White Paper - Constant Contactfiles.constantcontact.com/1ae5df5a001/e7eecbe6-d7ac-4844-8911-a... ·...

Do You Have A “Strategy for Speed”?

…Start by Conquering the “10 Plus Wastes”

& Transform Your DC or Warehouse from a Cost

Center to a Profit Center

White Paper

Howard W. Coleman, Principal MCA Associates

Derby, CT 203-732-0603

www.mcaassociates.com

66 Derbyshire, Derby, CT 06418

203-732-0603


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Introduction: There is always much talk about the basic technology (and supplemental technology) solutions

that are designed to optimize systems in an effort to work “smarter” in a distribution center or

warehouse – to possess a “strategy for speed”.

Managers are now under more pressure than ever (and they should be) to carve out space and

optimize throughput. In most cases, the goal is to maximize storage capacity and labor

productivity within the same footprint – and do it without breaking the bank.

Here, we describe some techniques, that hopefully you can use, to not only get a better

understanding of how to meet the pressure, but how to put specific solutions to work that

maximize existing space (or new space) and bring labor efficiency to a whole new level!

This, our latest white paper, spells out what you need to know, the 4 components; (1) The "10

Plus Wastes to attack", (2) "5 – potential “design concepts” you can employ, (3) the

performance metrics to “baseline” and continually measure your operations and (4) “a summary

of the initial steps to take".

Your over-riding objective, I believe, is to implement (within 6-months) a strategy that has a

handsome ROI and establishes a hard to beat competitive advantage; transforming your DC or

warehouse from a cost center to a profit center - contributing to the bottom line.

Component #1 – The 10 Wastes to Identify Process Improvements

The 10 Wastes – Distribution Centers & Warehouses

“The Ten Wastes”Over-processing

Waiting/delays

Inappropriate processing

Space

Unnecessary inventory

Poor Ergonomics

Defects

Unnecessary Transport

• More work than needed/required

• Idleness

• Overly complicated flow

• Wasted space – vertical & horizontal

• How much and where?

• Unnecessary motion

• Rework - not done right first time

• Automated or manual

Resources

Not using workforce knowledge

• Power, water, etc.

• Failure to use knowledge of workforce


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Henry Ford is quoted as saying; “Time waste differs from material waste in that there can be no

salvage. Wasted time does not litter the floor like wasted material”. In other words; once time

passes, it cannot be retrieved.

I’ll bet you - that upwards of 60% of the activities you perform in your DC or warehouse add no

value…its waste! Your processes and workflows are limited by these constraints. They limit

your performance! So it seems only logical that by identifying and eliminating these wastes you

can attain the greatest potential source of performance improvement. This is a basic “lean

thinking” principle.

The objective is an “expected outcome” – in other words, obtaining consistent results at lowest

cost.

Now, “Waste 10.1” (below) is just my way of elevating these constraints to the most frequently

observed.

“Waste 10.1”

“Poor DC/Warehouse productivity – transaction costs that are too high”!!

6 - Most Frequent “Barriers/Waste”

Unnecessary inventory…

Waiting or delaying of events…

Excessive storage & handling/lack of conveyance…

Unnecessary walking/motion/ergonomics…

Inaccuracies, mistakes, discrepancies (defects)…

Inappropriate space layout....product location, vertical or horizontal use of

space…

These “10.1 wastes” allow me to continue this discussion….


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Component #2 – 5 Potential DC/Warehouse Design Concepts

Component # 2

• Warehouse/Distribution Center Design

Concepts

Design Concept #1 – A “High Velocity Pick Zone” – “HVPZ”

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I guess it’s always best to start off with some “real bang for the buck”! So, say hello to a

“HVPZ” (high velocity pick zone).

First, through the utilization of flow racking and some conveyors, as you see pictured above, we

can address a few design topics and their advantages.


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Secondly, utilize the end-game of “Pareto’s Law” (the 80/20 rule). Through basic Pareto ranking,

most clients we work with are able to identify products with the highest number of “order hits”. I

find that usually a minimum of 500 to 600 sku’s, or more, can be accommodated in a “HVPZ”.

These represent upwards of 50% or more of the order hits experienced.

Thirdly, the utilization of conveyors (automated or gravity fed), eliminates a Picker having to

walk, with the product picked, to a staging area. I still see this waste frequently. Why do we

cause a Picker to traverse this distance when it’s an accepted fact that 70% of a Picker’s time is

spent walking? With a “HVPZ”, the walking distance is dramatically reduced. When properly

slotted, product stored in a “HVPZ”, and “taken away” or moved by conveyor, can often result in

up to a 50% increase in Picker productivity!

Additionally, flow-rack applications allow product to be re-stocked from the rear and picked

from the front (gravity feeding of product to the Picker). Overstocks can be stored above,

enabling a quicker and smoother bin replenishment process.

