Pencils Down: Reducing Non-Value Related Labor Costs

  By John McBride, Senior Sales Executive, Adaptive Data Inc.

We all remember taking tests in school. To mark the end of the test the teacher would proclaim, “Pencils Down”. Not only did that phrase mark the end of the test, but also the beginning of the grading period.

Today you may be working within a manufacturing plant, or warehouse/distribution facility. Your test now is an ongoing one to develop methods and procedures that efficiently move product through your process, form receiving to shipping. Grades are measured in the amount of money necessary to complete the process. Reduce the amount of money without reducing the quality and you’ve earned a great grade.

A proven method of delivering significant efficiency improvements is the use of automatic bar code systems. Replace those pencils, pens, forms, and whiteboards strewn throughout your facility with portable scanning terminals including programs designed for your particular process. Inventory control, work-in-process, process control, shipping, and even asset management may all be “automated” through using available technologies.

What are the benefits? Accurate inventory levels, elimination of redundancy, improved inventory turns, process, verification, and precise shipments, have been the proven results along with significantly improved profits. Let’s explore each of these claims.

Accurate Inventory Levels – With pencil in had from receiving through shipping, including all points in between, hand written notes are made (and sent to data entry people) to verify quantities, model and serial numbers, and condition of each unit. Additional hand written notes are made about storage locations, work-in-process, and shipping information, which are, again, sent to data entry people to be included into the “system”.

Pencils Down: With automatic data collection, the receiving personnel may use handheld terminals that have the purchase order information within to show the quantities, descriptions and potentially the license plate bar code to be attached to each unit received. The storage areas are then recorded when the items are put away, WIP may be recorded, time stamped, with subsequent shipping values and information all recorded. The information never has to be sent onto data entry personnel to transcribe into the system. The inventory values remain accurate and even discarded materials and products are recorded.

Elimination of Redundancy – Redundancy is inherent in a manual system that relies on handwritten information. Not only are descriptions and values at the mercy of the handwriting clarity of the person recording the information, but then all of that information is then sent to data entry personnel who must decipher the handwriting and enter it into the system. Let’s face it, one of the key reasons mechanical writing machines (the printing press, typewriters, printers, etc) were invented, was due to the fact that not everybody’s handwriting was clear as the scrawl of cloistered monks. Beyond that, statistics have shown that data entry errors from trained personnel may run as high as 3-5%.

Pencils Down: Automatic data collection eliminates the need for data entry, thus freeing up those valued employees for more productive and efficient tasks. The pertinent information is recorded with each scan and select information is stowed within the “system” being used . . . automatically. Errors are reduced to insignificant levels, if not eliminated altogether.

Improved Inventory Turns – From the moment items enter your dock at receiving until they leave the door in shipping, they all have a hard dollar value assigned to them. The longer they remain in the building, the longer it will be before any greater amount of money will be gained from them. Misplaced or lost items represent dollars that will never be replaced, so such situations must be managed and, if at all possible, eliminated. Other items may have a shelf life, after which they become useless. It is imperative that on-hand product be located efficiently throughout your processes and shipped out the door for greater profit.

Pencils Down: What are the functions of bar codes (including 2D and RFID)? They are used to answer 2 questions . . . What is it? and Where is it? Imagine the ease of scanning received materials/products against the purchase order from which they are acquired, making instant notations of quantities, product type, and condition, so any variations are instantly sent to the right personnel and issues resolved. Additionally, the locations of all stored materials/products, including usable remnants, are tracked so they are used on a first come basis. The use of automatic bar code systems has proven to efficiently improve inventory turns.

Process Verification – The food industry, automotive manufacturing, pharmaceutical etc. require a trial of ingredients, parts, and processes used to produce the products being shipped. In the early days, this was referred to as a “paper trail”. Reams of had written information and forms were filled in and sent to order entry personnel to be included in the necessary paperwork to complete each order. The information was then stowed away in file rooms that looked as ominous as the warehouse at the end of Raiders of the Lost Ark.

Pencils Down: Electronic file storage has become such an efficient and reliable method of holding information. Even in cased where the computer system has crashed, the systems available today continue to hold information from harm’s way and intact.

Precise Shipments – Those picking the products for daily shipments need most to know what is it and where is it. The act of seeking out the correct items within warehouse storage areas can, at times, be a daunting task. Sometimes, similar appearing items may be mistaken for the correct items. Other times the quantities prepared for shipment may be incorrect. Without instant verification, it is a struggle to assure correct shipments.

Pencils Down: Through the use of automation bar code verification, every shipment may be instantly “double checked” to assure that the correct items, including serial numbers or lost numbers, are being shipped to fulfill each order. Even the packaging methods may be verified, if that process is important to your customers. The results are reliably correct shipments, creating that much more good will from your customers.

So much of the above will result in significantly greater profitability and efficiency. It is well worth looking into such systems for your manufacturing plant or warehouse/distribution facility. Complete payback for such systems takes place within 5-12 months (with the median skewed towards 6 months). The rewards are tremendous if only you put your pencils down.

What do you think?  Share your thoughts, experiences in the comment box below.