With Warehouse Layout Think Inside the Box

Author: Thomas Openo Jr., Director, Preferred Realty & Development

Think inside the box. Does your warehouse and warehouse layout meet the strategic objectives for your multichannel business? 

Warehouse LayoutMany older warehouses, distributions centers and locations are obsolete in today’s “point and click” world. Higher volume ecommerce sales and increased competition are quick to expose warehouse inefficiencies. Today, consumers expect fast delivery, which requires automation and technology but with an outdated warehouse layout; operations such as high-rise racking are not an option.

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Applying Automation and Material Handling Solutions to Fulfillment


Everyone wants to see how other multichannel and omnichannel companies apply automation and Cross_Belt_Conveyortechnology to their fulfillment operations. What are the benefits, challenges and the ROI? My panel at Operations Summit 2015 showcases how Cabela's, Crutchfield and Colony Brands (formerly Swiss Colony) have implemented automation and material handling solutions. These fellows are four of the most talented multichannel and omnichannel leaders I know.

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How to Apply Material Handling Solutions to Your Distribution Center

 

Most small to moderate operations have what we call conventional warehouse operations. They havePicktoLight applied limited material handling solutions and rely heavily on manual processes and manual labor to get product in and through the center and the customer orders out the door. So, it’s not uncommon for the owner or senior management to seek out how automation can be employed in their distribution center to improve efficiency, cut labor costs and reduce errors.  But there isn’t a silver bullet.  There isn’t a one size fits all solution to improving your distribution center with automation. Material handling solutions are a means to the end. Because of the capital expense you have to find the practical application that has a return on investment (ROI).

This article discusses a successful methodology for identifying where automation can be practically applied.  Then, we give examples of how other multichannel companies we have worked with in our operations & fulfillment consulting practice gained an ROI through automation.

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Warehouse Layout and Design Ideas to Begin Improving DC Capacity

Probably the most frequent lament heard from our clients during our Warehouse Layout and Design projects is “I am running out of space in the warehouse”. Unless you are that rare company that has control over your forecasting and inventory management functions, you have probably said the same thing.

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Are You Maximizing Your Warehouse Capacity and Efficiency?


Most of us in the fulfillment and distribution world have rarely had the luxury of designing a warehouse from the ground up. What a pleasure to work alongside architects to make sure that the physical characteristics of the facility take into account department locations and required size, column spacing, ceiling heights, lighting plan, and overall material flow.

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Conducting Warehouse Assessment During Holiday Season

Industry Question: I have been trying to get permission from my boss to get some outside help in conducting a warehouse assessment of my fulfillment operation. I really to make sure I am prepared for the “Christmas Crush”. Last year was almost a train wreck, and I am very worried about this coming season. Last week I received approval to hire a consultant for the warehouse assessment, but it’s already the beginning of November. I wanted to do this back in July. Is it too late to do the warehouse assessment? What should I do?

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Achieving a Single Version of the Truth

How many times does this happen in your company? You go to a meeting about sales performance, and Marketing says they think sales are up 3.5%, but the merchants disagree and say sales are up 6.3%. The specific numbers in this example aren’t important; the point is that the two figures aren’t even close. That’s the reality in most companies today.

Or, say management has tasked you with developing a report and you try and go back to prior results, maybe from a season or two ago. How many different versions of the sales, purchase and inventory plans are there? Which ones are the actual and which were prior versions?

Some might say "we could do a better job of controlling and eliminating versions of plans"—which is certainly true, and something every company should work toward. Or you may say "if we use only one enterprise system we can eliminate this dilemma". But that isn’t really the solution; such order management systems aren’t viable for most companies, and anyway, there are multiple data elements that are all valid for whatever processing order management system is being used. There isn’t a “single version of the truth”—one official set of figures for sales, inventory, plan, history, etc.

Take for example a product’s inventory. You can find sales plans on a user-derived Access system or Excel spreadsheets. A product’s inventory on hand in units and dollars occurs on your order management system. A separate best-of-breed warehouse management system will also include the same product on hand, but needs to be synched up daily. The finance system will also carry the total company inventory in dollars—probably not updated real time, but daily or weekly. You may also have a specialized standalone forecasting and inventory management system, to project inventory by promotion or catalog campaign.

Additionally, because the major transaction systems require a high degree of training, management does not use them as the source for their information. Management has to go to extremes to get what they need, either by requesting that department managers pull data or by using business analysts to come up with reporting. Because these are manual efforts using sources not originally geared to management’s needs, they are delay-riddled, error prone processes. And they still don’t deliver a “single version of the truth.”

You get the picture. There simply isn’t a “single version of the truth” for the major data elements used in many businesses. For management to have confidence in the integrity of the data they’re getting, I think the time has come to advocate and budget for projects that resolve these problems. Such problems are not new, and I believe they inhibit the effective management and growth of direct businesses.