Putting these three (3) attributes together allows a Picker to pick alternatively from one side to

the other as they go down the aisle – placing product into plastic totes or cartons – as they make

their way down to a packing or staging area (see below) for consolidation and delivery routing.

The "HVPZ” concept is consistent with whether you pick one order at a time, or utilize zone or

wave picking (discussed later)


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Design Concept #2 – Narrow Aisle Storage - “NAS”

“Narrow Aisle Storage”

Why do I still observe aisles in DC’s or warehouses that are 11’ to 12’ wide or more? I know the

answer; forklifts need to fit through and maneuver, right? Hasn’t anyone heard of “narrow aisle

stock pickers” (see above)? You don’t even have to buy this equipment. You can affordably

lease it and then own it after 4 to 5 years. Companies I’ve worked with often are able to store

another 500 to 1,000 sku’s. More DC’s and warehouses should be looking at this for space

savings (5-1/2 foot aisles) and particularly to accommodate higher velocity sku’s (high order

hits,) for products that don’t fit in a “HVPZ”, because of size or other physical characteristics.

Narrow aisle storage, like flow-racking and conveyors are a great example of a materials

handling solution, not a computer system solution. Best of all, most likely you can continue to

use your traditional pallet racking.

Additional Design Concepts For those of you who still process orders using “discrete picking” methods (one order at time),

here’s some other alternatives to consider. Of course you’ll want to investigate whether your

ERP/WMS systems provide (or should provide) these features.

As I stated in this white paper’s introduction:


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Managers are now under more pressure than ever (and they should be) to carve out space and

optimize throughput. In most cases, the goal is to maximize storage capacity and labor

productivity within the same footprint – and do it without breaking the bank.

So these concepts are no longer a “nice to have” decision anymore. Having people move around

a warehouse passing the same sku’s, time after time, without considering alternative processes, is

no longer an option, if you choose (as I hope you will) to transform your facility from a cost

center to a profit center, as a “strategy for speed”.

Design Concept #3

– Batch Picking

Batch picking can be a little “hairy” particularly if you are still in the “paper mode” and

required to “juggle around” multiple order picking companies have chosen to modify their

systems to produce a paper-based “consolidated pick list” (one document to pick from) and then

break it down into individual orders after everything in the batch has been picked. Frankly, I

rarely see this work all that well as it can become a potential for “order mixing” (errors!).

Some companies shy away from it because it requires an accumulation of orders to get the

benefits of the multiple picking opportunities and therefore is perceived as “delaying” the order

and/or inconsistent with delivery commitments. Fortunately, there are mitigating solutions.

Bottom line, batch picking is best used in conjunction with “Zone Picking” and/or “Wave

Picking” which I will describe shortly.

Batch Picking

• Pick more than one order-at-a-time

(multiple orders with same SKU)

• “Hairy” in paper mode (requires verification to

prevent order mixing)

• Consolidated pick list

• Wait for accumulation to minimize pick-path

(may be inconsistent with commitments)


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Design Concept # 4 – Zone Picking

Zone Picking

• Everybody picks the order from

assigned zone – only pick SKU’s in

their zone

• If – “low to lower pick-to-order ratios”

• Limited by the slowest picker or the

pick capacity of each zone

(storage media, equipment, manpower

planning & flow)

As we get to zone picking, here represents a major opportunity for additional productivity and

performance improvement! As the picture above describes; “everybody picks an order from their

own assigned zones”. Everyone is limited to their specifically assigned picking area – “reducing

pick travel time”.

Because products in a specific zone may be easier or harder to pick than products from other

zones - the type of storage media used, materials handling equipment, product flow and

manpower planning become more critical and mitigating factors. These need to be “matched” to

the requirements of the zone.

Zone picking does introduce the element of “consolidating orders” as everything is picked.

Therefore, it’s best conducted in a WMS/RF environment where orders can be more easily

tracked as to product staging location and degree of completeness, prior to routing and delivery

scheduling.


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Design Concept #5 – Wave Picking

Wave Picking

• A combination of zone and batch picking

• Great method if you have your own

delivery routes or have specific delivery time

frame commitments (ship via commonality)

• Typically in multi-shift/late shift operations

(schedule accumulation of orders)

• “Drop a wave”...all zones pick their orders

simultaneously

Individual products are conveyed to a packing

consolidation/staging area (requires RF)

Zones

Zones

Zones

Truck Route/Time of day

As the picture above describes; Wave picking is often a combination of zone and batch picking.

For the “typical” wholesale distributor, this may be is as far as you’ll get in terms of productivity

and performance improvement before you “might” consider “pick-to-light”, carousel picking, or

other more exotic methods (and at a substantial cost).

Wave picking in wholesale distribution is a doable option. Particularly if you have your own

fleet of delivery vehicles or ship primarily UPS or FedEx, etc., you have the basis to generate

“waves” of orders with common “ship via” or delivery commitment timing.

