Continuous Improvement: The Standard of Excellence for Warehousing
Originally published in 3PL Executive, Spring 2006 (IWLA – International Warehouse Logistics Association).
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Excellence and quality are not necessarily interchangeable words. For example, we define quality as “delivering to the customer the exact services that they require at the lowest possible price.” However, to meet this challenge, warehouses must have a program of excellence in place that is understood by all of the employees and management. The program must also address all elements of the warehouse operations:
• Quoting procedure, contract review and flow-through of these requirements to operations;
• Training of all employees (including temporary/part-time employees);
• Operational procedures including customer special requirements;
• Safety and sanitation procedures;
• Performance measurement and continuous improvement programs;
• Communication throughout the organization;
• Regulatory and security programs.
Most warehouses started with a very strong entrepreneurial management system that over time shifted to a managerial management system through growth and necessity. However, these warehouses had created many different systems throughout the years to address customer and regulatory challenges. Many systems that are still in use are obsolete, no longer required and are not inter-related with the overall management system. That is why it is very important to take a fresh new approach to creating a management system that is driven by excellence.
By starting over, we have the opportunity to question each form, software input, procedure and methodology to ensure that they are still required and consistent with the warehouse’s corporate objectives. The management system should start with a corporate management policy that includes the management’s responsibilities and interrelationships and flow downward to specific detailed requirements for every element (see diagram).
The specific requirements and performance reporting is generally missing from most warehouse management systems that include training programs, sanitation programs, inspection and reporting programs, and continuous improvement programs.
For example, we have walked into many food-grade warehouses and found that the floors were dirty and that no pre-set cleaning schedule was in use. In addition, we found chemicals such as floor cleaning chemicals in open drums next to food. Many warehouses also are operating without respect to safety and regulatory requirements, such as blocking fire extinguishers, using damaged racking with heavy product and not chocking trailers as they are loaded or unloaded. Although the management team recognized these errors when we pointed them out, it demonstrates two areas for improvement: training and measurement.
The employees were not properly trained or they would not have blocked fire extinguishers, and there was no measurement (inspection) system in place to discover and correct regulatory, sanitation and safety nonconformities.
These are just some symptoms of an ever-growing management challenge in the warehousing industry.
One major contribution to this problem is the term and definition of the warehouse inventory software system. In warehousing, the inventory system is referred to as the “management system” even though it does not manage the managers and employees. Therefore, since most warehouses have a management system (really an inventory system), they operate under the false assumption that they manage their business. I am not sure when this term was associated with an inventory software program, but it certainly has not helped warehouses recognize the need for a true management system that drives improvements and actually provides tools to help managers manage.
The inventory system is managed by customer service personnel. The accuracy and effectiveness of the inventory management system depends largely on the CSRs. However, how does the inventory system manage the following aspects of operations:
• Customer complaints;
• Customer special requirements such as special reporting, stacking requirements, rework requirements;
• Special kitting requirements;
• Security, sanitation and safety requirements;
• Training material and training requirements;
• Corrective and preventive action.
This is where a true management system designed to provide excellence in warehousing is required. The inventory system is just one of many tools required to effectively manage a warehouse. Managers require guidance, measurable objectives, training tools, standardized procedures, current performance measurements, the ability to communicate across the management platform, and venues for meetings, decisions, feedback and, most importantly, customer perception.
There are many management systems available today, such as ISO 9001:2000, SQF-2000, HACCP and Global Food Safety. All of these follow a similar set of requirements that start with management responsibilities and flow down to specific procedures to cover all contingencies.
Until warehouses recognize the need to manage all elements of the warehouse operations, they shall never achieve excellence in their industry. The days are long gone when a warehouse manager can successfully manage all warehouse operations without any management tools and continue to satisfy clients. Warehouses that depend on this approach will slowly watch their customers dwindle as their customers’ requirements are not satisfied because they slip through the warehouse manager’s hands.
Perhaps 2006 should be the year that all warehouses take the time to create and design a management system to drive improvement, satisfy their customers’ and regulatory requirements and provide a venue for communication and understanding of the warehouse business to all management and employees.
We use the following term for proper management: W.H.A.C.
Where are we going?
How will we get there?
Are we achieving our objectives?
Can we improve?
A proper management system will address all of the above in the following manner:
• Creating the management policies and responsibilities and defining the corporate objective answers “Where are we going?”
• Creating the specific procedures that plan for all contingencies answers “How will we get there?”
• Having in place a performance measurement system that provides current measurement of all performance indicators answers “Are we achieving our objectives?”
• Having a corrective and preventive action system answers “Can we improve?”
Therefore, a Standard of Excellence for Warehousing becomes a useful guideline or checklist to be used when developing a management system. The following is the introduction of a standard that IWLA and TQMS are working on: Manufacturers throughout the world are demanding access to warehousing and distribution services throughout the North American market. This increase in demand can be attributed to better marketing by manufacturers and their desire to have their products available in all cities across North America.
Government and regulatory agencies have traditionally been responsible for auditing and ensuring that warehouses have complied with regulatory standards and industry standards such as ISO 9001:2000.
However, compliance with these standards still does not provide warehousing customers with confidence that the warehouse can provide consistent services that meet their requirements.
The IWLA-1000 Standard is designed to audit warehouses and examine in-depth all aspects of their operations to determine their commitment to excellence based on customer satisfaction, employee knowledge and training, process documentation and quality systems.
The process involves the warehouse first agreeing to satisfy the requirements of this standard and submit to a third-party certification service to audit the warehouse’s processes, employees, customers and quality systems.
Although the requirements of this standard are based on the ISO 9001:2000 standard with additional unique requirements found in the warehousing industry, it is not a pre-requisite to become ISO 9001:2000 certified in order to achieve the IWLA-1000 Warehousing Certification of Excellence.
The Warehousing Certification of Excellence is a statement by a Certification Body representing the International Warehouse Logistics Association that the warehouse meets the requirements of this standard and is committed to excellence in:
• Warehousing Process Documentation;
• Employee Training and Knowledge;
• Total Customer Satisfaction;
• Maintenance and Sanitation;
• Food, Chemical and Overall Safety;
• Compliance to Regulatory Standards;
• Continuous measurable performance and improvement;
• Inventory Accuracy;
• A Commitment to Excellence in Warehousing.
To obtain a draft version of the Standard of Excellence for Warehousing, please contact IWLA. The cost for the electronic file is $45.
Peter Sanderson is president and founder of TQMS, a quality management consulting and training services company. He has developed several recognized quality training systems and is considered a leader and visionary in the field of quality control. He can be reached at peter@tqms.com.