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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

March 5, 2014

Can Manual DC Operations Benefit From Adopting A System Management Strategy?

Integrating DC Operations Speeds-up Order Processing Time and Efficiency

Holste Says:

While the automation adoption rate is growing in the US, improved warehouse and distribution center productivity remains a goal for some companies, not a reality.
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Previous Columns by Cliff Holste

Sorting It Out: Shippers Looking To Increase System Capacity Are Surprised To Find It May Already Exist!

Sorting It Out: For Shippers - Benefits Of Real-Time Control In The DC Are Huge!

Sorting It Out: Shippers Looking to Improve Operations Choose Customer Centric Approach

Sorting It Out: Productivity is a Crucial Factor in Measuring Production Performance

Sorting It Out: Packaging Construction Impacts on Logistics Operations


Integrated DC operations tend to be more efficient, easier to manage, and capable of much faster processing times than the typical departmentalized operation. An interesting consideration is whether or not a company must first purchase a material handling system in order to acquire the benefits of an integrated system operation. This is an important consideration because while most DCs, regardless of size, purchase and/or lease various types of materials handling equipment only larger, high volume operations actually have a comprehensive picking and shipping system in place.

Based on surveys conducted by Supply Chain Digest, distributors are generally interested in the benefits gained from a fully functional system operation, but for various reasons (as we have previously reported) are reluctant to actually commit to a system. This ultimately leads to a very important question: “How do you know if your DC would benefit from adopting a “system” management strategy without actually installing a system?”

At first this may seem overly optimistic. The idiom “You can’t have your cake and eat it too” comes to mind deliciously illustrating the concept of making trade-offs and realizing that you can’t have something if you have another. The phrase is often used when referring to compromises and alludes to making a choice between two options that could never be reconciled. In other words, two options that are mutually exclusive.

However, in this case, one of the major inherent benefits of adopting a “system” management strategy lays in the integration of DC operations; thereby, generating substantial benefits that are not necessarily dependent on a physical materials handling system.

Issues Driving Adoption of a System Management Strategy

Operational changes are typically driven by some chronic pain usually associated with customer dissatisfaction, higher cost of doing business or both. Therefore the logical first step is to determine your per-piece handling cost and compare that to others in your industry or specific market sector. If you are on the high end you may benefit from adopting a more integrated “system” management strategy that will improve efficiency, productivity, shipping capacity and on-time performance.

In addition to high per-piece handling cost there are many other annoying issues that could be alleviated by adopting an integrated system management strategy, such as:

  • Failure to optimize floor space and cube utilization
  • Inventory accuracy issues
  • Piles of material in aisles, and on the floor in various departments
  • Excessive manual handling and re-handling
  • Long movements resulting in too much walking/traveling time
  • Unbalanced sequence of operations
  • Operators waiting for a forklift or other mobile piece of handling equipment
  • Worker safety issues
  • Excessive temporary storage
  • Shipping delays
  • Errors and product damage
  • Excessive back charges

All of the above issues are typical of departmentalized (manual) operations –all of which could be alleviated with the adoption of an overall integrated system management strategy. Even the most basic Warehouse Management System (WMS) could alleviate most of the above issues. This is especially true if technologies like RF scanning, computer voice directed picking, GPS, etc, are deployed in conjunction with a WMS.


Adopting a System Management Strategy

When you know there are DC performance issues, start by examining the total picture. Make sure a specific problem isn’t a symptom of a still far greater more entrenched problem. While some solutions may seem obvious and easily implemented (referred to as “low-hanging-fruit”), getting everyone’s input and concurrence can be difficult and time-consuming.

An excellent first step would be to construct a flow chart of the current operation, see “Uncovering Pathways To Greater DC Performance”.

Going forward it is important to understand that the incremental labor component of a non-mechanized (manual) solution will over time continue to drive up operating cost. As shipping volume increases, at some point more automated material handling equipment and systems become a necessity. Industry experts agree that the adoption of material handling technologies (equipment & systems) is the proven solution for achieving higher overall performance.

Unfortunately, the “System” term is often misused. Anyone who has a few pieces of equipment that fit together can claim it’s a system and frequently do even though there is no operational integration. In addition, the term “Automated System” is often used to describe highly mechanized systems where human beings are doing most of the work. An example would be manually picking cases to a conveyor that transports them to an automated sorting conveyor that directs them to pre-assigned manual palletizing stations.

The answer to the question as stated at the beginning of this article is: any DC organized around individual departments such as; receiving, storage, picking, packing, and shipping, will benefit from deploying a WMS to achieve a fully integrated system operation. This is essentially the first step a distributor can and should take on the path to adopting a comprehensive system operation.

Final Thoughts

While the automation adoption rate is growing in the US, improved warehouse and distribution center productivity remains a goal for some companies, not a reality. WMS is a fundamental starting point which can be found in great abundance at: MODEX 2014 (March 17 – 20, 2014 in Atlanta) and ProMat 2015 (March 23 – 26, 2015, in Chicago).

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