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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.

Logistics News

By Cliff Holste

November 30, 2011


Top Performing Companies Are Constantly Strive For Higher Levels Of Improvement

When It Comes To Customer Satisfaction -- There Is No Such Thing As Over Achieving!

As the 3rd year of a sluggish economy winds down, and with most retailers reporting strong November sales, many are optimistically looking forward to a strong December and a more robust 2012. While no one knows for sure whether consumer spending is on the rebound, everyone agrees that an economic recovery is long overdue. By taking a pro-active approach to improving DC performance now, companies will be in much better shape to take full advantage of the long anticipated recovery as it materializes.

The question is – are companies looking to achieve improvement based on conservative business projections or, will they strive to raise the bar on overall productivity by implement a stellar continuous improvement program?

Holste Says:
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Implementing a continuous improvement program is the only practical way to increase efficiency, become more nimble and better manage risks.
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While implementing a continuous improvement program can have immediate benefits the program should be based on a 3 to 5 year planning horizon. Fixing problems that impede throughput and increase processing cost should be done immediately. Improving inventory accuracy, increasing inventory turns, and lowering overall per piece handling cost, are objectives that can take several months or years to accomplish. Implementing a labor management system (LMS) and migrating to a higher level of material handling automation are examples of strategic and tactical maneuvers that involve considerable analysis and planning, and that are typically phased-in over time.

Raising the Productivity Bar in 2012

Systematically increasing processing efficiency and productivity provides an immediate competitive advantage regardless of business conditions.

In the short term companies can improve their performance by understanding that real productivity improvement is a combination of efficient processing methods in addition to effective utilization of the paid labor hours for both process and support personnel. By identifying and eliminating unnecessary processing steps and or delays that may have crept in over time, in additions to upgrading technology where practical, quick gains can be realized.

In addition to productivity, high order fulfillment accuracy is critical to increasing and maintaining the customer base. A 99.9% accuracy factor still disappoints one customer in a hundred. Consider what processes you need to put in place to hit 100% accuracy on the first pass! No costly inspections or re-do’s allowed. Remember that when it comes to customer satisfaction – there is no such thing as over achieving!

While every DC is unique, many of the basic operations are very similar. The following are but a few examples of how top performers stay on top:

 

 
  • Dock-to-stock time: Why not go for "gate-to-stock" time instead. Aim to reduce the total time that it takes to spot a trailer, unload the pallets or cartons and transport them to a storage location. Use the advanced shipping notice (ASN) data to setup the receiving process while the shipment is still enroute.
 
  • Touches: Put up signs promoting "OHIO" – no not the state (Only Handle It Once). Why? Because it encourages one to ask, can we crossdock this receipt? Or, at a minimum, can we by-pass reserve storage and put it directly into the forward pick slot? In many DCs something like 30% to 50% of the labor is not devoted to picking, but to the tasks that support picking.
 
 
  • Employee satisfaction: Top performers know that good processes are important to the achievement of high levels of quality and productivity. But processes do not run by themselves. It takes trained and motivated employees to make them effective. Can you find ways to reduce learning time to hours instead of days or even weeks? Can you create a work environment that is ergonomically, functionally, and socially friendly enough to keep costly turnover to a minimum?


What’s it All Going To Cost?

This is the creative part; how much can you spend to reach your improvement objectives? Obliviously, to some extent it will depend on business activity, cash flow, and future prospects. But regardless of the economic realities, start out small by going after the “low-hanging fruit”. By building a string of small successes, chances of getting more complex projects approved that typically require a larger investment, will be more likely.

If you could achieve all of your projects at one time, you might easily reduce DC labor by 20% while optimizing storage, increasing throughput capacity and order accuracy. Therefore, be sure to document the before and after throughput performance and productivity data for each project.

When trying to justify individual improvement projects on an incremental basis it’s important to recognize that some projects will not produce an acceptable ROI until other pieces of the puzzle are in place.

Once a track record of success is obtained, getting future improvement projects approved will require less time and effort.

How can you make this happen?
 
 
  • Form a team of people who know your business well, but are not “wedded” to current processes.
  • Support the team with some outside expert resources who can stimulate your thinking and bring experience from other industries.
  • Get your team together for a few intense work sessions. Don't worry about being too ambitious. That's the whole idea.
  • Get management to challenge your recommendations. Be careful though – when realizing the full potential they may get excited and push you even harder.


Final Thoughts

Going forward companies must be able to quickly adjust to critical changes in customer buying patterns and business strategies. Inefficient operations and systems make it more difficult to compete putting the business at some considerable risk. Implementing a continuous improvement program is the only practical way to increase efficiency, become more nimble and better manage risks. It’s one of the key factors to becoming a top performing company.

 

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