Supply Chain Efficiencies

Optimal flow occurs with the fewest possible touches and shortest material pathways.

By Chris Doyle

An efficient supply chain, particularly from an internal logistics standpoint, involves integration and continuous improvement of a handful of elements. Elements such as:

• Facility layout and resulting material flow
• Distribution Center/Warehouse processes
• Equipment/hardware
• Personnel
• Data and information.

Every time a person touches a product, cost is added to that product and opportunity for errors is increased.

“Optimal flow” generally occurs when you provide for the fewest possible touches and shortest material pathways. In many cases, a layout is initially created, equipment installed, and infrequently revisited. Future flexibility may not have been accounted for at the outset.

Material Flow
Changing customer expectations, business growth and other factors drive the need for change in the supply chain. You are familiar with the symptoms of distribution inefficiency. When those symptoms surface, one approach is to consider a material flow analysis. The areas to look include physical mapping, touch and process cycle time.

Physical Mapping — The inefficient movement of material within a warehouse can add significant labor costs to an operation, while adding zero value to the product itself. Excessive path lengths, traffic congestion, blocked access points or a circuitous route all indicate an opportunity for layout or process improvements. By mapping current flows onto the existing layout, these opportunities for improvement become evident.

Touch Analysis — Every time a person touches product, cost is added to that product and opportunity for errors is increased. By identifying and minimizing non value-add touches, you can reduce labor costs while improving operational efficiency. This is a straightforward process of listing steps, step costs and identifying value-add/non value-add steps.

Process Cycle-Time Analysis — By performing a detailed examination of each process step, you can identify opportunities to improve material flow through improved logistics. An area rife with opportunities is process dwell time and WIP staging. By streamlining the process, the need to stage product may be eliminated, thereby reducing material handling costs and reclaiming valuable space. Even if individual processes are world-class, ignoring material flow between the processes can result in a highly inefficient distribution operation.

Space Optimization
Another area of interest, space optimization, can be impacted by a variety of factors. A first step in space optimization is to perform an assessment of your current capacity and identify which of the opportunities for improvement identified below apply to your operation.

Mezzanines take advantage of under-utilized space.

Purchasing Policies — Purchasing policies should be examined for opportunities to reduce on-hand inventory through reduced safety stock or smaller, more frequent buy quantities.

Obsolete Inventory — An examination of historical activity by sku will identify those products with zero demand. These sku's should be evaluated to determine if they are candidates for liquidation.

Storage Media — An assessment of current storage media may reveal an opportunity to increase storage density. A move to smaller locations can dramatically increase cube utilization.

Aisles — Fork truck aisles make up a large percentage of a distribution center's available space. Transitioning to narrow aisle or even very narrow aisle trucks can result in much greater storage density. Racking above aisles (creating tunnels) also offers potential.

Product Slotting — It is important to make sure that product is stored in the right size location to maximize cube utilization. Periodic re-warehousing as inventory levels change is one way to continually re-optimize the available space.

Returns Staging — Returns take up a significant amount of space in some distribution centers. Worse yet, returns take space that would otherwise be available for saleable inventory. Often overlooked by management, the returns department is typically rife with opportunities to improve throughput, thereby processing receipts faster and minimizing required staging.

WIP Staging — Staging of product between processes may be an indication that the overall process needs to be streamlined. By improving the handoffs between areas within the distribution center, you will not only reclaim the space previously used to stage pallets, you will also reduce labor costs by eliminating touches by material handling personnel.

Look Up — Some of the most underutilized space in a warehouse may be found overhead. Areas above pick modules, pack lines, shipping and receiving docks, and value-add areas often go unused. Installing a mezzanine or racking over these areas can add significant usable space to the facility.

Appropriate cube utilization can significantly maximize space.

Product Slotting
Inventory slotting, or profiling, identifies the most efficient placement for each item in a distribution center or warehouse in order to optimize material handling efficiency. Although each instance is unique, benefits from good product slotting are numerous.

Picking Productivity — Travel time can often account for up to 60% of a picker's daily activity. A solid product slotting strategy can reduce travel time, thereby reducing picking labor.

Efficient Replenishment — Sizing the pick face location based upon a standard unit of measure (case, pallet) for the product in question can significantly reduce the labor required to replenish the location.

Work Balancing — By balancing activity across multiple pick zones, congestion is reduced, improving material flow and reducing the total response time for a given order or batch of orders.

Load Building — To minimize product damage, heavy product is located at the beginning of the pick path ahead of crushable product. Product may also be located based on case size to facilitate pallet building.

Accuracy — Similar products are separated to minimize the opportunity for picking errors.

Ergonomics — High velocity products are placed in a “golden zone” to reduce bending and reaching activity. Heavy or oversized items are placed on lower levels in the pick zone or placed in a separate zone where material handling equipment can be utilized.

Pre-Consolidation — By storing and picking product by family group, you may be able to reduce downstream sorting and consolidation activity. This is particularly important in a retail environment to facilitate efficient restocking at the stores.

Ongoing Product Slotting Maintenance
Typically a good job of slotting occurs initially. Over time, however, customer demand changes, products come and go, labor costs creep up, order fulfillment rates are down and response times are impacting customer service. It is important to continually re-slot the warehouse to keep it operating at maximum efficiency. Many will re-slot their highest movers (typically also their most profitable products) on a weekly, or even daily basis.