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The True Cost of Inefficient Picking

red brush mark
Kevin Marshall

To determine the cost of inefficient picking and its impacts upon your business, it is necessary to understand the picking process. What factors influence the cost of picking? What are the benefits of picking efficiently? How can you increase your picking efficiency? Continue reading to find out the answers to these questions and more.

What Is Picking?

Picking is one aspect of the order fulfillment process within your warehouse. Order fulfillment is one of many warehouse processes that can be managed through a Warehouse Management System (WMS). Picking has a direct impact not only on order fulfillment but also on inventory management and customer satisfaction.

How to Determine the True Cost of Inefficient Picking

Once you know the cost of picking an order, you can determine how higher pick rates will add to your bottom line. You can determine the approximate cost of picking an order by calculating the labor cost divided by your pick rate. For example, if an order picker makes $20 per hour, and your pick rate is 40 orders per hour, the cost to pick an individual order would be $0.50 per order. If your picking efficiency (pick rate) increased to 80, your cost per order picked would be cut in half.

The Benefits of Efficient Picking

Man picking up a box

The above example is one of the tangible indicators of increased picking efficiency, but there are intangible impacts. The primary one is increased customer satisfaction, which is driven by the fact that more efficient picking results in fewer mistakes in orders, faster shipping times, and better overall inventory control.

Higher pick rates also result in lower labor costs and reduced maintenance expense for the picking process machinery. By improving route efficiency, pickers spend less time per order, and machines travel fewer miles within the warehouse when picking orders.

Factors That Influence the Cost of Picking

• Warehouse size

• Complexity of the order to be picked

• Cost of labor

• Route efficiency

• Pick rate (# of orders picked per hour)

Common Picking Problems

The following is a list of common picking inefficiencies. When addressed, these can radically improve your picking processes.

Man confused looking at two similar products

Human Error

Manual picking can result in incorrect pieces being picked or incorrect quantities of items being picked. This can result from improper storage of inventory, or it could be due to the lack of a warehouse map or clearly delineated locations for goods waiting to be picked.

Picked Items Cannot Be Located

Whether items were stowed incorrectly or mislabeled, an item must be able to be located to be picked efficiently. This also leads to human error if the picker does not validate the item being picked but merely grabs the location.

Inefficient Picking Routes

Processes that rely on the picker's best guess regarding how to navigate the warehouse result in multiple routes for picking an order. This means that the picker drives aimlessly from one location to another, picking items for an order without any attention to the shortest route through the warehouse. This wastes both labor and machine time.

Manual or Paper-based Picking Processes

Man filling papers to process an order

Manual or paper-based picking processes are horribly inefficient because most do provide an audit trail of who picked the order, the time when it was picked, or the order in which it was picked. Paper or manual processes are also fraught with errors in inventory management, as it is easy to overlook or record incorrect quantities of items picked.

No Contingency for Partially Picked Orders

If an order cannot be picked in its entirety for any reason, there must be a contingency for partially-picked orders. Without contingency for picked orders, orders can be lost, shipped prematurely, or picked more than once, rather than picking up where the first attempt left off.

Your Processes Rely on Worker Experience/Memory

Smaller warehouses may rely on picker experience when fulfilling orders. As your business grows, this becomes an obstacle to efficiency because workers may not remember where everything is located. Without a warehouse map, temporary or contract workers do not know where to go to pick orders and spend inordinate amounts of time just trying to locate pieces for the order.

Overall Lack of Automation

Automation, by its very nature, is more efficient than any manual process. By leveraging the latest technology and equipment, you can easily increase your pick rates by up to a factor of 5x. A 500 percent increase in pick rate will have a significant positive impact on your bottom line.

How Can You Increase Picking Efficiency?

Woman holding a Warehouse Management System scanner

Short of bringing in a Lean Six Sigma expert to evaluate your warehouse operations, here are a few things you can do to improve your picking efficiency.

Document all of your warehouse processes. Nothing should be in someone's "head." Everything needs to be recorded somewhere so that if anything happens to key employees, your warehouse does not become a shambles.

Make your process documentation readily accessible to all relevant employees. It doesn't do any good to have the processes documented in a notebook stored away in a file cabinet somewhere. It needs to be in the hands of your pickers. This allows them to operate more independently and solve their own minor issues when problems arise.

Develop contingency plans for the most common problems that occur in your operation. Document these and distribute them with all the other process documentation. This keeps everyone on the same page and helps to ensure that outliers will be resolved in a consistent manner.

Automate as many of your processes as possible. There are many great Warehouse Management Systems on the market today that can help you with everything from warehouse mapping to inventory control.

Install automated pickers/conveyor belt systems to reduce the cost of manual picking. You can also investigate voice-controlled picking and mobile apps designed to help with picking and inventory management.

Engage your workforce. Often your best employees have insights from the day-to-day job that management night not ever see. Some of the best suggestions may come from the veteran of 20 years and the new employee looking at things from a fresh perspective.

If you are wondering where you can get pallets there are companies that focus on supplying pallets to businesses. Recycled pallets can also be an option, but those are much harder to come by.