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Expert Insight: Sorting it Out
By Cliff Holste
Date: April 16, 2009

Logistics News: A Consultant Might Just Help you Save your Automation Project


Many Consultants are highly skilled at selling MHA projects to the executive level management, and Can Take Risks Pushing the Project You Might Prefer to Avoid

Over the years I have seen many good projects go down the tubes because of the FUD factor – Fear, Uncertainty, and Doubt.  This is unfortunate because while every business is in some ways unique, the system concepts and equipment technology that will be most beneficial is not new.  It is most likely providing cost savings and operational benefits to your competitors’ every day.

The following is an example of where an aggressive consultative approach helped a major consumer goods company avoid taking a potentially disasters step backwards:

Several years ago, while working as a consultant for a MH Systems Integrator, I was hired to plan, develop and design a new USA warehouse and distribution center for a global manufacturer and retailer of skin and beauty care products headquartered in Germany.  What drove the project was a corporate marketing decision to reduce errors and improve customer satisfaction by consolidating their USA warehousing and distribution operations into one large facility.  Under this plan, USA customers ordering across multiple product lines would place one consolidated PO and receive one consolidated product shipment instead of several fragmented shipments from each operation.

The project champion chosen to manage the consolidated DC was a Distribution Manager of one of the operations.  He reported to the SVP of USA Operations.  The SVP made it clear to me that he and his staff had been pushing for this project for years and wanted the new consolidated DC to be a shining example of warehousing and order processing efficiency and flexibility.  He explained that other than for his immediate staff, I could expect very little support from the various product line managers who were about to lose control of their own warehousing and order fulfillment operations.

Tip-Toeing Through The Mind Field

Without going into too much detail, obtaining the required planning data from the various operations was the first of many challenges. These guys were convinced that a new consolidated DC operation would make a bad situation even worse. I spent a considerable amount of time learning what made each operation unique and what VA they provided for their customers. I gave examples of how similar companies benefited from appropriate MHA systems and arranged site visits. In that way I was able to position myself as their independent system design representative focused on insuring that each company’s uniqueness would be maintained.  Eventually, one by one, I was given access to the item master and customer order profile data I needed.

However, no one could tell me what a consolidated customer order would look like, because it did not exist and no one was willing to stick their neck out.  Because customer order profile analysis is a key part of system planning, if this issue was not properly resolved the project would be in jeopardy. So, with the help of order processing associates from each of the client companies, I proceeded to identify accounts that would be key consolidated order accounts and then manually put together hypothetical consolidated orders for each account. We were then able to fabricate a consolidated order data base and complete the planning stage.

What To Do When The Light At The End Of The Tunnel Is A Train!

The next big challenge came several months later when the facility and MHA system design, budget and project schedule was completed and ready for formal presentation to the corporate logistics team for final approval.

Leading up to this critical meeting there had been several intense review meetings with all stakeholders. Everyone knew what level of DC automation and controls sophistication was being proposed well in advance of the formal presentation.

However, the corporate logistics team from Germany came to the meeting with a surprise agenda.  As a result of two recent automated material handling system failures in Europe, they decided in favor of a non-automated forklift and paper based discrete order picking pushcart solution. In other words a larger scale version of the manual warehousing order fulfillment DCs they already had.  They felt that they could not tolerate/survive another MHA system failure.

While this was a sudden and unexpected objection, it was one that I had grown accustom to over the years working with other clients.  Having been in this situation many times before, I knew that the FUD factor can cause clients to lose sight of their objectives. So, after taking a deep breath, I continued the meeting by stepping back and reviewing what I had learned gathering order profile data and analyzing the various operations.

This approach gave me an opportunity to point out the well known but never-the-less disturbing pattern of customer shipping error and resulting complaints from key accounts. I also reviewed a not so well known list of accounts that had been lost over time due to these reoccurring issues.

We talked about inventory accuracy issues and its effect on order filling errors. I suggested that consolidating without deploying appropriate levels of proven technology, like WMS, bar coding and RF picking, could exacerbate an already bad situation.  Isuggested that it would better not to consolidate at all until those issues are resolved.

It took a little while for all of this to sink-in, but no one disputed what I was saying and no one was championing a manual solution.

Getting Over the Last Hurdle

Having re-established their focus on the projects primary marketing objectives, I moved on to address the risk associated with the proposed level of automation, which was at the core of their objection.

This operation was primary full case with a very small split case component.  The proposed automation included a traditional RF paperless batch order pick-to-belt and sortation system of which there were hundreds in operation in the USA and throughout the world.  For this client at that time it was the best strategy available for reducing picking errors and improving shipping performance.  This was not news to them.  They just needed re-assurance, and I gave it to them.

In addition to providing high order fulfillment accuracy and picking/shipping productivity, the proposed MHA utilized very-narrow aisle (VNA) high bay (6 pallets high) storage, and included high throughput turret trucks and RF computer directed put-away/retrieval.  This design reduced the buildings storage footprint by at least 40% when compared to a conventional lift truck operation equating a substantial savings in the cost of the building lease. The solution was available through several vendors and was based on proven technology.

The WMS was going to be provided by a well established firm with a proven track record of similar installations.

In a few hours we were back on track with the original proposal for an automated DC.  A few weeks later the project was approved.

Key Points

Consultants are hired based on their specific “expert” knowledge and experience.  As such, they have a certain amount of power/prestige to influence that client staff may not have.

They operate independent of the client’s internal politics and culture – while at the same time being aware and sensitive to it.

During the presentation meeting described above, the local management, including the SVP, was understandably reluctant to push back against what initially appeared to be a firm corporate logistics team decision against automation. I considered their objection to automation to be understandable given their recent experience, but also irrational.  Based on my experience and system knowledge, I absolutely knew that this project was a perfect application for the level of automation we were proposing and to do otherwise was to incur unacceptable risk at higher operating cost. I had built a strong case for automation because it was the right thing to do.

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.

You can also contact Holse directly to discuss your material handling or distribution challenges at the Feedback button below.

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profile About the Author
Cliff Holste is Supply Chain Digest's Material Handling Editor. With more than 30 years experience in designing and implementing material handling and order picking systems in distribution, Holste has worked with dozens of large and smaller companies to improve distribution performance.
Visit SCDigest's New Distribution Digest web page for the best in distribution management and material handling news and insight

Holste Says:

Having been in this situation many times before, I knew that the FUD factor can cause clients to lose sight of their objectives.

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