Warehouse Layout and Transfer Management: A Supply Chain Consulting Case Study
The order-to-fulfillment lead-time for a packaging manufacturer's external distribution center was causing problems for its customers' operations; immediate improvement was needed in order to maintain the business relationship.
The client was growing at a rapid pace but could not meet customer needs quickly enough on the distribution side of the business. This was mainly due to the improper set-up of the facility that could not meet customer demand. The overtime charges were out of control and inventory accuracy was a problem due to a poor layout strategy. In addition, there was not an inventory slotting strategy to drive any efficiencies inside the distribution center.
Having an optimized layout inside the new distribution center would increase productivity greatly while reducing costs without an impact to head count.
LeanCor’s supply chain consulting team was requested to develop a strategy for improving material flow and processes at the new distribution center location, without impacting head count. The layout was designed with a focus on increasing material velocity, process discipline, and reducing operational waste. The team ensured that the recommended strategy and layout were sustainable and flexible to future customer growth. The supply chain consulting project included the completion of a Lean ABC SKU analysis, a customer demand variation analysis, on-site time and motion studies (to understand process and cycle time variations), and 3D product dimension analysis. The team focused on planned vs. actual productivity per shift to begin identifying and understanding problems, standard work compliance and problem-solving projects.
Upon completion, supply chain consulting project resulted in an optimized layout and material flow design for the client's newest finished goods distribution center utilizing a lean slotting strategy. The project provided:
- Recommended plan for transferring from existing facility into the new DC without impacting customers or production operations
- Recommended resource requirements for the new facility and a standard work summary for fixed resources
- Data analysis summaries and files that drive velocities and flow
- Recommendations for sustaining improvements
- Transfer management including on-site tactical leadership to ensure plan execution, hour by hour logistics plan for each SKU to be transferred, daily Plan-Do-Check-Adjust management, agendas, and meetings coordination
The transfer was completed with minimal impact to production and customer delivery activities. As a result of the recommended distribution center layout and material flow design, the client requested that LeanCor design another warehouse in order to capture additional cost savings opportunities.
Overall results for the supply chain consulting project included:
- Unloading and putaway cycle times reduced by up to 66%
- Picking and loading cycle times reduced by up to 54%
- Labeling cycle times reduced by up to 88%
- Resource requirements analysis reduced overtime charges by up to 90%
- Estimate 95% reduction in inventory shrinkage and damage costs as a result of less handling required for cycle count requirements
Today’s complex supply chains require vision, strategies, and innovative techniques to create optimal performance. LeanCor Supply Chain Consulting is a trusted partner for implementing end to end supply chain performance. Global organizations leverage LeanCor Supply Chain Consulting services to develop vision and strategy deployment plans for improvement in all supply chain functions. We focus on elements of speed, cost, quality, and delivery, and are able to develop innovative solutions from operational experience as a third party logistics partner.
When you partner with LeanCor, you receive tangible results such as total logistics cost reduction, working capital improvements, optimization of material and information flow, and process improvement leading to supply chain visibility and velocity.
Posted by LeanCor Supply Chain Group
LeanCor Supply Chain Group is a trusted supply chain partner that specializes in lean principles to deliver operational improvement. LeanCor’s three integrated divisions – LeanCor Training and Education, LeanCor Consulting, and LeanCor Logistics – help organizations eliminate waste, drive down costs, and build a culture of continuous improvement.Facebook LinkedIn Twitter Google+