick faces from reserve, and set replenishment triggers.
- Match the picking method to the order profile.
- Fix receiving with supplier labelling standards and fast put-away.
- Use cycle counting and investigate every significant error.
- Feed production with two-bin systems, kits, supermarkets and milk runs.
- Manage forklift, racking and manual handling risks under WHS law.
- Organise first, then automate.
Where warehouse improvement goes wrong
- Storing by part number rather than by how often items move.
- Letting obsolete stock occupy prime locations.
- Relying on the annual stocktake to fix the records.
- Picking from reserve pallets for small orders.
- Measuring only cost per line.
- Installing a system on top of a disorganised store.
- Ignoring the people who know where the problems are.
Questions to ask about your store or warehouse
- How far does a picker walk for a typical order?
- Where are our fastest-moving items, and why are they there?
- How often do pickers find an empty pick face?
- How accurate are our stock records, and how do we know?
- How long does received stock take to become available?
- How many hours does production lose waiting for materials?
- Which improvements have the people in the warehouse suggested?
Bringing it together
A productive warehouse is not one where everyone is busy, but one where stock flows from receiving to customer or production line with as little travel, waiting, searching and correction as possible. Measure accuracy, availability and timeliness alongside cost. Slot stock by how often it moves, keep pick faces replenished, choose picking methods that suit the orders and fix receiving at the source. Make the inventory record trustworthy through location discipline and cycle counting, and feed production with simple pull methods such as two-bin systems and milk runs. Manage the safety risks deliberately, organise before automating, and give the people doing the work a daily route to fix what they see.
Source: KEVOS editorial notes, drawing on earlier KEVOS operational excellence handbooks on lean warehousing and material-flow design and on demand segmentation and inventory planning, together with established warehouse practice. The worked example is illustrative. This article is general information.
