THE KEY TO IMPROVING distribution center productivity is to trim the “fat” — too much time spent on each step, excess shipping charges, and redundant processes — and make your warehouse operation a lean machine. By probing every process in the DC, companies can determine which areas they need to firm up. This month, six operations executives share the techniques they use to increase productivity.
We move our best-selling items weekly to ideal picking and storage locations. We set up for a catalog launch, placing items in the appropriate places according to sales projections, and then adjust the placement of these items according to actual sales. In the past our storage bins were all the same size, regardless of whether we sold 20 or 200 items, and we constantly had to replenish bins of our best-selling items. Now, we allocate bigger bins for our best sellers.
Also, we used to ship items in our planter kits in two separate boxes. By designing special boxes to hold kits in a single box, we have reduced our outbound freight charges significantly.
We have increased productivity during peak times by using a separate area to ship our best-selling items. We place each of our best-selling items in two places; the main warehouse and an area designated for best sellers. If an order contains strictly best sellers — as do 30%-40% of orders during peak — the entire order can be processed from the “best-sellers” area. This area staffs 10-11 people, versus 30-40 people in our main warehouse.
Peter Gaylord, Distribution Manager
Gardener’s Supply Company
In April 2003, in anticipation of the upcoming holiday season, we identified processes that limited the number of products we shipped. We zeroed in on our pick, pack, and ship operation, finding that picking was the bottleneck in our process. Pickers would go to pick items for an order and find it wasn’t there, which created a “problem order.”
To solve this, we changed our forecasting model, which tells us when an item will go out of stock on the pick face. We switched from a 30-day algorithm to a weighted 30-day algorithm, emphasizing the most recent seven days. We now respond quickly to a spike in sales and keep quantities on the pick face. We also pad the pick-face quantities to account for the variability of the sales rate, and if we have an unusual order, the system generates a pick-face restocking request. Between September 2003 and the holiday season, we reduced stockouts 52%. The pick, pack, and ship part of our operation is now 30% more efficient.
David Dierolf, VP, IT and Operations
We turned to lean manufacturing principles after the city of Santa Fe created the nation’s first minimum wage. Facing increased costs, we looked into the state of New Mexico’s manufacturing extension partnership. We paid 20% of the program’s cost, and the rest was funded by New Mexico.
State representatives spent several days measuring each step. They encouraged the shipping team to work together to problem-solve improvements. This included a simulation day in which they used teamwork to build a certain number of clocks by the end of the day. We then determined the fast and slow parts of the process. Any step that took too long caused a logjam. We moved workers around systematically to make the time between steps even.
At the end of a shift, each workstation needs to be restocked to prevent 20 minutes of slow time the next morning. Packers stopped putting plant-holder inserts in each box because they were only removed and reinserted by the boxers. Also, boxers were getting ahead of packers, who had to stop what they were doing to go pick up boxes. Now the boxers deliver just-in-time boxes to the packers.
Ava Salman, Marketing Director
High Country Gardens
Santa Fe, NM
To reduce our labor costs we use lean manufacturing principles, focusing on simplicity. Since much of our business is seasonal — we go from 40 to 200 workers during our peak season — we build a process that works with minimal training. Every package is ready for distribution when it comes out of manufacturing. We build the dimensions of the box we ship our product in into our manufacturing system. We also take advantage of automation on the manufacturing side, including sealing each box. There is little handling — it’s not pick, pack, and ship, it’s just label and go.
We post expectations and daily results in English and Spanish on whiteboards. We also offer seasonal bonuses as incentives to all employees that meet our goals.
Glenn Gazzolo, Director of Operations
The Popcorn Factory
Lake Forest, IL
Our business is built on feng shui principles, which suggest that a clear and clean workspace makes people more efficient and productive. The way orders are filled and the arrangement of furniture have an impact on efficiency. We also take an extended-family approach to apply feng shui principles to our staff. For example, if someone needs help getting organized, we’ll help them update their Rolodex or file folders.
We were able to increase our efficiency, profitability, and level of teamwork by bringing fulfillment in-house, where we could share our vision — which we refer to as CARE, for customer, accountability, responsibility, and efficiency — with our employees. If one area of the operation is slower than another, everyone will pitch in to help. Everyone from the entry-level service representative to the owner has taken customer service calls. This helps all of the employees get a better understanding of what the customers need.
We also offer incentives to our employees, including profit-sharing, bonuses, stock options, and rewards for upsells and cross-sells. When the employees feel like they matter, they treat the company as if it’s their own.
Marci Zaroff, CEO
Under the Canopy
Boca Raton, FL
The best way to increase productivity is to measure and then improve processes. We measure such characteristics as pieces per hour, cartons per hour, units per hour, piecing, packing, shipping, counting, inspecting, and more. We capture information on these variables through a time-clock system and warehouse management system, which also tells us how many units our warehouse is processing.
An efficient warehouse should have items in a good location relative to the overall flow of merchandise and goods, which should come in on one side of the warehouse and move in a linear fashion to the outbound portion of the warehouse.
Productivity can also be increased by reducing the travel time needed to pick and pack products. By profiling merchandise, a company can place its fastest-moving product to be picked nearest the pack line or shipping dock, and slowest-moving merchandise farthest away from the shipping dock. A few years ago we changed the way we picked single-item versus multi-item orders. By batching single-item picks of 20 at a time and printing them separately, we realized an estimated 10% increase in our productivity.
Joe Howell, VP, Fulfillment