Warehouse Operations Tools & Tips

Interview with Billy Lindler, USSI

Many retailers need to focus more on managing their warehouse cube. That requires identifying and updating poor performing systems. Many cost-saving fixes are low-cost or no-cost.

Furniture World recently spoke with Billy Lindler Jr., president of USSI, a company that partners with furniture retailers to provide services, including operations, expansion and new construction consulting, facility audits and warehouse inspections. Lindler offered insight into how retailers can improve their warehouse operations and prepare for future challenges and technological advances.

State of Furniture Warehouses

“I visit at least one furniture retail warehouse per week, and overall,” Lindler noted, “they reflect softening demand causing some to be significantly full or overflowing. During the pandemic, retailers we worked with leased additional warehouse space and adopted a precision approach to engineering warehouse design based on the cubic volume of inventory they needed to keep on hand. Many had problems with their saleable inventory mix. For example, too many headboards and rails, but not enough footboards. The best operators cleaned out inventory waiting for parts that were demised, discontinued or damaged. Others still have a shocking amount of cash tied up in this kind of inventory and even misplaced inventory.“

Background

Lindler started working at USSI, founded by his father, as a teen. After earning an industrial engineering degree from Georgia Tech, he rejoined the family business for a short stint. He then left USSI to join the world’s largest automated material handling company, first working as an engineer and then selling warehouse management system software to Fortune 500 companies. He also spent time at the enterprise software providers, Siemens, SAP and Dassault Systemes.

Just over five years ago, Lindler did some consulting for USSI and was asked to stay on as company president. “That was an offer I wasn’t expecting,” he shared. “It’s been a fantastic journey since then. We’ve leveraged the solid foundation USSI has in the marketplace by bringing to bear the organizational skills I learned while away from the business.”

“Advanced systems can handle warehouse route planning, also known as interleaving, to coordinate different tasks to maximize warehouse efficiency.”

Warehouse Challenges

Lindler, who has an obvious affection for retail operations, said he’s yet to meet a furniture retailer who entered the furniture business because they had a passion for managing a warehouse. But as the operations side has become more critical to retail profitability, the need to focus on warehouse efficiency head-on has increased dramatically.

What’s Required

Selling bedroom sets requires salespeople to walk customers through the steps of the sale to help them find the one collection they like the best. Presentations must be based on the customer’s specific needs, skillfully utilizing all the appropriate FABs. Then, the sale must be closed in a way that includes all the right pieces they will need.

1. Labor Challenge: “The competition for warehouse workers is intense right now. Aside from low unemployment in many areas of the country,” said Lindler, “all kinds of businesses are gobbling up workers to get inventory closer to the point of purchase. It’s not just Amazon. Others are making significant investments in distribution operations as they scale back retail footprints in favor of web-based sales models. Furniture retailers are having an especially difficult time finding help. There are reasons for that. Most warehouse jobs involve sitting or standing on a fork truck, driving around, and moving pallets with a machine. In furniture warehouses, employees slide and lift 350-pound power motion sofas. It’s a lot of physical activity. A study we conducted revealed that the average order picker operator moves 10,000 pounds of furniture daily. It’s a significantly more demanding job than working for Publix in South Florida or at Amazon with the help of a Kiva robot.”

   Recruiting Challenge: Lindler said that retailers have limited options, but some things can be done in addition to continually looking for new warehouse talent. “Some retailers are enlisting employees to help find new workers by giving them bonuses. It’s a friends-of-friends recruiting approach with a financial incentive.”

   Work Schedules: “Retailers are becoming more aware of a need to make work schedules less demanding for warehouse employees to create a more family-oriented work environment.”

   Workplace Culture: “It’s important to address the three C’s: culture, compensation, and calendar. Operationally, some of the best organizations have moved the needle forward by addressing workplace warehouse culture through employee recognition programs. Consider bringing employees together for meals or in settings such as an annual gala to provide an opportunity for peer recognition and fun.”

“In the coming years, there will be increased use of robotics and perhaps the adaptation of a Reliable technology called Automated Storage and Retrieval Systems (ASRS).”

2. Equipment Lead Time Issues: “Current lead time for order picker delivery is about 60 weeks. So, some of our clients have ordered these machines before they break ground on new warehouse construction. Avoid unpleasant surprises by keeping track of equipment that’s nearing retirement. Lift equipment commonly used in furniture warehouses is specialized and purpose-built for furniture. There aren’t nearly as many of these used machines available for purchase as less specialized equipment.

