Logistics News: Understanding Warehousing and Distribution Center Challenges based on Company Size

If it’s true that regardless of size improving productivity is a common theme, then does size matter when it comes to the actions these companies need to take to succeed??

Of course it does. The following are a few of the reasons why:

While smaller companies (of say under $50 million in annual sales) do a commendable job in delivering product to customers with low order cycle times (fulfilling orders within two days of order placement), oftentimes their warehousing & distribution operations are labor intensive.  Overall IT infrastructures and WMS functionality may also lag behind in many of these enterprises as compared to their larger competition.  By neglecting technology, smaller operations typically hit the wall in productivity gains, and they can no longer squeeze more productivity out of their manual-intensive systems.  Still others fear that their simplistic methods will not scale up to support their operations as their company grows. With limited IT capability to provide enhancements, customer service information will also lag.

These operations would probably benefit from deploying low cost batch order picking and sorting techniques as described in the SCDigest article Sorting Completed Picks for the Smaller DC Operation.

Midsize companies have a different set of challenges.  To compete effectively against their larger counterparts, many midsize companies are seeking ways to make their operations more agile to capitalize on their customers’ increasing requirements for tailored order fulfillment, throughput and value added services.  Their ability to be more agile and responsive than larger competitors is the key to winning and keeping business.

Presumably, these companies have already deployed some level of software and system automation.  For them the next step may be to invest in a Warehouse Control System (WCS) - refer to the SCDigest article The Role of the WCS in the Distribution Center.

Large Companies Think Differently

Large companies (of more than $1 billion in sales) are continually searching for ways to do more with less.  Consolidation of multiple sites, while cost effective from a square footage perspective, places more pressure on the material handling, controls, and software systems to handle multiple tasks in a high-volume environment.  Filling orders placed through multiple channels (e.g., direct, Internet, catalog, distributors, retailers), recognizing the need for robust labor management, and addressing high inventory volumes and SKU counts, keeps large DC managers seeking the most efficient picking and throughput strategies.

For these high volume companies deploying the latest in automated system technology is a must!  They should give serious consideration to advanced order fulfillment strategies like “waveless picking”, which was discussed by Dan Gilmore, Editor of Supply Chain Digest, in his June 8, 2006 article To Wave or Not to Wave

Those who are advocating waveless picking claim it can pay off in a big way by increasing throughput and operational efficiency; improving labor productivity; reducing exceptions; reducing, if not eliminating, buffers; and, in many cases, avoiding capital expenditures. At this time there are a handful of successful installations in mostly very high volume operations.

For many companies, improved warehouse and distribution center productivity remains a goal, not a reality.  However, a segment of companies across the board have been able to reduce both costs and order cycle times.  These top performers are leveraging more technology, have better data visibility, and work harder at cross-training their staffs

Agree or disgree with our expert'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.