Getting Ready for Holiday, Part II

Jul 06, 2007 10:02 PM  By

In the first part of our series on preparing for the holiday, we listed the information that should be gathered for taking your operational pulse. (read part one here) This week, we’ll show you how to apply it.

Once you have gathered all the research and data available on your operation, begin your audit by comparing desired standards of service with actual performance. Comparing your figures—both actual and goals—to those of other multichannel businesses can also help you evaluate your performance. While there isn’t a public source of such information, you can find benchmark data through some trade publications or consulting firms.

It’s also effective to benchmark with one or several other multichannel companies and see how your operations audit results stack up. But make certain that you compare apples to apples by measuring your company against another multichannel businesses of about the same size that sells the same type of product and has similar operations. For instance, apparel pack rates vary widely depending on the type of clothing and how it’s stored and packaged. Packing merchandise on a hanger involves carefully wrapping it in tissue paper and boxing it, which might allow for completion of only 15 orders an hour. On the other hand, flat-storage merchandise that’s already packaged in plastic can be inserted into envelopes, allowing the facility to move 100 orders an hour.

These sources of information about your operation are invaluable in identifying problem areas. But your audit doesn’t stop there: An on-site survey of the fulfillment center is vital. Here are some areas to focus on:

Initial walk-through. As you walk through the distribution center, look at it as though you were visiting for the first time. How organized is it? Are productivity boards or reports displayed for all employees to see and check themselves against? Does the operation look efficient? Are there areas of congestion and bottlenecks? Space, work flow, and processes. How much space do the various departments need? Do space requirements vary from peak season to the rest of the year? Is there unnecessary or excessive movement from one department area to another? Are materials-handling systems and conveyors used appropriately to move product, orders, and returns through the center?

Staff input. Interview managers and department personnel. They’ll know where the problems are and where improvements can be made. Don’t forget to ask questions about space needs, work flow issues, and general procedures.

Once you’ve gathered and analyzed all the operations information you can, patterns will emerge, and you’ll have a quantifiable picture of what you do well and what you need to improve. But the final step is the action plan — or what will make your audit yield meaningful results.

Before you tally up a list of changes that could overwhelm your team, determine where you can achieve the biggest improvements from the smallest number of changes. Focus on the areas that will yield the greatest benefit, and outline the steps to take.

First develop a prototype design for any warehouse changes, and circulate it among management and staff for comments. Keep redesigning the plan until all concerned are satisfied that it’s an optimal, efficient design. Use the same philosophy to justify large capital investments; run the numbers and cost justify making sure the payoff will be there.

Write your action plan so that it provides for continual improvements over time. Manageable changes introduced gradually will be more effective and more readily accepted by your work force than one massive overhaul. Gradual change helps make continued improvement a part of your corporate culture.

And don’t assume that a one-time operations audit is enough. Comprehensive audits should be conducted on an ongoing basis — at least once a year — to stay in touch with customer needs, accommodate your company’s growth, keep pace with your competition’s improvements, and keep up with whatever promises your marketing department dreams up next.

Curt Barry is president of F. Curtis Barry & Co., a multichannel operations and fulfillment consulting firm with expertise in multichannel systems, warehouse, call center, inventory, and benchmarking; For more information, visit http://www.fcbco.com