   “On the repair side, components like wheels and casters are readily available, but electrical components like circuit boards and ICs can sometimes be more difficult to source. Overall, service suppliers have done a decent job of managing that inventory and keeping it available.”

3. Construction Delays: “Aside from lift equipment delays, lead times and material costs are moderating. The cost of steel used to produce storage racks, which increased by 300 percent during the pandemic, has returned to near pre-COVID levels. However, projects have been delayed due to shortages of concrete and electrical panel availability. Even leased build-out for a developer spec building has been, and continues to be, quite challenging.”

4. Extra Costs:

   “The availability of what I call ‘beachfront’ land suitable for new distribution center construction,” Lindler observed, “is another problem. Prices for large lots near an interstate interchange have risen by 100 percent over the past couple of years. Construction costs have also increased with no recent softening in the market.”

Software Solutions

Furniture World asked Lindler to provide information about the implementation of warehouse management system software.

“Advanced systems,” he advised, “can handle warehouse route planning, also known as interleaving, to coordinate different tasks to maximize warehouse efficiency.

“So many stores we visit,have items in the warehouse that can’t be found on their showroom floors. What that means in practice is that these SKUs will remain in warehouse purgatory forever.”

“Let’s say that an order picker pulls a cart full of furniture into a guided warehouse aisle. Once there, it can go full speed with no steering required. Order pickers are 20-foot-long machines that lack agility and are not adept at changing aisles. That’s why after an order picker unloads, it makes sense for it to perform as much work as possible by immediately flipping to order picking before changing aisles. Interleaving, controlled by WMS, ensures that the picker goes in full and comes out full. Carts are transported with a tugger so that it can do as much work as possible, as efficiently as possible. Interleaving eliminates deadheading, which reduces labor costs, wear and tear on machines and the number of order pickers needed.”

Lindler explained that “Efficient interleaving is rarely accomplished when using what I would call a brute-force system, but it can be done manually. First, a warehouse manager prints out received and scheduled outbound orders every day. This paperwork is sorted by aisle, so the information is available for picks.

“A problem that often arises with a manual system is that should there be a substitution or a delivery cancellation, the paperwork needs to be reshuffled to adapt to the changes.

“There are a number of software solutions retailers use. Some are part of popular furniture software applications that also control POS and other retail functions. There are also purpose-built applications that keep track of warehouse inventory from when it gets scanned off the truck, put into a receiving area, loaded on a cart, then into a storage location. The advantage is that the system knows, for example, that a specific SKU is in row 12, bay seven, level two. When the system calls for delivery of an item, the system identifies the location of the oldest one in inventory or perhaps finds a returned item already out of its packaging that’s still as good as new and ready for delivery. Bad things happen to furniture that’s been unboxed. Likewise, WMS can handle other functions necessary to help manage the returns process and the disposition of inventory. These include answering questions such as:

• If it’s a return, is it being sent for repair?
• Do we need to order parts?
• Should an item go to clearance, be donated or be put in the trash?

“Again, the process can be managed with a manual form. Technology is great, but to be successful, retailers must focus on people, processes, and technology in that order.“ Some systems our clients have used are InfinityQS, a system that Dearden’s developed; GERS, a point of sale legacy solution; BXK, from Warehouse Architects; HighJump; and STORIS.

Warehouse Danger Signals

Safety: “People’s livelihoods and the well-being of families need to be every retailer’s first priority,” Lindler told Furniture World. “If there were significant workers’ comp claims and other safety issues, it’s a red flag. ”

Poor Performance: “Another,” he said, “is failing to meet targets for key performance indicators. Sometimes I ask business owners about their KPIs and get blank stares. Without tracking KPIs across all departments, including benchmarks for sales, marketing, warehouse operations, delivery, hiring and employee satisfaction, it’s impossible to measure performance, difficult to coach, and hard to improve. Retailers can’t monitor what they’re not measuring. Just having sales figures and knowing how many deliveries are made every day is not enough.”

When asked how to develop KPIs and identify those that under-perform, Lindler suggested that “It can be useful to have someone perform an audit to get baseline data on safety, facilities, and operations. It’s also a good idea to compare operations with similar furniture retailers. There are some good performance groups in our industry. USSI has one as well that specializes on the operations side. Its members find it useful to compare KPIs such as cubes-per-man- hour among their peers.”

