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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

January 29, 2014



DC Changeover Projects Part 2 of 2 – Are You Ready To Hire A Materials Handling Consultant?

At the Right Time and for the Right Reasons, a Consultant’s Contributions are Invaluable


Holste Says:

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Selecting a consultant depends on the scope of the project.
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Previous Columns by Cliff Holste

Sorting It Out: Improve DC Efficiency With Alternative Storage & Picking Methods

Sorting It Out : Improving DC Performance - Back To The Basics

Sorting It Out: Depending On Size, Shippers Think Differently About Order Fulfillment Operations

Sorting It Out: Conveyor System Capacity Constraints Impact Productivity

Sorting It Out: Project Planning Ideas

More

All too often consultants are brought in at the wrong time for the wrong reasons. However, as we reported last week in Part 1 (see “DC Changeover Project – Key To Success Depends On Leadership Skills”) utilizing an internal resource person to lead the project has its own set of issues. By considering the following questions you can determine if you’re ready to bring in an outside resource.

 

Part 2 – Acquiring an Outside “Resource”

As we said in Part 1 – change is hard! However, sitting on the sidelines will not move the company forward. All warehousing and distribution companies have staff members who are experts in managing and directing the company’s business. Most are familiar with typical material handling equipment i.e., forklifts & conveyors, but have little or no experience with automation. Fortunately, industry experts are readily available to fill the void. But before tapping into that resource you would be well advised to do your homework. At the very least, consider the following (3) key questions:


 

1.

Do you know where you’re business is headed?

It’s OK to bring consultants in to help figure out where you need to go relative to DC operational improvements. It’s not OK to have them take you there before you have figured out just where “there” is. In other words – first get you’re ducks in a row; get educated about what the improvement possibilities are by going to trade shows and having discussions with peers from other industry related companies. Two great places to get started are – MODEX 2014 (March 17 – 20, 2014 in Atlanta) & ProMat 2015 (March 23 – 26, 2015, in Chicago).

 

 
2.
Should your own staff be doing the job?

Consultants often get asked to do things clients are perfectly capable of doing on their own. It makes no sense to hire a consultant to recommend potential improvements that in-house personnel have already identified. This is often referred to as “low-hanging-fruit” Although a second opinion from an independent source may be of some value its way more cost effect to fix the obvious stuff before paying someone else to tell you what you already know.


 
3.
Have consultants succeeded previously?

Consultants will only be as good as your organization will allow them to be. If bringing in a consultant just never seems to quite work out there may be internal issues (strong resistance to change for example) that need to be resolved first. Many good projects go down the drain because of the FUD factorFear, Uncertainty, and Doubt. Sometimes it helps to visit installations where automated technology has made substantial improvement. The point is that the equipment and system technologies that will be most beneficial are not new.

If you are seriously considering automating DC operations you will definitely need assistance from an experienced industry professional. In general, the need for automation emerges out of some chronic pain such as rising cost, and/or customer service troubles. For more information see “Complete DC Automation – A Single Path to Improving Performance and Achieving Better Margins”.


 

Evaluation & Selection

While some companies automatically turn to industry consultants and/or service providers with whom they’ve had success in the past, others go through a formal evaluation and selection process.

There is broad range of material handling consultants to choose from. Their capabilities, scope, and experiences vary widely. They include:

 

 

Former warehousing and distribution operations executives.

 

Academics with PhDs.

 

Industrial Engineers.

 

Independent supply chain logistics and materials handling industry experts (sole practitioners and large firms).

 

Systems Integrators whose operations range from small engineering firms to very large manufacturing companies with hundreds of employees, and everything in between.


Selecting a consultant depends on the scope of the project. If you’re trying to put in place a network of distribution centers, you’re probably better off going with a large supply chain logistics firm that has networking and DC automation system experience. Many small to medium size organizations don’t have the internal resources required to do network analysis, and all the number crunching that goes into system modeling and proving the viability of the overall logistics plan.

