The True Costs of a Mispick

mispicks-happen-blog-1-image-1When you mispick a product, how much are you really paying? Do you know how many mispicks happen every day in your warehousing facility? Even with just a %1 mispick rate, you could be losing thousands of dollars per year.

What is a mispick?

First, we should start with identifying what exactly a mispick is. Picking in general involves much more than just grabbing an item and placing it with an order; it means the operator receives a paper list of instructions about what to pick, who then has to travel to the correct storage location, locate the item in question, pick the correct number of items as indicated by the paper list, confirm the pick, then deliver the item for packaging. As you can see, there’s a lot of room here for human error compounded by possible fatigue that the operator may struggle with from walking so much during the day and inadequate lighting that is common in warehousing facilities. A mispick means that the wrong item is picked instead of the correct one, the wrong quantity is picked, an item is omitted, or the condition of the item itself is damaged or mislabeled. And while mistakes do happen, the true cost of mispicks could have a huge impact on your bottom line if measures aren’t taken to reduce them.

How much mispicks are costing you

lost-money-blog-1-image-2So what, really, is the true cost of a mispick? A survey in 2012 of 250 supply chain and distribution managers found that distribution centers lost an average of nearly $390,000 per year due to mispicks. This doesn’t include the cost of shipping the item back, processing it, returning it to stock, losing customer satisfaction, plus picking, packing, and shipping the correct item back to the customer. Can your company afford that?

It’s estimated that 35% of facilities experience mispick rates of 1% or more. This may seem negligible, but it adds up quickly. For example, a facility that picks 250 lines per hour and three SKUs per order for one eight-hour shift picks 6,000 items per day. If one percent of their picks are incorrect, then that means there are 60 mispicks. The cost of each mispick can easily add up to $100 or more, which means that 60 mispicks could translate into $6,000 in revenue lost per day and $1,560,000 per year.

Reducing your mispick rates

So how can you reduce mispicks? Automated goods-to-person storage and retrieval (ASRS) systems such as horizontal carousels, vertical carousels, and vertical lift modules (VLMs) could be the solution for you. These machines deliver items directly to the operator, eliminating walk and search times. They can also be equipped with pick-to-light systems that negate human error. Part 2 of this blog will cover the different types of light-directed picking technology and how they can help increase accuracy and throughput.