Achieving Predictability in the Warehouse: The Value of a Bulletproof Management System

Predictability is the foundation of a successful distribution system. But smaller order sizes, more frequent deliveries, fluctuating demand and expanding networks have all increased the complexity of warehouse management and made it harder for many operators to achieve predictable service levels. That can put valuable customer relationships at risk and lead to higher costs and lower productivity.

At DHL Supply Chain, we’ve earned a reputation for managing large and complex warehouses with a high degree of predictability and operational excellence. That doesn’t happen by accident. It’s a result of years of developing, refining and applying our warehouse operations management system, OMS First Choice.

Just as a computer’s operating system translates commands from a user into tasks the computer can execute, the warehouse OMS is critical to the ability of every warehouse worker and manager to translate supply chain goals into consistent, efficient processes that enable predictability and continuous improvement. In our experience, an effective OMS must address four key management challenges.

Setting and Communicating Measurable Objectives

The first goal of the OMS is to ensure every associate is on the same page regarding expectations and operational performance. This starts with a clear definition of goals that are then translated into specific and measurable key performance indicators (KPIs) that are continually communicated across the organization. The KPIs enable each team to establish specific objectives, ensure roles and responsibilities are clearly understood and establish daily routines.

Having a well-defined library of standardized process templates is critical to achieving consistency in how tasks are performed and achieving KPIs. These templates should be tailored to the specific requirements of each warehouse and provide clear direction on how each team member should perform their tasks.

KPIs should then be reviewed weekly as part of regular feedback meetings with all associates. Each team should also be tracking KPIs on an hourly and daily basis. Teams are sized to allow frontline team leaders to devote adequate time and attention to each team member.

Performance Management

Performance management is at the heart of the OMS, serving to connect and synchronize every other aspect. Managing performance begins with measuring performance. That is accomplished through a range of systems, tools and methodologies that track real performance against KPIs and other targets at the individual, team and site level.

At DHL, performance tracking data is delivered to frontline leadership through simple-to-use visibility and reporting tools. The objective is to give these team leaders the data they need to manage individual performance and identify gaps and opportunities without overwhelming them with unnecessary data that is irrelevant to their role.

The value of performance tracking also extends to resource allocation and utilization. Operational data can be used to create forecasts that predict future operational demands. Plans can then be modified to ensure resources are available to meet service levels.

For example, through accurate forecasting and resource management at sites supporting direct-to-consumer fulfillment during the 2020 holiday season, DHL was able to ship 100% of cyber week orders during cyber week with an average order cycle time of less than four hours. This was achieved despite a 225% increase in order volume for the week.

Job Standardization

To achieve predictability, you can’t have warehouse workers performing the same task in different ways. That’s why job standardization is an essential component of an effective OMS. Guided by experience and performance metrics, best practices for each job should be identified and documented for every level of the organization. Job standards must then be supported with training that gives workers hands-on experience performing their jobs according to the OMS.

At DHL Supply Chain, we’ve found the most effective strategy for maintaining job standards is to shift management’s role from “boss” to coach. OMS First Choice includes monthly training to provide leaders with the skills needed to better mentor their team members and coach them with constructive performance feedback.

Through that approach, regular performance reviews become more open and collaborative with leaders seeking to better understand how they can help their team members deliver results while team members feel more confident identifying obstacles to productivity and areas for improvement.

Gemba walks, in which warehouse processes are regularly observed by management teams, can also play a valuable role in ensuring the OMS is being properly executed across the warehouse.

Continuous Improvement

Lean and Six Sigma tools are designed for continuous improvement and should be integrated into an OMS. Using these tools helps identify opportunities to streamline processes, reduce waste, increase efficiency and enhance employee satisfaction to reduce turnover.

Not surprisingly, frontline workers are often in the best position to identify opportunities to improve processes. Incentive and recognition programs should be put in place to encourage full engagement with the OMS.

Maximizing the Value of an OMS

Using an OMS to optimize warehouse performance and ensure predictable service takes more than simply developing an operating handbook or conducting regular training. It requires a disciplined and systematic approach to operations that leverages best practices, monitoring and management tools and continuous communication and coaching.

Not every organization will have the resources and experience to successfully implement and manage an OMS in the warehouse. However, engaging with a third-party logistics partner with a well-developed and consistently executed OMS, such as DHL Supply Chain, can allow them to realize the full value of this approach and achieve predictability and continuous improvement.

To learn more about how DHL Supply Chain can help strengthen your OMS strategy, visit http://app.supplychain.dhl.com/e/er?s=1897772577&lid=7541.