Warehouse operations development planning: getting it right

You’ve decided the answer is more automation and space. But are you answering the right question?

In this article Nik Pamplin and Tom McClinton, consultants at Hatmill explore how to optimise your warehouse operations with an Operations Development Plan.

The most important warehouse projects this year are enabling the future, not immediately delivering it. A structured approach to improving your warehouse operations starts with understanding what the business is trying to achieve.

Aligning your operations development to the business strategy is key to really knowing where your operations are now and where they need to be. Development of people, systems and data are each as critical as each other to getting the most out of cutting-edge technologies and ways of working.

As a business leader you expect your operations to facilitate trade through resilience, flexibility and cost-effectiveness

Your warehouse operations are tried-and-tested, they get the job done to budget and service is almost always exemplary. But surely the explosion in advanced systems, automation, robotics, AI and Big Data in warehousing should be unlocking a step change for the business? And if so, where are the business cases to support them?

Technological advances and innovations may not be the silver bullet you’re looking for… yet

A vital first step is to sequence the development of your warehouse operations through an independent Operations Development Plan, ensuring your operations continue to facilitate trade. This enables evolution, not kamikaze revolution.

Phase 1: Where are we going?

Giving your operations teams a remit to develop operations must begin with articulating what the business needs them to do.

It’s tempting to investigate what all those automation acronyms posted on LinkedIn mean, and how they will prove to be the key to unlocking tranquil, best-in-class operating bliss. It’s tempting, but you’ll be losing – and wasting – precious time and potentially the goodwill of enthusiastic vendor business development teams.

Define and agree the business strategy as it applies to operations, not to shareholders

Start by discussing and quantifying key questions like these with your operations leaders:

• How will our planned sales growth translate to the supplier base, stock holding and range?
• What will change in our customer proposition?
• Which new markets are we launching into?

Determining the business strategy, through an operations lens, will start to guide your teams thinking. Business objectives linked to sustainability, the environment, business continuity, cyber security, etc. should be captured and considered in every subsequent phase.

Phase 2: Where are we now?

Now you understand what’s important to the business, the customer and what the future holds it’s time to step back and assess what your operations look like, whether they’re fit for-purpose now and whether they will be in the future. It’s extremely difficult to objectively assess your own operations.

An independent assessment will help you:

• Gain an entirely unbiased, fresh set of eyes view, unscathed by nightmares of the past.
• Draw on experience from competitors, the wider sector and non-competing sectors and incorporate innovations and best practice.
• Expert knowledge on how to methodically approach operations assessments
• A neutral party to engage openly and honestly with your teams.

A starting point is to score the level of your operations against our seven key operations indicators. Get others in your teams (and out of your teams!) to do the same.

An independent assessment of your operations, combined with an understanding of your documented strategy begin to point to areas of important focus.

Phase 3: Generating opportunities and taking the right ones forward

By now, your operations team have a clear understanding, articulated in their language, of what the business strategy is. Plus, they have the output of an objective assessment of the condition of the operations against its peers, competitors and complimenting sectors best practice. So how does the team get together and find solutions to the now fully understood exam questions?

Use an impartial facilitator to run a concise workshop or set of workshops (ideally a warehousing industry professional). The facilitator will ensure everyone gets heard and they will detect the big ideas thanks to their objectivity, industry experience and being removed from the day-to-day running of the operation.

Phase 4: Prioritising opportunities and building your Operations Development Plan

So now your operations team have enough projects to build business cases to last a lifetime, how do you prioritise those that best deliver the business strategy? Is it ones that can be done fastest and cheapest, or those that have the best return on investment? A scoring approach that tests each opportunity based on the criteria that are most important to your business is a great place to start.

Typical criteria that start to weed out the least valuable projects and begin to create a must list rather than a wish list are; business risk, difficulty, capital cost, return on investment, systems development, business disruption, customer impact, safety implications, etc. Each criteria can be estimated quickly by those most in-the-know in your team, but taking the draft Operations Development Plan to a final version should involve desktop modelling undertaken by a data analytics expert, some initial supplier engagements and an independent voice on the merits of each opportunity.

Summary

Every warehouse or warehouse network can have a successful Operations Development Plan that is integrated to the key priorities of the business strategy. By adopting a structured approach you’ll ensure you deliver the warehouse operations of the future – evolving rather than revolutionising.