Maximize DC Process Efficiencies With Operational Assessments
To grow profit margins in today’s competitive distribution and fulfillment market, distribution center (DC) operators must evaluate their processes and workflows frequently to ensure that they’re properly addressing ever-changing business requirements. For example, escalating e-commerce order volumes and SKU counts demand maximum process efficiencies; these often are among the most common challenges that retailers face. In this all too common scenario, many operations think that investing in new technologies is the answer — but even that’s no guarantee.
Case in point: Assessment uncovers pick module productivity blocks
Consider this real-world scenario of how a home improvement commodities supplier dealt with order volume growth. To better manage an influx of higher-velocity, smaller items in their inventory, their DC transitioned from a broken-case, vertical-carousel picking system to a new pick-and-pass module. But instead of reaping the expected rewards, the operation experienced a 40 percent decrease in productivity — which by all accounts was considered a negative return on their investment.
DC operations managers suspected a programming error in the pick module software but could not pinpoint the specific cause. Further investigation of the entire fulfillment process would be needed to restore the pick module back to its intended productivity levels. In our most recent On The Move (OTM) webinar, Improve Facility Performance With Operational Assessments, I reviewed an operational assessment approach to this exact scenario.
In this case, after performing an operational assessment of all picking and replenishment processes that supported the new picking module, Honeywell Intelligrated’s operations & solutions development team uncovered several issues that were masked from traditional productivity reporting, such as:
- Use of alternate picking processes outside of pick module
- Empty and partially filled slots
- SKUs that didn’t fit in assigned slots
- Poor pick zone balancing and idle labor
- Outdated min./max. settings
- Goals that prioritized picking over replenishment
This operational assessment revealed that while the new pick module indeed was running as intended, multiple hidden process errors were blocking it from achieving its desired productivity levels. This is exactly the type of scenario that operational assessments are designed to resolve — whether it’s validating the effectiveness of a new technology-driven process or evaluating if business requirements have outpaced existing fulfillment workflows.
When to perform an operational assessment
As I detailed in the webinar, operational assessments are intended to provide an end-to-end process review of material flows and subsystems within the four walls of the facility — evaluating the balance of workflows and their impacts on labor utilization. Contrary to what many may think, operational assessments are neither a mechanical inspection of material handling equipment nor an employee performance evaluation.
So when is the ideal time to perform an operational assessment? According to our live OTM webinar polling, the most likely reason attendees indicated was due to stagnation or degradation of key performance indicators. While this is certainly an important and common justification, there are also many other reasons to perform operational assessments:
- Business model or process changes
- Forecasted growth in order volume or inventories
- Check the health and rigor of fulfillment processes
- Need for external benchmarking
- Dealing with limited labor availability
- Prior to making capital investments
Honeywell Intelligrated’s operations & solutions development team recommends operational assessments for all the above reasons. Simply put, it’s a matter of making sure that existing processes are aligned with ever-changing business requirements — which, in today’s marketplace, are constantly in flux. Before you presume that your only option for dealing with e-commerce growth is to invest in new automation systems, let us perform an operational assessment first to see how you can get the most out of your existing DC.
To learn more about the importance of operational assessments in distribution, fulfillment and manufacturing environments, view Improve Facility Performance With Operational Assessments.