The center of the distribution of trade is a warehouse, the place where the goods arrive and initially stored, packaged and finally distributed to various places. Efficiency in a warehouse means inventory system and goods movement. The inventory is constantly moving and goods tracking in a warehouse is absolutely necessary to keep the business running efficiently. Errors in the operational management of a warehouse can cause customers are not only not satisfied and financial loss to the business owner. Technical operations in optimizing inventory and delivery are very important to improve the efficiency of a warehouse.
As the business grows, it is easy to fall into routines and operating systems in the warehouse could start to become ineffective and obsolete, so as to make you aware, it is important to continuously review the operating practices to better fit with the development of the business. The main focus is the high level of productivity with no delay, and make sure to prevent and eliminate potential problems that could elevate processing time.
The FIFO – LIFO accounting method is one of the means of inventory management and financial issues relating to the supply of goods produced, raw materials, parts, or components. FIFO stands for First in, first out, which means that the supply of the first entry that was first recorded as goods sold. The FIFO method assumes that the cost of goods purchased will be the first time the goods are sold first. In this method, inventory outcomes were assessed with the cost of purchasing the very end.
LIFO stands for Last In First Out, since the 1970s, some US companies shifted towards the use of LIFO which reduced their income tax in times of inflation. But with International Financial Reporting Standard banning the use of LIFO, more companies have gone back to FIFO. LIFO is only used in the US.
LIFO system can be used at some pallet racking systems, such as:
1. Block Stacking
The block stacking system refers to a unit being stacked or stored line up in a line or block. Pallets stacked with a certain height adjusted to criteria such as the condition of pallets, heavy products, high safety, and warehouse forklift capability. Pallets are stored in this method can be taken with the LIFO system. This stacking system does not allow for the collection of goods by sorting date method or FIFO. It is not expensive because it does not require the shelves and can be performed on various types of warehouses with wide open land.
2. Single Deep, Double Deep and/ Drive in Pallet Rack
These racking systems provide access every pallet to be stored on the shelf. When a pallet is moved, then the blank spot can be filled with another pallet.
This type of placement can be adjusted to the desired height. The weakness of this method requires floor space to fit the width of the lane.
Double Deep Pallet Rack puts two single rack in a place that can reduce the amount of need hallway, but can cause honeycombing, so it can be said when this method is less efficient than single deep pallet rack and requires a special forklift to pick up two pallets at a time, taking or placing pallets from the shelves. While Drive in is the continuation of the double deep rack. Drive-in provides access to a forklift to place or move the stock. However, the forklift has limited space to maneuver and thus require more time to put or take the pallet.
While FIFO system can be implemented in some such as:
1. Pallet Flow Rack
Pallet flow rack method works by transferring the load from one side to the other by using a simple conveyor so that the pallet can be moved using FIFO. When a pallet moves, the others will fill the vacant space. So the first in is the first out.
2. Single Rack
3. Double Deep Mobile racking
With its mobility, forklift can drive in to retrieve the first in pallet.
Some other tips that are important in improving the efficiency of the warehouse:
1. Personnel ID
The personnel ID helps identify people who is working in the warehouse. An important key to maintain the security of a warehouse by eliminating those who do not have any purpose in a warehouse area.
2. Clean the Warehouse
It is necessary to have the warehouse clean on daily basis. Defective goods, returned goods will have no place to hide. The warehouse is a place where all your money is stored in the form of goods.
3. Increase the receiving area
The error of a warehouse inventory area can start from the reception area. If you make a mistake here, 10 other errors will arise in the company. Begins with designing or rearranging of adequate employment space so that there is no accumulation of goods in the reception area.
4. Place the right person in the receiving area
It is important to put the right people in the receiving area. When your employees know the product, the ins and outs of warehousing, then the error in receiving and goods placement by type can be minimized.
5. Create colour coded labels
Colour label facilitates your warehouse employees to identify goods, defective goods, goods for a refund or goods to be sent to the customer.
6. Perform cycle counting
Daily calculation provides many benefits to find defective items, or repair any item placement, and even inventory. Some minor problems in warehousing both errors in the placement of items can affect the performance and reputation of your business.
Procedural error and an unorganized warehouse are bad for your business. Each a small mistake is potential to screw up the business. To ensure that your warehouse system runs at maximum efficiency, it is necessary to monitor the standards and provide employee training. Improving the efficiency of a warehouse is essential to increase business and customer satisfaction.
Also every ease of the works in the warehouse will have a great impact to employees.
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