Value Chain Report -- Could Your Distribution Center Be More Productive?
Although it had installed a state-of-the-art warehouse management system (WMS), a well-known retailer was experiencing a productivity problem in its multiple distribution centers, a critical link in its supply chain. After spending significant time and money on the WMS implementation without achieving the anticipated benefits, operations management decided that an external, unbiased perspective was required and engaged a warehouse operations and logistics consulting team. The team soon discovered a number of reasons the client had not seen the productivity gains that had been used to justify the WMS expenditure. In particular, the lack of uniform practices throughout the distribution network had significantly hindered realization of potential productivity increases. Installed Versus Implemented While it is true that the retailer had a functionally robust WMS available at its distribution centers, the system had been installed with minimal process, workflow or other changes that would allow the organization to take advantage of the increased functionality of the new WMS. Opportunities to improve operations by repositioning prime pick locations for high-volume items or slotting based on proximity to prime picking location or cube utilization had not been considered. It is often the case that companies devote time, human energy and financial resources to new systems having been convinced by the software vendor that the new system, with all its features, is the primary solution for eliminating, or at least reducing, operating inefficiencies. In fact, the software is a tool that enables the process changes that create true improvement environment. Recognizing that a capable tool was in place, the joint client and consultant project team began to identify process changes that would allow the company to realize the gains originally anticipated. In this particular case, the team focused its efforts on eight regional distribution centers, each of which was 1.5 million to 2 million square feet with approximately 300 to 400 personnel. Leveraging the functionality of the WMS and identifying internal best practices among the eight distribution centers, process improvements were implemented in four major categories: receiving, material handling, order fill and shipping. The project team identified a "best practice" distribution center for each major warehousing process. For the purposes of the project, a "best practice" site was defined as the best process performer compared with the other distribution centers among the eight facilities. The team then re-engineered the process at the "best practice" site to further improve its productivity. In short, they turned a "B" operation into an "A." Finally, the re-engineered processes were implemented at all other distribution centers within the network. Receiving Improvements Receiving process improvements that were implemented included:
- Pre-receiving using advanced shipping notices (electronic messages from suppliers to customers that let them know products or materials are en route) and pre-slotting of items to speed physical receipt.
- Slotting based on proximity to the prime pick location and cube utilization.
- Combining responsibility for physical unloading and checking functions to both increase individual accountability for inventory accuracy and eliminate unnecessary labor hours.
- Special handling of UPS and FedEx deliveries through advanced shipping notices and pre-staging of pallets and labels.
- Centralizing material-handling responsibilities (versus three separate material handling groups operating independently) to better manage intrawarehouse pallet moves.
- Warehouse location partitioning simplification within the WMS.
- Driver profile modification to create seamless transitioning between work assignments, eliminating downtime.
- Creation of a shift strategy to service internal warehouse customers more effectively.
- Selective direct full pallet moves from storage to ship dock to avoid non-productive use of the conveyor system.
- Routinely topping off prime pick locations during off-peak hours to reduce the number of time-sensitive intrawarehouse replenishments.
- Improve storage density through contiguous storage of high-volume items.
- Improve replenishment trigger timing to ensure product availability and eliminate double touching pallets.
- Reposition prime pick locations of high-volume items to increase pick rates.
- Utilize a "dock door" team to improve manpower planning.
- Eliminate gaps between cartons on conveyors by allowing cartons to accumulate before releasing to the person loading the trailer, to ensure that the loading function is man-paced, not machine-paced.
- Overflow and/or exceptions handling to capture and timely process retail store orders.
- Reduction of trailer switch times by pre-planning all trailer moves and yard staging of trailers.
- Improve trailer loading procedures and trailer load planning via the WMS.