Subscribe to our newsletters & stay updated
For as long as the term “metamorphosis” has been in use, distribution management has been characterized by tacticians, focused on ensuring that orders rolled and were filled. Execution and firefighting were highly valued skills.
Whether these same skills will serve tomorrow’s supply chain and order fulfillment business is more than “up in the air,” especially as there is a focus on transformation in the industry — going from tactical to strategic. So, get prepared as the future quickly becomes now.
I want to share with you some critical factors (not a fully comprehensive list due to space limitations) and suggest you consider now which ones ultimately will become “critical success factors” for your business.
It’s All About the Speed of Flow
Think continuous flow because value-added never ends. Ideally, a process continues to add value without ever stopping if you look at it as a value stream (see Figure 1). Any time it stops, what happens? Waste; lead time is lengthened, the customer waits for product or service, and it costs more money than if the flow was continuous in nature.
In each of the functional steps of your value stream, an opportunity exists to boost service and free up cash:
Here are three simple examples of the order management, inventory/supply chain and warehouse/distribution functionality components of the value stream. These three initiatives — the critical success factors of time and space — are not difficult to accomplish and allow for quick adoption. In many ways, they will have a significant and positive impact on your key value stream operations.
1. Re-slot product in the warehouse/distribution center. Make product more accessible to reduce warehouse associate travel time.
2. Employ high-velocity pick zones. These reduce warehouse employee walk-time, save space and can increase warehouse productivity by up to 50 percent.
3. Employ continuous flow inventory replenishment techniques. They would be in lieu of, or in conjunction with, standard min/max or order point/economic order quantity methods. Reduce your average inventory investment, as well as the impact of forecast variance, by aligning inventory with actual customer demand.
Here are three other topics to consider. Think about them. They fit right into your value stream improvement initiatives — don’t they?
4. New warehouse/distribution center designs. New warehouse and DC flow designs, as well as storage and retrieval equipment and methods, can foster a reduction in the time it takes to do things and optimize available space. Together, they are changing the face of distribution operations.
Whether to start with our suggestions in Nos. 1 and 2 or take a more aggressive approach is, of course, a budgetary consideration and a return in investment calculation. Refer to our assessment guide, “Drive Your Distribution Center & Warehouse Performance.”
5. Collaborative robots. Commonly referred to as “cobots,” these robots work with, and alongside, your warehouse employees. They can transport product from receiving, through put-away, and picking and packing — and even beyond. Cobots speed up operations — acting as a force multiplier — and handling more orders with the same number of people or less. During the duration of COVID-19, people can be spaced even farther apart.
The great thing about cobots is that they don’t require a custom or fixed infrastructure such as automatic guided vehicles or conveyors, making them ideal for high-product mix, lower-volume work assignments. Cobots go to where the work is. Right now, our feeling is that they are cost-structured for companies starting with around 50 employees.
These procurement cost structures, though, are being influenced by robotics-as-a-service (RaaS) pricing, reducing the need for major equipment capital expenditures. In other words, you can lease them just as you may do with your trucks.
The selection of cobot configurations now includes available weight load capabilities of up to 3,000 or more lb. (Hint: great for transporting pallet loads, multiple customer orders and branch stock transfers throughout the warehouse)
6. Staffing takes center stage. Economic recovery will get underway and job growth will increase in the coming months as companies aim to restore normal operations
“In addition to seasoned warehouse workers on the market, there’s a new pool from which to recruit,” notes a Supply Chain Brain December 2020 article (http://bit.ly/3bxta5P). “The pandemic has leveled many industries, leaving a large number of employees displaced. Companies in warehousing and logistics now have an opportunity to provide new roles for those workers while simultaneously attracting talent that was difficult to find in the previously tight labor market.”
Tighter labor markets will return, though — you will still be faced with the challenge of retaining that top talent.
“It’s important to note that workers don’t just get older, they get younger, too,” the article adds. “As you start staffing, don’t forget to look at new recruits and make sure you’re catering to the new generation of warehouse workers. What matters to these potential employees? In a post-COVID-19 world, it’s safety first — and that doesn’t just mean easy access to hand sanitizer.”
• Health and safety. “On the floor, it’s critical to provide tools that are ergonomically safe for the worker,” the article reports. “Older models such as heavy radio-frequency guns create arm strain and put workers out of commission unnecessarily.” Advancements in wearable technology make it easier to provide these types of tools to floor workers.
• Innovative and intuitive technology. “A younger workforce is ushering new technology into warehouses,” the Supply Chain Brain article continues. The distribution industry is in a “massive” movement to modernize its enterprise resource planning and warehouse management systems and adopt wearable technology and additional automation systems. “Warehouses offering new technologies to enable the workforce to improve productivity while also making their lives easier will win the long game.”
Your incoming workforce gravitates toward familiar technology; they are accustomed to touchscreen smartphones, tablets and other interfaces.
• Upward mobility and growth. Warehouse workers are part of the “heartbeat” of any distribution company but, unfortunately, they’re not always thought of as such. “It’s important to go above and beyond to make them feel as if they’re just as important as other departments,” the article notes. “An employee on your warehouse floor should feel equally valued and recognized as those in roles in finance or marketing.”
Consider connecting recognizable and relevant digestible metrics, such as total shipments per week, and “calling them out in weekly all-hands meetings or written communication. It helps to put the workload in context for the rest of the company and often gives undervalued team members a chance to shine,” Supply Chain Brain says.
To attract and retain talent in 2021, wholesale distribution executives must reevaluate employee benefits, safety protocols, technology performance and career paths to ensure they are cultivating an “attractive and sustainable warehouse environment for a younger generation.
The challenges of 2020 forced many distributors to jump through hurdles to maintain their day-to-day operations. Unexpected pivots often left little time for forward-thinking and permanent improvements
However, as already demonstrated by many companies, you can be agile enough for short-term stability — while enabling a strong foundation for long-term improvement.