|
|
Recent Articles |
Fiscal Visibility in Supply Chain = Money Saved
The globalization of commerce has made sophisticated logistics
technology not just a luxurious expense for the Global
Fortune 500, but a necessity for companies of all sizes
and in all industries.
Logistics Costs and Bean Counting Don't Add Up!
Does you company actually have true fiscal visibility
throughout the supply chain? Many claim they do...very
few really do...what should you do?
Supply Chain Integration Solutions
Let's take a quick look and analyze your position in the
Supply Chain. You are either the one driving the truck,
the one pumping the gas, or the one paying the other two.
SCM & Distribution Guide
Supply Chain Management is a decisive element of good
overall business management. To ensure profits, customer
satisfaction, repeated sales and future growth a company
needs to have an efficient supply chain management for
any type of sales.
Creating Supply Chain Value w/ Cycle Time & Inventory Yield
A supply chain is not a series of links forged together
for a common purpose. That is a nice image. However it
minimizes the reality of the chain and how each link in
that chain must design its own logistics process to function
within the chain.
How To Solve Supply Chain Related Issues
Businesses whose operations rely on supply chains have
to manage inventories of a large variety of assorted items.
Accurate Data and Inventory Management Systems
Inventory management systems are required to automate
and efficiently keep track of your inventory levels. If
your inventory levels are not properly tracked, it will
result in rising costs. Accurate inventory counting is
one of the most important aspects of inventory management.
3PLs Need to Take it to the Next Level - How to do it
Outsourcing of supply chain management tasks has been
functioning at a similar approach level for years. 3PLs,
whether they are international or domestic, whether...
Lean SCM - More Essentials
Being able to understanding and identify waste then requires
removing that waste. The initial question then is where
and how to begin implementing lean supply chain management.
Paving the Road to Success: Modern-Day Logistical Systems
For any business looking to trade worldwide, properly
integrated logistical systems can mean the difference
between roaring success and dismal failure.
Oracle Responds To Real-Time Events
The company's Event-Driven Middleware Suite debuted last
month can complement service-oriented architectures with
its pervasive messaging technology.
|
 |
|
11.20.06
SCM Savings: People, Process, And Productivity
 By
Michael Stolarczyk
Okay, yes, I know...this is going to sound like a broken record...
You don't need the latest ERP package or other SCM software to improve your distribution center operations. True, technology plays its part as an enabler; however, the majority of the savings are found in an area often overlooked:
Processes (and yes, don't forget those people behind them)!
As you add on more suppliers, SKUs, customers who generate more complex order requirements, your organization often works around the complexity that these challenges bring, leading to inefficient processes. The result? Higher error rates, lower productivity and late orders. Here are three process areas that can improve the situation, and they can be implemented using your current staff.
Process area #1: Inbound - everything begins here
Is your Inbound area a constant bottleneck? Why? Lack of appointment scheduling, poor pre-receipt planning and documentation, and incorrect purchase order information will bring any dock to a halt.
This is the source of problems that, if not corrected, will precipitate and multiply their effects throughout your operation (exponentially), creating inefficiencies and ultimately affecting your end customer. Eventually, you have to fix the problem (e.g. wrong item shipped) later adding even more cost. Why not fix the problem the first time around? Do you have documented processes for the following areas?
- Appointment scheduling
- Pre-receipt planning & document preparation
- Vehicle arrival & unloading procedures
- Quality control procedures
How well are they followed? Investing time to ensure that your associates are trained and aware of these processes will pay dividends later in the form of decreased credit invoices, less damages/returns and higher profitability.
Process area #2: Picking - the most costly activity in your operation
Since approximately 50% of laborbour hours are attributed to picking in a typical distribution centre, even incremental improvements will have a significant bottom-line impact. The largest component of picking time is travel time (the time it takes for the picker to get to the next pick slot). By reducing the travel time, the picker spends more time picking, less time traveling, thus, improving picking productivity. A number of solutions will facilitate this:
- ABC analysis to identify fast, medium and slow SKUs to re-profile layout
- Introducing flow rack for smaller items to free regular pallet slots
- Multi-level picking & shelving for very slow items
- Batch picking for small volume orders
How are new items slotted in the distribution center? Unless there is a defined process, usually everyone is "too busy" to do it properly with the end result being large traveling distances for pickers and a corresponding loss in productivity.
Process area # 3: Realistic Work Productivity Standards - must be set
One operation I have visited measured productivity as cost per case. While this is an important managerial-level metric, it does not translate well to the distribution center associates. For example, when ten receivers are scheduled in Inbound, but only seven are available due to illness or holidays, the cost per case will increase (full-time absent workers are still being paid) for that period; however, the productivity may actually increase due to fewer associates dealing with more volume. Thus, management will observe a decrease in productivity when it actually increases during that period. Simple logic, that is often ignored, or just plain missed! Consequently, this does not motivate the team to improve.
Instead, it is important to measure cases per hour and set a target for the month. Compare this to last year's actual productivity and year to date. These are meaningful numbers that can, when tied to an incentive program, motivate the team to increase productivity. If you currently use a time and attendance system (TMS), you can easily modify the reporting outputs to include departmental productivity, whether it is Inbound, Putaway, Replenishment, Picking or Shipping. Once again, by having a process to measure and monitor productivity properly, realistic expectations can be communicated to all associates. Don't forget about your people, people!
By implementing processes for the above three areas, distribution center operations will run more smoothly despite all the complexity that exists and continues to develop.
You know, it always comes down to people and process...yeah, yeah, I know...broken record. How about a few of you sharing your thoughts on these type of subjects!
Comments
About the Author:
Michael Stolarczyk is currently Senior Director, of Business Development for Exel in their Westerville, Ohio General Office for the Americas. He is also on the Board of Advisors for West Virginia University’s School of Business.
|
