What should a warehouse efficiency audit include?

What the usual checklist leaves out

Most of the audit checklists you'll find cover the building, the stock and safety: inventory accuracy, picking, layout, receiving, safety, technology and training. All of those belong in an audit. What they leave out is where the paid hours go. That's often where the largest saving sits, though no checklist can see it from the aisle.

A useful audit also does more than tick boxes. Each finding needs a measure, a cost and a way to check it's been fixed, so the result is a list of changes in the order they pay rather than a score.

What a thorough audit covers

1. Where the paid hours go. Labour utilisation, the share of paid hours spent on the work, with the off-system work counted. Take the paid hours from the clocking system and the tasks from the WMS, then add what supervisors log. In two warehouses we've worked in, it read around 42 per cent on the systems and 65 per cent once that work was counted.
2. The start and end of each shift. Time between clocking on and the first task, plus the time between the last task and clocking off. In one week in one warehouse we've worked in, 572 hours sat between operators clocking on and starting their first task.
3. Travel and how the pick work is grouped. How far a picker walks for each order line and whether the pick lists send several people down the same aisle at once. In one warehouse, pickers walked 950 metres to fill three cages.
4. Where the stock sits. The share of picks taken from the location each line should live in, slow lines sitting in prime faces and busy lines still picked from bulk. In a parts warehouse we've worked in, eight sets of brake pads had sat in a full pallet location for 223 days.
5. Replenishment. Trips to each face per day, faces too small for the lines that move fastest and time pickers spend waiting at an empty face.
6. Productivity, measured fairly. Tasks an hour against what a reasonable operator does, compared only within the same job, zone and kind of order. Where a route has an engineered standard, measure against it while checking what the standard can't see: one of the best pickers in a third-party logistics warehouse lost 24 minutes of 57 to stock that wasn't where the system said it was.
7. Service by order type. On time and in full measured separately for each kind of order and, in a 3PL, for each client, so the urgent work is judged against its own deadline rather than lost in the average.
8. Labour planning against demand. How the rota, overtime and agency hours line up with the work that actually arrives. One warehouse we've worked in cut £23,000 a week from its agency spend by planning demand better.
9. The numbers themselves. Which reports people trust, which need a caveat before anybody acts on them and where the records disagree with what's on the floor.
10. The usual checklist items. Inventory accuracy, receiving and putaway, safety and training, since a finding in any of them can change the cost of the rest.

How to run it

Walk the floor before reading the reports. A day-in-the-life study, following a shift with the people doing the work, shows what the systems miss and gives every later number something to be checked against.

Then take at least a week of data from the WMS, the clocking system and anything the supervisors keep. Agree the starting point before changing anything. Every change after that is measured against the same line, which is what lets you say whether it worked.

Putting a cost on what it finds

Each finding needs a figure in money or hours, or it gets argued about rather than acted on. The one that frames the rest is the utilisation gap.

Two warehouses we've worked in measured utilisation at 65 per cent once the off-system work was counted, against a realistic 85 to 90 per cent, which is around six and a half hours of work in a 7.5-hour shift. The cost of the 20 to 25 points between them is a fifth to a quarter of the labour bill.

Take a warehouse with 350 operators, each costing £30,000 a year with the employer's costs included. The labour bill is £10.5m a year, so the gap is worth £2.1m to £2.6m a year. The findings under it, from the start of the shift to the pick grouping, are how that figure gets closed a piece at a time.

Work out what the gap costs in your warehouse

What should come out of it

1. Each finding, with the measure that shows it and what it costs a year.
2. The changes in the order they pay, weighing what each is worth against how hard it is to make.
3. Who makes each change and when, at a pace the team can take on.
4. The starting point each change will be measured against, with the date it's checked.

Once Fettle is running, most of the measures on this list stay in front of you day to day, rather than in a report written once and filed.