Missing Inventory: “Another danger signal is lost inventory, even if it’s just one brown leather $1,000 sofa. No retailer likes to call a customer to say, ‘Thanks for buying the sofa. We’re working on delivering it as soon as we find it.’ This represents a broken promise. Just last week I spoke with a retail owner who misplaced an entire container. Situations like these are disturbing because when retailers fail to invest in warehouse operational excellence, so much is at stake regarding the total customer experience. When done the right way, the result is lower rates of damage, as well as decreased labor costs and consumer dissatisfaction.”

“Today, the standard max for order pickers is 30.5 feet. In the next 12 to 24 months, manufacturers plan to introduce models that reach into the 45- to 55-foot range with increased capacity.”

Inventory Control Issues: “Poor inventory control, including shrinkage, is an additional cause for concern. It’s important to keep track of saleable inventory by keeping up with cycle counts. So many stores have items in the warehouse that can’t be found on their showroom floors. What that means in practice is that these SKUs will remain in warehouse purgatory forever. This can quickly get out of hand. Recently, when doing a warehouse audit, we found that 20 percent of a retailer’s cube was not displayed on its sales floors.”

Lack of Management Attention: Retail store owners and managers are busy people. This can result in warehouse management operations upgrades often getting put on the back burner. “They have other urgent business priorities,” explained Lindler. “They may be in the middle of opening a new showroom or say they’ve managed their warehouse in the same way ‘forever,’ and it works fine. But if nobody is paying close attention to what’s going on in the warehouse with the intent of improving operations, it’s a danger signal as well.”

Don’t Ignore the Simple Things: Lindler completed his list of warehouse danger signals with this observation. “Retailers often shoot themselves in the foot by ignoring the simplest things. For example, not paying attention to graphics on warehouse boxes indicating storage orientation. This information is always printed on boxes with the words ‘this end up,’ or by a black line on one side that indicates the side where a box should contact the shelf to avoid damage. This black line may extend around the edges as well, with the top left purposely blank to indicate that either there’s lack of necessary protective packaging on top to protect an item, or the item has delicate elements there that are easily damaged. Glass furniture may have red lines with added text that reads ‘fragile.’

“It’s hard to believe there are so many warehouse operators, assistant managers and managers who don’t know what the black lines mean. It’s common for racks to be full of furniture that is stacked helter-skelter due to lack of attention or poor training. Even boxes clearly marked ‘fragile’ with red arrows that should point up, often point down.

“Remedying this situation doesn’t require a costly warehouse management system, new racks or order pickers. It just requires staff to follow the instructions on the box! Items like dressers aren’t designed to be flipped upside down and banged around on an order picker or on their journeys through the warehouse. Just a couple of weeks ago, I toured a facility accompanied by its DC manager. I kept taking pictures of mis-stacked furniture until I felt a bit sick to my stomach. It turned out that he didn’t know what the black lines meant. Nobody in the warehouse did.”

“Current lead time for order picker delivery is about 60 weeks. So, some of our clients have ordered these machines before they break ground on new warehouse construction.”

Tech Advances & Best Practices

There are many new advances on the horizon, as well as best practices already in place that can help furniture retailers improve operations. Here are some that are interesting.

3D Product Data: Warehouse management systems providers are working on new ways to make warehouses more efficient. “One,” identified Lindler, “that’s interesting is the adaptation of 3D product photography commonly seen on consumer-facing websites and in-store kiosks. Once package dimensions are added to that 3D information, it will routinely be used in ways to better manage the warehouse cube.”

Product Data Entry: “City Furniture is ahead of most furniture retailers with regard to data collection,” Lindler observed. “Upon receiving, they record useful information about every new SKU. The goal is to facilitate put-away based on each product’s sales velocity, weight and box dimensions. Fast-moving SKUs are positioned towards the front of the warehouse because those trips are more frequent. Slow movers are located toward the back. Items in the mid-ranges are also placed according to their velocity. The system continually adapts based on sales volume changes over time.

“Some manufacturers are helping retailers by providing box dimensions and weights, but even with that information, problems can arise in warehouses with merchandise that was assembled and returned before delivery to customers’ homes.

“Let’s say a retailer delivers six chairs and a dining room table that was received knocked down without legs. It’s assembled for delivery, but should it be returned, it can’t fit back in the same warehouse slot. And so, collecting and managing dimensional data based on assembled and unassembled size turns out to be very important information for furniture retailers to have as well. Likewise, when a new product that requires assembly is delivered to a warehouse for the first time, some of the best retailers measure assembly time so they can do production planning to coordinate anticipated volume during, for example, a Presidents’ Day sale on a $399 dinette and six chairs that will need to be assembled before delivery.

