Does Your Warehouse Honor Pareto’s Law?
How Our Warehouse Racking Solutions Can Help
You already know how important an expertly-managed and smoothly functioning warehouse is to a successful business. But did you know that by applying one simple principle to the layout and management of your warehouse, you can significantly improve the efficiency of your operation, ultimately increasing your profit? Find out how our warehouse racking solutions could help your company in exactly this manner.
At Specialized Storage, we offer a free operational analysis in which we’ll review your current environment and determine how we can help you with your storage, process flow, and warehouse space utilization needs. By applying Pareto’s Law, along with 30 years of experience in industrial storage, we will ensure you get the biggest return on your investment in storage efficiency.
What is Pareto’s Law? How can a simple concept like Pareto’s law make a significant difference in the effectual functioning of you warehouse layout design? Let’s take a closer look.
What is Pareto’s Law?
Also known as the 80/20 rule, Pareto’s law states that roughly 80% of effects come from 20% of the causes. Also known as the “vital few and trivial many,” the law essentially speaks to a natural emphasis on the most crucial aspects of something. Pareto’s Law is perhaps best understood through examples. Consider these:
- 80% of corporate pollution comes from 20% of corporations
- 80% of a restaurant’s turnover comes from 20% of its menu
- 80% of the problem comes from 20% of the causes
The rule can be inverted as well. For example:
- 20% of clothes in a closet are worn 80% of the time
- 20% of tools in a toolbox are used 80% of the time.
A general rule rather than a scientific surety, the concentration of activity can fluctuate to 75/25, 90/10 or others, though 80/20 tends to be the ration most frequently observed.
The principle is named for the Italian economist Vilfredo Pareto, who in 1896 published a work in which he noted that 80% of the land in Italy was owned by 20% of the population. Developed as a principle within the context of wealth and population, the law proved to be incredibly versatile and is now utilized in many contexts.
In 1941 Joseph Juran began to apply the principle to quality issues and managerial strategy in business, recognizing it as an effective way to quickly optimize management of a given situation. Perhaps the most important application of the law from a business perspective is found in the following statement:
- 80% of profit comes from 20% of the product range
Applying this straight-forward concept to your warehouse space and management can make a massive impact on the effectiveness of your space and the efficiency of your business.
How Does Pareto’s Law Apply to a Warehouse?
In a warehouse, Pareto’s Law suggests that 80% of orders come from 20% of your total inventory. Therefore, your warehouse layout should reflect storing the top 20% most-used items closest to the outgoing packing/shipping area to maximize your picking efficiency and minimize wasted time searching for inventory. Once you’ve determined what your top 20% most active products are, you can reconfigure your warehouse racking solutions to maximize storage space and work flow efficiency.
By placing the fastest moving SKUs closer to the doors, your product picker won’t have to travel so far past slow-moving items to reach the order. This small adjustment can save an enormous amount of energy, time and money.
One study was able to quantify the exact improvement in efficiency that a reconfiguration of one company’s warehouse made. That company was Ankor, a wholesaler of tools and garden equipment (think Skandia brand). Like many companies, Ankor’s warehouse was under constant pressure to improve efficiency in the warehouse. Ankor’s picking process required orders to be picked in order of weight, with the heaviest products pulled from inventory first in order to reduce damage. A research team and organization experts re-configured Ankor’s warehouse layout and picking flow, including maximizing space and workflow to and from their mezzanine structure. The study revealed that the average route length in the order-picking operation was cut by 31%. In total, the number of order pickers was reduced by more than 25%.
At Specialized Storage, we can help you apply the law by creating warehouse racking solutions that will greatly enhance the effectiveness of your space.
What are some ways Specialized Storage can reorganize your warehouse to better follow Pareto’s law?
We don’t use a “one size fits all” approach. We will review your current warehouse environment and utilize Pareto’s 80/20 rule to determine the most efficient method for organizing your unique space. We will customize a solution that suits your situation perfectly.
