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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

July 31, 2013

Improving Core DC Operations Yields Long-Term Performance Benefits

A Comprehensive Improvement Strategy Applied To Core Operations Will Reduce System Losses

Holste Says:

Companies looking to improve their core operations should analyze which ones are in need of a tune-up and focus on those initially.
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Previous Columns by Cliff Holste

Sorting It Out: Achieving Sortation System Success

Sorting It Out: Optimizing System Performance

Sorting It Out: Shippers Looking For Small Footprint, High Density Storage & Picking Solutions

Sorting It Out: Shippers Searching For More Flexible, Adaptable, Scalable & Cost Effective Solutions

Sorting It Out: Ten Factors Driving Small Parcel Shipping Volume


At some point in the growth and evolution of the typical order fulfillment DC, no matter how well managed the operations are small inefficiencies begin to build-in. Like a thief in the night, they go unnoticed by supervisors and associates. Over time the accumulated affect degrades throughput capacity, lowers productivity and reduces margin.

Management can guard against this type of transparent loss by implementing a continuous improvement program that is focused on core operations such as, Receiving, Putaway, Storage, Picking and Shipping. This is not to suggest that value added services (VAS) should be ignored. However, customer specific VAS is often a relatively short-term setup and closely supervised. Whereas, core operation are on-going and tend to be taken for granted.

DCs that are shipping 10,000 or more cases per day are at a high risk of - ‘bleeding to death from a 1,000 pin pricks’. A continuous improvement strategy helps maintain operational efficiency.

Based on interviews with logistics executives and DC operations managers, we have assembled the following suggestion for preventing core operations from degrading:

  • Doing SKU and activity profiling annually can often show important changes in the business, and support improvements in layout, slotting, software configuration, and other processes.

  • If you are still using a spreadsheet-based warehouse inventory monitoring system, look hard at a plan to migrate to a Warehouse Management System (WMS). Deploying a WMS may be the single most important tool capable of providing measurable gains across all of the core operations.

  • Develop an in-house preventative maintenance program. Make sure that qualified maintenance personnel are available for all shifts and they can quickly respond to trouble spots. Electronic systems are available that can send out alert messages whenever a fault occurs.

  • Develop a comprehensive employee training program to allow for a more agile operation. By cross-training your employees in multiple disciplines, you will be better able to respond to peak throughput periods.

  • Make rapid customer order processing a top priority. Best-in-class operations fulfill and ship customer orders typically in less than 24 hrs.

  • Focus on enhancing visibility to support better communications up and down the supply chain. Provide a company-wide view of real-time performance data, such as: on-hand inventory levels; status of vendor backorder SKU’s; individual customer order shipping status; labor productivity status; etc. This can be accomplished by deploying a Warehouse Control System (WCS) that can be accessed via the internet.

  • Upgrade your current WMS if older than 5 years. Companies operating an older WMS often do not know what functionality they are missing out on that could drive improved throughput and productivity or enable more efficient support for seasonal fluctuations or customer demands for VAS.

  • Consider upgrading to Multi-Modal technologies (search SCD for articles on this topic)

  • Evaluate emerging best practices for automation. Material handling providers are constantly introducing new technologies, system designs, equipment, controls and software that enhance the performance of DC core operations. You can learn about the new advancements by searching Supply Chain Digest for automation topics, and by attending industry related trade shows and conferences throughout the year.

  • Pay close attention to workplace safety issues. This will improve employee morale and productivity while lowering the cost of insurance premiums.

Final Thoughts

Companies looking to improve their core operations should analyze which ones are in need of a tune-up and focus on those initially. However, given how scarce internal resources can be, it may be more expedient to have an independent industry professional perform an evaluation of core operations. Of course, the value received depends on whether or not the company is ready to move forward with the recommended changes.

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