The HITS Report: The Killer App for Distribution

In recent years, one piece of techno jargon — the app — has inundated our culture. We have an app for everything: turning a phone into a flashlight, scanning business cards and catapulting birds at egg-stealing pigs. Over the last several years of consulting, I have run across the killer app for transforming your warehouse into an efficient machine — the HITS report. This is my go-to tool for working with clients. I use it every single time. It is just that powerful.

The HITS report, sometimes referred to as a Picks report, is a little like an SKU popularity contest. We are trying to determine how many times a customer has ordered a specific SKU during a calendar year. In this report, I am not concerned with how many units they purchased when they placed the order. I simply want to know how popular an item is with our customer base. Each order is recorded as one hit.

Right about now, many of you may be asking: “How do we account for requests for items that we currently do not carry?” Or “How do we account for lost sales because we did not have the product in stock?” These types of situations are very hard to capture from a systems standpoint. Actually, the systems can capture the data, if someone is willing to record the event. I spent many hours taking customer orders over the phone and counter. The last thing I wanted to add to my workload was to create a nontransaction. Let's be realistic here. If you are determined to account for these occurrences, give the customer service person an easy method of recording the data. Something as low- tech as keeping a lost sales notebook next to the order taker will help.

Once you've generated the report, use it for several different inventory management tasks. The most beneficial uses are: organizing the products in your vault for logistical efficiency, helping speed up the cycle counting process, sniffing out the nearly dead items in your product mix, determining how much safety stock to apply to an item, setting up a pricing matrix and even organizing your time at a large trade show. I am constantly amazed at what folks use it for.

I grew up in a warehouse environment where we chose to keep all products from the same vendor grouped together. We arranged the products by manufacturer SKU number so that a picker could find something relatively quickly. This was before bin locations became integrated into our distribution software package. The problem with this arrangement is that order pickers found themselves traveling all over the warehouse each time they filled an order. If you have a small facility, this doesn't really seem like too big a deal; but if you are working in a larger warehouse, these additional footsteps really add up.

One of the ways to improve the efficiency of your order pickers is to change your warehouse layout based on product velocity. Using the HITS report puts your most popular products closest to the shipping point. As you move further away from the shipping point, the products become less popular. When you arrange your facility by product movement, you will notice that most of the activity will be occurring in the first couple of rows. I was discussing this at a recent conference, and one of the participants confirmed that most of the picking occurs in only the first row of his facility. Make sure that you give yourself some extra room in the first couple of rows.

You don't have to set up the facility in the exact order from the report. I have seen several different adaptations on this theme. One client created a small high pick zone located right next to the shipping dock. Another client has been experimenting with using a carousel conveyor system for his high pick items. I like using the zone approach because of the different shelving requirements needed. Remember the goal here: We are trying to increase the efficiency of our pickers by reducing additional footsteps.