Some ways in which we will apply our knowledge include the following:
- Warehouse Racking Solutions
First and foremost, it is essential to choose the best type of storage for your product. Whether your operation is pallet in/pallet out, pallet in/case out, or case in/case out, your picking operation and order volume will determine the rack and shelving combination. You’ll want to determine if you need basic selective pallet racks and standard shelving or pushback racks and pick modules.
We know all about these systems, and we can help you sort through the racking options available to make the best use of your space, maximize your productivity and meet your budgetary needs.
For example, when Joseph Rutigliano and Sons was moving to a new location, they needed a rack system to be durable enough to handle the high traffic associated with a food distribution warehouse. We provided a structural rack and designed a system to meet their growing needs well into the future.
- High Density Storage (paperwork, books, etc)
Another essential element to consider is whether high density mobile shelving can be implemented to eliminate non-productive aisles. The clients that utilize high density storage most frequently are those who are storing medical charts and records, media like DVDs or vinyl records and car parts, including tires. If applicable to your warehouse, utilizing high-density storage shelving can double your storage capacity in existing space or reduce your storage space requirements by half.
Using Pareto’s Law, we can organize the slower-moving inventory further back, while the fast-moving items are in the front and more quickly accessible. All your employee needs to do to reach the slower-moving inventory is to turn the handles clockwise or counter-clockwise (depending on which shelf they wish to access). In less than 60 seconds, employees can find the item they are looking for.
To make things easy, our mobile systems can be designed to hold objects of any size or weight that can be stored on shelving or pallet racking.
- Modular cabinets and technician workstations
Designing a warehouse isn’t just about storing the goods. You’ll also want to design a workspace to maximize both worker productivity and square footage together. Pareto’s Law can help here too. We will survey the area, take an inventory of your parts, and come up with the most efficient solution to effectively optimize your workstations. We can also design modular cabinets specifically suited to your needs.
- Custom Racks, Cabinets, and Platforms
Taking into account your unique needs, we will determine the best warehouse racking solutions to fit your space and then we’ll design custom racks, cabinets and platforms to optimize the organization of your warehouse.
For example, when ITT Avionics installed a pressure chamber in their facility, they needed a platform that would enable accessibility into elevated doors. We designed a special platform that maintained a clearance of 1/8inch around the structure while enabling access to the chamber below the door with removable carts. Both the stairs and platform were designed to be removable, uniquely suited to the specific needs of this company’s particular situation.
- Install a Mezzanine
We’ll help you determine if a mezzanine could be utilized in your warehouse to enhance efficiency and double your floorspace. Check out these other articles on how a mezzanine could double your floor space:
- Let SSS Conduct an Operational Efficiency Analysis
By letting us conduct an operational efficiency analysis, we can determine the most appropriate layout to maximize work flow, process flow, production, and distribution. In this way we will enhance your office, department, and warehouse space utilization with warehouse racking solutions uniquely designed to suit your business.
For example, when Satin Fine Foods was moving into a new facility to accommodate for their quickly expanding business, they wanted to replace their out-dated mixer support platform.
We engineered, designed and fabricated a Strongbox Mezzanine mixer support platform with an aluminium diamond plate deck to triple the production capabilities. The structure had to be durable enough to prevent vibration while the extruders were in use, and we also had to weld the seams of the deck to form a “pan” with drains so the equipment could be washed down daily.
We have been called upon to continue to evolve the design as the business grows, marrying the existing deck with a new one to double the size of the mezzanine structure.
Some of the things we’ll take into account when providing you with an operational efficiency analysis include building size, process layout, the number of employees and their functions, labor output, plans for growth, budgetary requirements, storage requirements and customer needs. And of course, we will be utilizing Pareto’s Law to ensure the fastest moving items are positioned for quick removal.
To schedule your analysis, call us at 973-273-4001 or email email@example.com