Here is a hierarchy of solutions you should consider:

• Extract data from major transaction processing systems into Excel or other reports
• Access databases, and business analysts using OLAP tools
• Data warehouse products
Business intelligence tools with dashboards and analytics

It’s time to advocate with management for solutions to this problem. Especially in this recovering economy, knowing exactly where you stand is essential. You can only control expenses and inventory and know which products and promotions are working—and which aren’t—if you have accurate data on which everybody across the company can agree on. In our experience, companies that used business intelligence tools to overcome such information problems have been successful in getting a positive ROI from these types of systems within 12 to 18 months. And in today’s business environment, that’s a “single version of the truth” on which all companies can agree.
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Learning From History - Leon Gorman on L.L. Bean

Leon Gorman led L.L. Bean from $2.25 million to $1.2 billion from 1967 to 2001. In a keynote speech in Boston several years ago, he recalled the life of his grandfather, Leon Leonwood Bean, who founded the renowned outdoor gear and apparel company. Gorman believes that the company has prospered in large part because it has maintained its values, perhaps epitomized by the tenet "Treat people with respect, or they will not respect you."

Gorman has written about the company and its growth in the last half-century in L.L. Bean: The Making of an American Icon. This is one of the industry's great books. It painstakingly charts the changes in marketing and merchandising that achieved these dramatic results over 38 years. The book discusses the synergy and the necessary tension between marketing and merchandising. The role that supply chain strategies, including call center, plays in providing exemplary customer service. Staying true to the principles established by his grandfather L.L., sourcing the best outdoor products at the right price, how the college and preppy trends accelerated L.L. Bean's growth, trying to sell to women shoppers without getting caught up in fashion trends, providing a 100%, no-quibble guarantee (there are legendary stories about shoppers returning outdoor gear after extensive wear). It is the ultimate in customer service and kept customers coming back. Bean's huge retail presence in Freeport, ME and the slow charting of retail growth outside the region. Gorman talks about how different these channels are for them.

I met Leon Gorman in the mid-1970s. Mr. Gorman was friends with Mr. Frank O'Reilly, the then president of Brooks Brothers. In a very forward-thinking strategy, Mr. O'Reilly launched the first Brooks Brothers' catalog when BB had less than 20 stores. At that time I worked for Garfinckels, Brooks Brothers, Miller & Roads, Inc., in the corporate data center as the manager of research and development (systems and programming). Our team was invited to Freeport, ME for a week to explore all the aspects of order management software and customer service. Mr. Al Schmidt was in charge of the marketing at that time. Mr. Gorman and his team couldn't have been more gracious and thorough in educating us on the basics. Back then there were no commercially available order management systems. I vividly remember Mr. Gorman walking us through how he guided the selection of product and worked with creative to paginate the catalogs, and his concern for developing new products. We designed and programmed our 370 mainframe system by emulating L.L. Bean.

In the book, Mr. Gorman continually talks about the top guy being thoroughly involved with the merchandising of a direct company, something which is obviously very difficult to do given this rate of growth. Without continual product research and development and sourcing, retail and direct businesses are essentially out of business.

What's interesting about the way the book is written is that many people were interviewed, current and former L.L. Bean managers across the company and consultants as far back as Stanley Fenvessy. Mr. Gorman has his commentary and the other participants give their viewpoints (they are identified by name and position). This illustrates the contrasting viewpoints of various people who charted and achieved the company's long-term growth. But one thing for sure, Leon Gorman was ultimately in charge, and he held himself and the company accountable to achieving the best results for all stakeholders.

This is a great read. Get your team reading it now. Especially for young managers it's a great way to see how all the functions fit together.

--

Curt Barry is president of F. Curtis Barry & Company, a national consultancy focusing on warehouse, systems, and inventory management.
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Measuring Your Employee's Performance

The following is from a recently received email sent to Curt Barry...

Dear Curt -

We met briefly at the NCOF conference in Vegas, and I wanted to reach out  to you regarding performance errors.  I was hoping you could provide  me with some insight into how other 3 PL fulfillment companies manage employee errors.  Currently, we don't have a strong policy in place to  deal with these issues.

Some questions that arise in my mind are:

1.  How many mistakes is too many?

2.  Should the consequence be different in receiving than picking or packing?

3.  If there is a larger mistake that causes our company should there be a more severe consequence?

I understand that everyone makes mistakes and I would like to allow  for learning and coaching, but I also want to make sure that our  employees have a formalized consequence to ongoing errors, and they  know what to expect.  If you have any feedback on this I would really  appreciate it.  Or, if you know any warehouse managers I could speak with to get ideas on what they do that would be great!

Thank you so much for your time!

Sharon, VP of Client Services, 3PL Company

Dear Sharon -

In my opinion, there are a couple levels of issues:

  1. Weekly productivity reporting by person through out the call center and fulfillment.  Our clients display these by department and person on white boards, reports and monitors throughout the facilities.

  2. Contact center monitoring should be in place.  There should be a form for evaluating the calls and a weighting system for the responses.  What are your standards for monitoring experienced core employees versus new hires?  Companies have developed coaching approaches to improve employees, get them to accept responsibility for improvement or a basis for asking them to leave the company.

  3. Personnel policy that deals with severe HR issues.  These include theft, embezzlement, sexual harassment, etc.  These should have clear documented policies which employees understand.


In terms of error rates, we would expect that controllable error rates would be only 0.5%. Meaning, 99.5% of all major transactions are error free.  In bar coded systems it will be much higher.

In a speech a number of years ago when I made the statement about error rates of 0.5%, a national FedEx manager pointed out that meant 73,000 of their customers would not get their package on time in any given day. What is your management's attitude about errors?  And you are in a 3 PL service so what guarantees are you making to clients?  Hope this helps.  Call me if I can further explain.

Curt Barry

Hey, blog readers, what's your company's approach?
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