Wednesday, October 24, 2012

Pick/Pack/Ship - In Search of a Standard Approach

Michael Sachs

Warehouse operations are fundamental to the service-parts business. So, you’d think that when you bring 21 companies together, all in the business of distributing motor-vehicle service-parts, that there would be a lot of commonality in the way they operate their distribution centers. Well, nothing could be further from the truth.

Earlier this month, we closed out our 2012 North America Parts Benchmark (NAPB) cycle in Chicago with a Focus Day devoted to the subject of outbound warehouse operations (actually, it lasted 1.5 days – lots to talk about). Once we got through the basics of high level facility and performance comparisons, we broke the session down into the following modules:
  • Slotting/Storage
  • Picking Strategies
  • Scanning/Technology/Equipment
  • Dock/Loading
  • Safety and Environmental

For every module we started by comparing the basics; for example, do you use temporary employees or do you have a WMS? In no case, did we find a significant bias toward one solution vs. another, even among top performers. Here are some examples:

Slotting/Storage – This is fundamental to efficient warehouse operations. If you don’t get this right, then it is very unlikely that you are running anywhere near peak efficiency. There is little debate about this. So, one would assume that there are some great off-the-shelf tools out there for managing the slotting/storage optimization process. Yet, only half the companies have a WMS that they rely on for this activity. Some of the best performers are in the “don’t have” category. The following charts provide a couple of other examples of how diverse the approaches are to warehouse storage:

Note: All charts are based on one data point per OEM. OEM names have been removed to protect anonymity.

Picking Strategies – One of the many ongoing debates in this field is whether or not a single person should be responsible for a given order line from pick through sort. The argument for doing this is that by having a single point of ownership, there is also a single point of accountability – no finger pointing when quality issues arise. This allows for both the identification of and training for people who need help with the quality of their work.

What’s interesting here is that those with the highest productivity within their respective industry segment tend to have a single point of line item ownership, yet some of the best quality comes from those with multiple points of ownership. Go figure.

Even for some of the most basic things there is no consensus; like how one traverses the warehouse or whether an operator picks and sorts each line (vs. picking all lines first, and then sorting).

Scanning/Technology/Equipment – Scanning is one of my favorite topics, because it seems that for every company that claims to have seen improvement by adding scanning there is another one that has seen improvement by reducing or eliminating scanning. Having said that, scanning is one of the few areas where the majority of industry players are in; about three-quarters of them. Again, whether a company scans or not is not a predictor of performance level. As the chart below illustrates, even among the majority of companies that scan, there is clearly some debate about how much scanning to do and where in the process it should occur.

Okay, by now I think you get the picture. Here are the Bottom Lines:
  1. There is no single way to achieve high levels of warehouse operations performance.
  2. While it is difficult to determine the key drivers of performance for any given OEM, the fact that each OEM does so many things differently from the next, even among top performers, suggests that everyone still has room for improvement.
  3. All of the above commentary, and accompanying charts, are interesting, but what really makes the 1.5 day investment valuable is the conversation about what companies actually do inside the four walls to achieve their performance levels.
  4. Bring together a large group of subject matter experts who all have a passion for warehouse excellence and over the course of 1.5 days everyone will learn many interesting things (as indicated by the 94% top-box overall satisfaction with the event), regardless of their performance level, and leave with their own customized list of ideas and action items.

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