Occasionally I get calls from DC executives looking for help in improving operations. Generally, I welcome these calls because it’s one of the best ways for me to stay connected with practical, real-world logistics issues.

During one such call the caller provided an overview of how things work in his facility. And it all sounded pretty good. But, I wondered, if things work so well, why was he calling? Eventually, he admitted that some, maybe most, processes were being stretched a bit too far as a result of cost savings measures and reductions in the workforce that took place over the past couple of years. His concern was how to improve processes, without large capital expenditures and/or increasing labor cost.

A tour of the operation revealed that almost everything is an exception to how things "normally" work. Observations include people performing almost impossible tasks, or at least difficult tasks with little process and systems support. A sure sign this is happening was people working exceptionally long hours just to get the daily orders picked, loaded, and out the door, along with frequent errors and high absenteeism.

For example, I found that often people were dealing with a long list of handicaps, which included extra late order cut-off times or late additions as well as inventory and location inaccuracies. Or products needed to fill today's orders that are still enroute as the dispatch time closes in. Elsewhere, they are handling sometimes heavy awkward and bulky containers with cumbersome or no mechanical support. Despite all this, they somehow are still getting the job done – albeit marginally.

Left unchecked, the underlining concern is that this operation (and there are many more like it) may be on its way to becoming a causality of excessive cost saving/cutting measures.

There are at least two critical issues here:

(1) Something is systemically wrong with a supply chain where suppliers are hurting because the pressure to cut costs rests with them. If there’s a weak link in the chain, find it and either fix it or replace it.

(2) Innovation is more important than cutting costs. And radical innovation is what’s needed.

Where Do We Go From Here?

If people are willing to stretch themselves to achieve daily success against all odds, then how do you justify making investments to improve the process?

On the surface, it appears that you could spend some money to make the process better but won't get a materially different result. You will make life better for those who are struggling everyday to get the job done, but in the end you really won't save any payroll dollars.

You might think it's hard to justify spending any money if people are willing to knock themselves out. But what if these people choose to leave?

Could you find replacements that are as willing and capable?

How long will it take to find and train them?

How long will it take for them to come up to speed in your business?

What jobs are not getting done or goals not being met because there is no time or energy left after just getting to the end of each business day?

How much are you limiting your growth potential with the current physical, emotional and energy constraints?

It seems to me that businesses like this that are just getting by with the superhuman efforts of a few key people are taking a big chance. Making an investment to create jobs that can be done consistently right with some time left over to think about how to do them even better is just good business insurance. Sometimes that investment requires a capital expenditure. However, often it can be just a commitment of management time to help think of better more innovative ways to do things.

Start by considering the following ideas:

• Look outside the walls of the DC to your supply chain partners for performance improvement opportunities, i.e., product/container ID bar codes, ASNs, and EDI for starters.
• Log exceptions and their resolution then prioritize them and perform root cause analysis.
• Find out how your key people are spending their time. Look for ways to off-load routine tasks or give them appropriate systems support to make the tasks easier.
• Follow the products/orders through the process, looking for tasks that are physically challenging. Then find alternatives for automating or mechanizing them. For instance, it may only require changing the elevation of a container to make it easier to reach inside.

Final Thoughts

Just because people are getting the job done doesn't mean they don't need more tools to help them. Don't let strongly committed employees lull you into a sense of security. Everyone has their limits and when the economy improves they may decide that they have reached theirs. Who knows - maybe there is such a thing as the straw that broke the camel's back. If so, I’m guessing that you don’t really want to go there.

Agree or disgree with Holste's perspective? What would you add? Let us know your thoughts for publication in the SCDigest newsletter Feedback section, and on the website. Upon request, comments will be posted with the respondent's name or company withheld.

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