For instance, let’s say you have 6 of your own trucks that leave each day to make deliveries.

Some may travel further distances than others. Most likely that may dictate which truck gets

picked and loaded first. Each truck can then be considered a “wave” and those orders, for that

truck, are “dropped” into the system for picking – using batch and zone picking methods.


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Wave picking, because of its productivity potential, motivates many companies to move to a

staggered shifts/late shift or multi-shift/night shift operation. The days of typical 7:30 a.m. to

5:00 p.m. working hours in today’s DC’s or warehouses may slowly be coming to an end as a

way for companies to extend their “open for business hours” - and accommodate orders from

customers up until 6:00 p.m. or later, as an example.

The increased productivity gained provides them this opportunity to extend their “value” to their

customers.

What happens to the “day shift”? Well it’s still pretty important! There’s receiving, put-away,

bin replenishment, cycle counting, counter orders, will calls, emergency orders, etc.

Component #3 - Productivity Measurement

“Baseline” Productivity Measurement

KEY PERFORMANCE INDICATORS

D/C

WH

A B C D E F G H I J K L M N

Outbound Inbound

Week Sales

Sales

Order

Transf

er

Transf

er

PO

Lines

T/O

Lines Total Hours

Sales

Order

s/

Outboun

d Lines/

Total

Lines/

Hrs.

Act.

Sales

Order

s/

Oubou

nd

Total

Lines/

End

Order

s Lines Orders Lines

Receiv

ed

Receiv

ed Lines Paid

Man

Hr. Man Hr.

Man

Hr. Worked

Hr.

(Act.)

Lines/

Hr.

(Act)

Hr.

(Act.)

7/6/2013 1140 3054 150 2008 1569 230 7011 840 1.36 6.03 8.35 772 1.48 6.56 9.08

As the old adage says: “You can’t manage what you don’t measure…”

I believe there are two important points to make here. First, productivity measurement fills the

need to balance business analytics with anecdotal information. It maintains objectivity. Secondly,

“baseline productivity measurement” fills the need to know - where you are NOW before you

begin your improvements. What is the ROI that results?


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Of course, productivity measurement is on-going, beyond the “baseline measurement”. It needs

to be developed, implemented and reported on a regular basis.

The picture above is just an example of the type of data required. There is usually more needed

to determine whether you are on the path to a “strategy for speed” resulting in transforming your

DC or warehouse from a cost center to a profit center.

Component #4 – The Initial Steps to Take

Lean Thinking, Design & Metrics

Learn about &employ best practices...

Get a handle on costs thru meaningful performance measurements

Uncover the barriers and bottlenecks in your processes, people & systems...

What ToDo?

People

Process

Technology/Systems

The picture above generally “says it all”; (1) Uncover and understand the barriers and

bottlenecks – the constraints – to overall DC or warehouse performance, (2) learn more about

available concepts and best practices, and (3) measure…measure…measure your “baseline” and

the results of your continuous improvement.

Lastly, have a professional provide a “to scale” CAD (computer aided design) drawing of your

facility as it is now. It will make it a lot easier to modify and incorporate your concept thinking

as it evolves.


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Finally:

What’s Your “New Reality” Going To Be?

What’s Your New Reality?

Back in the early to mid-nineties, new warehouse concepts and technology really came into its

own, but many let it pass by or marginally embraced it. Today, competition is intense; national

competitors, regional competitors, E-commerce competitors in almost all the industrial supply

verticals. It has only made it more imperative to embark on a wide range of warehouse and

distribution process improvement initiatives.

This may be the last chance for many wholesale distributors that have historically “kicked the

can down the road”; those that have hit the wall on productivity, those who possess a layer of

WMS tools that they don’t use, or have not been able to scale sufficiently to meet their drive for

growth as well as positively impact distribution transaction costs.

But it’s really more than just about your software. It’s really about processes, lean thinking,

developing a strategy for speed and transforming your DC or warehouse from a cost center to

a profit center.


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What’s your new reality going to be? Let us know if we can help.

Howard W. Coleman, Principal

MCA Associates

66 Derbyshire

Derby, CT 06418

203-732-0603

[email protected]


MCA Associates, a management consulting firm since 1986, works with wholesale distribution

and manufacturing companies that seek and are committed to operational excellence. Our staff of

Senior Consultants provides operational excellence – thought leadership - and implements

continuous improvement solutions focused on business processes, inventory and supply chain

management, distribution center/warehouse design and productivity improvement, sales

development and revenue generation, information systems and technology, and organizational

assessment and development, including family-business succession planning. MCA Associates

may be contacted at 203-732-0603, or by email at [email protected]. Visit our

website at www.mcaassociates.com.

mailto:[email protected]

http://www.mcaassociates.com/

mailto:[email protected]

http://www.mcaassociates.com/

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