If you need a survey of your existing DC operations, looking for productivity, throughput, and/or efficiency improvements, your best bet may be an independent industry expert. APMHC (Association of Professional Material handling Consultants) is a professional society composed of individual consultants who are active in the material handling field http://www.mhi.org/apmhc .

Another option would be a material handling system provider with whom you, and/or others in your specific industry, have had previous successful experience. However, when working with a system provider you may get proposed solutions that are limited to what’s in their “tool box” and not get the objectivity and diversity of thought and input that you can get from an independent consultant.

Finally, if you are looking for single source design-build responsibility there are several domestic and international system integrators who are fully engaged in developing and providing automated material handling systems on a turn-key basis. They are prepared to take total responsibility for design and implementation. See the following top 20 list as published in a 2013 article by MMH http://www.mmh.com/article/top_20_systems_suppliers_2013/ .




Be Specific About Goals

When evaluating potential service providers, be very specific about your goals and objectives. Find out what they have done for similar companies, and what results they’ve gotten.

When interviewing consultants pay close attention to what they know about your company. You want to be sure that they are familiar with the peculiarities of your business model. For example, as a minimum, have they;

 

studied your web site,

 

know your customers and competitors,

 

visited a typical retail outlet (if applicable).


Also, it’s equally important to pay attention to how well the consultants, system integrators and other service providers listen to what you say. For sure they will want to impress you with how clever they are, but they should listen carefully to explanations of your problems before giving you the benefit of their wisdom.


 
Note:

Given the impact a consultant can make on your business you must dig much deeper than reviewing their sale brochures and bound proposal to get a true picture of a potential consultant’s character and capabilities


It’s crucial to clearly set expectations and deliverables from the get-go. Even so, it’s almost guaranteed that the scope of the consulting engagement will expand as new requirements emerge. Therefore, if you are concerned about this possibility, you might want to consider negotiating a not-to-exceed or fixed price agreement instead of an open ended pay-as-you-go deal. Either way, there should be an escape clause just in case premature termination becomes (for whatever reason) necessary.

If you have decided to hire an outside, independent consultant for your changeover project the following guidelines, extracted from Logistics Resources International, Inc. ( http://logisresources.com/ ), may be helpful in your selection process:


 

Insist on solid, experienced, and well-qualified consultants: When hiring a consulting firm, get a high degree of commitment from the firm on the skill level of consultants to be used in the project. Otherwise a senior partner can come in, sell the deal, but then you get IEs and/or MBAs fresh out of school who barely know what a forklift is. Once you know who you will be working with, make sure there’s good chemistry between the consultants and your team. Look for individuals who fill in any gaps that your team may have.

 

Don’t look for a clone of yourself: Look for expert advisors that think differently than you do. Try to find individuals who will bring up potential solution that you would not normally consider and by doing so contribute to a much stronger result.

 

Establish an open atmosphere: To successfully work with consultants, establish a strong relationship and set an environment and tone where, not only are you free to challenge, but where you are expected to challenge each other. There has to be a real open environment of sharing and feeling that you’re in this together.

 

Keep the executive staff informed: It’s critical that information flow back and forth between the planning team and the executives. This will help to promote ownership and buy-in and greatly reduce the chances of getting off track and consequently presenting a project that they will not support.


Final Thoughts

In its booklet “Your Secret Weapon”, Deloitte Consulting (www.deloitte.com/us/consulting) suggests making this speech to your selected consultant prior to signing the agreement:

 

I want ultimate candor. This means that we are on the same team. We will act that way and share information. There is no problem you can bring to me that will get you fired.

 

If we have a problem, and you believe that I am the source of that problem, you must tell me. Not my team. Not my boss. Just me!

 

In the event that we have a problem and you go over my head without bringing it to my attention and telling me that you feel I am not responding, I will fire you - period.

Perhaps the above provides a clue that consulting engagements are serious business not to be taken lightly.

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