“The bottom line,” Lindler concluded, “whether a retailer uses a WMS or manual system, a best practice is to start capturing the information needed to make decisions about how products get stored based on unassembled and assembled (in box) dimensions, velocity and weight.”

Taller Warehouse Construction: “In the near future, we will see advances in warehouse automation and improved lift equipment that will allow retailers to build smaller footprint warehouses by building higher,” Lindler predicted.

“It’s common for racks to be full of furniture that is stacked helter-skelter due to lack of attention or poor training. Even boxes clearly marked ‘fragile’ with red arrows that should point up, often point down.”

“Today, the standard max for order pickers is 30.5 feet. In the next 12 to 24 months, manufacturers plan to introduce models that reach into the 45- to 55-foot range with increased capacity as well.”

Robotics: “USSI continuously evaluates new warehouse automation technologies. The problem is that most robotic solutions are built for pallet or tote handling. I’m optimistic that we’ll have some advances to report soon for some furniture products, for example, to help move powered motion upholstery that’s become heavier and more unwieldy.

“In other industries, automation allows for the implementation of goods-to-person systems. In furniture warehouses, warehouse personnel must instead go to the goods, fetch them and bring them to the point of delivery. “That’s why we’ve been looking at a promising push-pull device that can reach in and grab the sides of a box. Levers flip out, squeeze the sides and pull it into the carrier.

“In the coming years, there will be increased use of robotics and perhaps the adaptation of a reliable technology called Automated Storage and Retrieval Systems (ASRS). Earlier in my career, I worked for Daifuku, the world’s largest provider of ASRS. The implementation challenge has been to justify its use from an ROI perspective, because furniture isn’t a high-value category per cubic foot like jet engines or pharmaceuticals.

“We’ve also been testing and exploring exoskeleton systems that have the potential to protect warehouse workers from injury and make them stronger. The good news is that these devices are generally quite good at lifting. Some are powered by a battery pack. Others use elastic band-type systems. The bad news is that the units we’ve tested aren’t that useful for the most common actions in furniture warehouses that tend to push and pull boxes versus bend and lift them.”

Business Intelligence: “Software integration is another area that will allow retailers to improve operations,” added Lindler. “Most furniture retailers currently use a mix of software solutions like specialized furniture POS/inventory business systems, routing software, and/or a legacy solution for labor management and others.

“There’s huge potential to drape a business intelligence solution over legacy business applications to collect data to bring reporting into a central area in near time for actionable business decision-making.

“Right now, most business systems behave like flight recorders. When a plane crashes, the FAA retrieves the recorder to find what went wrong. This information helps avoid future disasters. On the other hand, business intelligence tools work more like cockpit gauges that warn pilots, for example, that they are losing altitude. This provides information that can help a business avoid a crash.”

Recycling Technology: “Furniture World readers should look into purchasing an EPS densifier that melts Styrofoam down to an 80-to-1 ratio reduction. It’s a better solution than compressing. The resulting ingots can be recycled, reducing retailers’ haul fees, then sold to plastic buyers and converted into all sorts of products.”

“Better results come from a precision approach to engineering warehouse design and operations based on the cubic volume of inventory a business model calls for.”

Fire Regulation

“In 2018, a new international building code was adopted for increased fire protection system standards (https://codes.iccsafe.org). Furniture, especially mattresses and upholstery, are categorized as just one danger level below flammable liquids.

“Fire code mandates for new construction and expansion areas in older warehouses require attention. This has been complicated by the uneven adoption of new codes across municipalities that call for increasing the density of sprinkler heads in storage areas. It’s important to keep on top of current legislation and to communicate with insurance carriers that may require fire safety updates beyond what local codes require, to maintain inventory insurance coverage.

“Retrofitting furniture warehouses to comply,” said Lindler, “can be complex. At a minimum, storage rack systems loaded with product need unloading so a sprinkler contractor can update the system. That assumes there’s an adequate flow rate and pressure for a new sprinkler system. The cost can be significant should a fire pump and/or a holding tank need to be installed to ensure adequate water supply.”

Conclusion

Lindler concluded with this advice for Furniture World readers. “Furniture warehouses come with their unique challenges. Most retailers think about their warehouses in terms of inventory dollars. But from a warehousing perspective, it doesn’t matter if a $10,000, hand-stitched full-grain leather or a $300 leather split takes up space on a rack. They cost the same amount to receive, store, pick and prep. That’s why retailers need to start thinking in terms of managing their cube.

“Better results come from a precision approach to engineering warehouse design and operations based on the cubic volume of inventory a business model calls for. This should be based on clear strategies and accurate measures for required inventory days on hand.”