What bad picks cost
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Published on: November 24, 2016 / Updated on: November 24, 2018 – Author: Konrad Wolfenstein
Traditional order picking: Picking errors are virtually guaranteed
And how to prevent costly picking errors
Picking errors are frustrating, delay processes, and cost logistics companies vast sums of money annually. Studies show that distribution centers lose an average of over €290,000 per year due to picking errors. Therefore, precise order picking is crucial for the success or failure of distribution companies. Consequently, work processes must run as smoothly as possible.
Therefore, zero-defect order picking is a top priority for many logistics companies. But how can it be achieved? Improving performance in distribution centers requires the use of modern technology. However, in addition to selecting and installing suitable technical systems, successful practical implementation by employees is crucial for the success of the measure. To function effectively, the technology must be intuitive and easy for warehouse staff to operate. Only then will the necessary acceptance be achieved among the workforce. And this acceptance is essential if the technology is to be successfully implemented and the costs resulting from picking errors are to be sustainably reduced.
What are the costs associated with inaccurate order picking?
An amount that may seem small at first glance. However, let's assume that in a distribution center, 60 orders per hour are processed on one line, each containing three items. These 180 items per hour, multiplied by the eight hours of a shift, result in a total of 1,440 items per day where mispicks can occur. Assuming a precision rate of 99%, this equates to 14.4 errors per day. If each mispick is charged at €17, this results in avoidable costs of €245. Calculated over a year (300 working days), this adds up to a substantial €73,400, which is incurred with a precision rate of 99%. And that's for just one picking station. In large distribution centers, however, the volume of items handled is significantly higher, quickly resulting in costs of several hundred thousand euros annually that could be avoided with greater precision. From this perspective, investing in more modern storage equipment quickly makes sense.
Fewer errors with automated systems
Besides the automated provision of items, the additional features of the devices are the main reason for the increased precision in order picking. By indicating the items to be picked to warehouse workers via light signals, pick-by-light systems their work easier and ensure more precise and faster access. Such a system supports the order picker by
- Indication of the number of items to be removed
- Placing the item in the correct order container
- Confirmation of the correct completion of the order
Errors can occur in each of these four order picking steps, which are effectively prevented by the digital display. The necessary LED or laser pointers can usually be integrated into the devices as an optional, customer-specific feature.
Compared to the more error-prone manual picking from conventional rack storage systems, these tools, when used with automated retrieval solutions, increase access accuracy to 99.9 percent and higher. By employing modern software control and additional identification methods such as RFID or barcodes, the accuracy of the devices can be increased to nearly 100 percent.
Applied to our example, this near-zero-defect picking process results in potential savings of almost €70,000 per station annually. If we also factor in the cost savings from reduced personnel requirements and efficiency gains due to shorter processing times, the purchase of such a system for the distribution center pays for itself relatively quickly.
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