Establish Improves a Consumer Goods Distribution Center

A client of Establish's was running into some warehouse process problems: the warehouse was not as efficient as it could have been and, with a labor shortage of quality workers, needed to become as efficient as possible. As such, they called Establish and enlisted our help.

 

The current situation was a warehouse that acts as the hub for our client's business: it receives all of the sourced product and distributes to end customers, retailers and its network of satellite warehouses. As such, it was critical that this operation be as efficient as possible.

 

The operation consisted of all magnitudes of order picking: full pallet, case and unit/inner pack. Initially, the picks were done in varying areas: inner and unit picks were done from full cases, pallets and from case flow rack. Cases were pulled from the case flow rack, a hot-case area and the full pallet area.

 

Additionally, capacity was a constraint. The warehouse was nearly out of space.

 

Once Establish came in, we started with our standard, 8-step methodology. We had a project kick-off to discuss the parameters of improvement and toured the site for the first time. In the meantime, we collected all the data we could from our client's ERP system: receipt history, monthly inventory data, sales history and more. We then observed all functional fulfillment processes and created a current state baseline of where the operation was, and recommended some quick fixes to help productivity.

 

We then created several conceptual warehouse designs that met the design criteria established from the kick-off meeting and all of the data analysis. The winning concept, as determined by our client, was a standardized case flow rack picking system. All SKUs were to be re-packed into a standard tray from their carton to speed up order picking and allow for a more dense and uniform picking area. Additionally, it was recommended to pick directly into a shipper. It was estimated that the additional replenishment time would require an additional 0.5 FTE, but the labor savings in picking direct to a shipper with reduced travel distance would dwarf the additional replenishment labor.


Additionally, the overall 150,000 square foot operation was re-designed to utilize more bulk floor storage for pallets to increase the warehouse capacity nearly 40%. Our final deliverable was a detailed layout with all of the specifications that our client would need to manage equipment acquisition and installation of the new design.

An Often-Overlooked Aspect of any Operation that can be Improved

As supply chain consultants, we are fortunate to be exposed to nearly every industry and have the unique opportunity to see hundreds of different warehousing and distribution operations. We get to see the different operations for exactly one reason: our clients want us to help improve them.

 

The most common item we recommend improving is the cleanliness and orderliness of a warehouse. Maintaining a clean and orderly operation is much more important than just the optics (though the optics are important - imagine taking a potential client or business partner through a dark warehouse with trash on the floor and graffiti on the wall!).

 

A clean and orderly operation drives the culture of accountability and effort. When nothing is disorganized or out of place, it makes it that much harder for someone to purposely misplace something or work inefficiently. When cleanliness is stressed, it follows to all aspects of the operation, from receiving to stretch-wrapping the pallet going out.

 

As simple as it sounds, this idea is not so simple to implement. Operators are typically evaluated on their productivity. The more you pick/put away accurately, the more productive you are. However, this leads to the little things being forgotten. Will an operator want to put an empty carton away in the corrugate bin if it slows them down? Probably not. These need to be taken into account when evaluating your warehouse personnel. Productivity is key, but not when it neglects other areas of the operation.

The Key Components of an Agile Supply Chain

The agile concept started in software development as an iterative method requiring collaboration to create an end product. Lately, the agile concept has been shifting to nearly all facets of business, including the supply chain.

The key concepts to an agile supply chain, and agile business, as well, are: Technologies, Empowerment/Culture, Customer-Centricity/Flexibility and Partner Relationships.

Technologies: A key component of an agile supply chain is visibility. Companies and employees must be able to quickly react and change course based on real-time data. To do this, of course, the right technologies are needed to track and display critical data points.

Empowerment/Culture: As good as real-time data may be, it is useless if the company culture is very rigid and employees are not empowered to make decisions. To have an agile supply chain, companies must have a flat hierarchy where employees always feel empowered to make critical decisions without excessive oversight. Additionally, there must always be a culture of continuous improvement internally.

Customer-Centricity and Flexibility: From a greater business aspect, companies must listen to their customers and tailor their business to their customers' needs. From the aspect of the supply chain, the supply chain must be able to easily accommodate customers' changing needs quickly and flexibly.

Partner Relationships: Whether any supply chain activities are outsourced or everything is in-house, there will always be partnerships and suppliers to work with. To maintain an agile supply chain, the relationships with all partners and suppliers must be extremely close. The partners and suppliers will grow as you grow, and the closer and more collaborative that they are worked with, the better work and adaptiveness they will offer.

The agile concept is growing similar to the lean concept, but don't confuse the two - they are similar but different. We will save that topic for another blog.

The Warehouse Rack Layout Aisle Width Decision

As warehouse consultants, we are fortunate to visit and improve hundreds of distribution operations. The majority, but not all, of the operations require forklifts of some sort. Upon starting my career, one of the things I expected to see in the operations was more standardization of forklift types and, by extension, aisle width. However, that is not the case. Operations of similar applications and volumes can often have different forklifts and aisle widths. Here, I’ll explore some reasons why this may be:

Facility – Oftentimes, the facility may be the constraint. When creating pallet rack layouts, column lines cannot be in the aisles and are best buried in the flue spaces. As such, sometimes the column grid guides the aisle width decision. Also, the facility could have limited height, encouraging bulk floor storage where possible, which limits the truck types used.

Warehouse Management System (WMS) – Some types of racking, such as double deep, drive-in or pushback, require additional functionality to the WMS. Without the functionality, many types of rack cannot be used optimally, which affects the truck type and aisle spacing.

Item Profile – If an item is heavy or bulky, it may require a certain type of truck (for example, a counterbalance instead of a reach) or an extra-long aisle for maneuverability. The reverse is true if an item is too small and only fits in shelving.

Inventory Profile – If the inventory profile contains many pallets of few SKUs as opposed to many SKUs of few pallets, it affects the optimal racking method, thus affecting aisle width and truck decision.

Order Profile – If items are picked in full pallets as opposed to each or case quantities, the best picking method will then drive the truck and rack selection.

Though two operations may appear similar, there are many factors that go into selecting the right aisle width and forklift type. It is not a one size fits all solution nor an easy decision - it requires analysis of several variables.