Procrastination and impatience may seem like opposite ends of the behavioral spectrum, but they have remarkable similar effects on the cost and efficiency of the supply chain especially as it relates to distribution.

As consumers, we have become so accustomed to internet shopping with next day delivery that it has become a decision by default. Why do we ask for that special someone’s birthday present to be sent overnight when that special someone’s birthday is on the same day every year? We take it for granted that the service is available, and the cost, if any, is modest. Like fast food, same-day shipping has become a normal expectation. We don’t think about what it cost and who’s paying for it.

The operational and staffing issues of not being able to plan tomorrows work today makes a big difference in DC productivity. Certainly, there are legitimate circumstances like in wine/sprits distribution and some specialty retail operations, where significant reductions in store inventories are made possible by overnight delivery. But, often the need for same day and/or overnight response is a result of either procrastination or impatience.

You could argue that’s OK when occasionally the few who really need it, ask for it. In the name of customer service, DC managers are always willing to jump through hoops a few times a day. But, when it becomes the norm, then the daily workload is not only unpredictable, but unplanable.

Understanding the Cost Factors

So what are the cost factors for expedited service? It’s not just the premium shipping cost, which can often be passed along. Not just the extra cost to walk one order through the DC. But, the cost of not being able to:

• Schedule staffing to meet a work plan;
• Level activity over an 8-hour shift;
• Spread flow over multiple shifts to reduce capital investment;
• Create efficient order batches for picking.

Another unintended cost factor - most employees are prepared to work unexpected overtime every once in a while. But, when the end of every day is a variable, it disrupts their lives, keeps them from being able to pick up their kids from school or childcare on time and their families from being able to plan on them.

At the DC - how many hours are lost waiting for the orders to come in? How many times each day are DC managers forced to search for fill-in work to use up the work shift hours? How many employees leave because they can't plan their lives around the erratic schedules? These are the costs that are being absorbed in DCs and passed along through the supply chain because we've made instant response the norm. Flexible and agile systems may offer some relief, but they are not magical cure-alls.

Final Thoughts

To get a clear vision of who is paying for all this “free” expedited service – look in the mirror! We are all paying a little extra every time we place a phone or internet order, even those among us who have been gifted with the ability to plan ahead. However, with gasoline hovering around 4 bucks/gallon, the savings plus convenience resulting from not having to run all over town looking for that special gift – putting the “Instant Response Genie” back in the bottle won’t be easy.

Agree or disagree 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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