June 1996 € Volume 6 € Number 6
Keep It Simple:
Re-examine Your Distribution Processes
By Jan Young
Quick, what's the latest buzzword? The hottest new technique for squeezing
the last dollar out of your logistics chain? The tweak-of-the-week?
So many concepts come and go that it can be easy to lose sight of the goal:
lowest cost, highest quality and best service. Yesterday's changes become
an accepted part of our culture and we pile concept on top of concept, often
without considering the larger consequences.
There's a lot to be said for one of the oldest concepts: Keep It Simple,
Stupid (KISS). In many businesses, there is a real need for a review of
the basics and a down-to-earth evaluation of some of the things we do without
thinking about them. Indiscriminate complexity is an evil that sometimes
creeps into our operations unnoticed.
Sometimes costs can outweigh benefits
For instance, the idea of forward picking and replenishment from reserve
is almost universally accepted. Yet it involves costs as well as benefits,
and under some circumstances, the costs can outweigh the benefits. The time
and effort (and equipment and risk) associated with moving product from
reserve to forward should be more than compensated for by reduced picking
effort, generally in the form of reduced travel time, but also possibly
in the form of reduced equipment requirements.
To cite an example, consider charcoal briquettes, handled by many hardware
and grocery stores and stocked in warehouses across the country. Charcoal
moves almost exclusively in pallet quantities, with the average store ordering
more than one pallet at a time. A few partial-pallet orders are serviced,
but they represent a small (and declining) percentage of the business. Should
a forward picking location be created for this item, or should the warehouse
simply pick it from where it lies? The answer is that the warehouse should
do whichever involves less labor. The next question is, How long has it
been since the warehouse has evaluated the desirability of replenishing
charcoal, and how much money is going out the window because that aspect
isn't being considered?
Justify everything
In principle, everything we do should justify itself, both before and after
the fact, for ever and ever. Let's look at another example.
A warehouse that shall remain nameless installed a conveyor sortation system
to move cartonized product from its picking lines to palletizing stations
at the docks. A year or so later, the company changed its distribution scheme
and the warehouse became a master warehouse, distributing almost entirely
to regional warehouses, thus providing faster service to customers. One
aspect of this change was a significant increase in full-pallet volume and
a corresponding reduction in carton volume at the master warehouse. The
change was handled in the warehouse by extending the sortation system into
the reserve area so full pallet quantities could be unloaded onto the conveyor
for delivery to the docks. The engineers who designed the extension and
the managers who approved the money for it completely missed the basic idea
that sortation is unnecessary for full pallet quantities. The sortation
system, although justifiable when installed, did not remain justifiable
and should have been removed or modified. Management should have KISSed
the warehouse.
Consider cost of complexity
A third example: Another warehouse belonging to a well-known company distributes
small articles in carton, inner pack and piece quantities. This warehouse
decided that if replenishment is a good thing, then more replenishment must
be better. The warehouse was thus reconfigured to include separate carton,
inner pack and piece picking areas, with each being replenished from the
next one down the food chain. This accomplished the goal of reducing picker
travel time because the pickfaces could be made very small. The cost, however,
was in replenishment. Consider a piece pick: the product had arrived on
a pallet and had been stored in reserve. At some point, the pallet had been
moved to the carton pick area. A bit later, several cartons had been moved
to the inner pack pick area. Still later, the cartons had been opened and
inner packs moved to the piece pick area. Then, finally, the pieces had
been picked, packed, staged and shipped. This company was enamored of the
idea behind replenishment and failed to consider the cost of the required
complexity.
Take a long, hard look
It may be time to re-examine your distribution methods and the physical
flow of product through your warehouse. Instead of thinking about how money
can be saved, try thinking about how the processes and procedures can be
simplified. Then evaluate the ideas generated. The odds are that many of
them will, in fact, be real cost savings.
Jan B. Young, CFPIM, is director of warehouse technology for Catalyst
International, a supplier of off-the-shelf warehousing and distribution
systems. He is the author of Modern Inventory Operations, published by Van
Nostrand Reinhold in 1990.
For more information about this article, input the number
18 in the appropriate place on the Reader
Service Form
Copyright © 2020 by the American Production and Inventory
Control Society Inc. All rights reserved.
Click
here to return to the table of contents.