A distribution center has many components that piece together like a puzzle to accomplish a successful operation. Let’s define a successful operation as one that has great customer service while being lean in processes and efficient in order to add as many dollars to the bottom line of a company as possible. There are four main building blocks, which include People, Processes, Technology and Design.

Let’s discuss design first. Within design, we will include the layout of your distribution network, automation or material handling equipment and facility. Before you continue to invest in the building you are currently in, it makes sense to evaluate if you are located in the right city or region. For instance, if most of your customers say (85%) are located on the east coast and your distribution center is located in Denver, Colorado, does that make sense? Sometimes your facility starts out in a location because corporate is there and they decide to put it close, but over time and continued growth it doesn’t financially make sense to pay the additional shipping cost. A network analysis may identify major savings. Within your facility you have taken advantage of voice, pick to light order picking, automated packaging solutions, etc. Great, but are you utilizing this equipment to its maximum efficiency? Step back from your current role and look at what works and what doesn’t work with new eyes. 

An example: a company built on a 250,000 square foot addition. Because the fast movers were moving rapidly, they decided to put the fast movers in the new addition. Therefore, the older product wouldn’t have to be moved. Great idea, except the new addition was clear on the other side away from the dock doors. Every day the travel time to pick orders increased exponentially, and new forklifts had to be purchased to handle the volume. Why not bite the bullet and do it right?

Technology is expanding and new functionality added every day; it’s just amazing what new functionality is out there. Do you have an order management system or warehouse management system? If you do and it’s been over three years since your initial implementation, the odds are that you are not using the system’s total functionality. In distribution centers, turnover is an issue, and usually as new people join the team they have not been trained on the system in totality but just enough to do their jobs. Therefore, all those bells and whistles that were purchased to increase productivity and efficiency are not being used. 

If you want to increase your throughput or productivity by 10%, you may want to evaluate yourprocesses. Generally, once current processes are mapped out on paper there is usually an opportunity to reduce touch times, steps and walk times. Depending on the size of your operation and the amount of people you have engaged you may even be able to identify larger savings. Bring in the whole team and let them look at it from a “new eyes” prospective. Let them look at their area but also look at other areas. Fresh eyes can usually see things that someone working in an area day in and day out cannot. This will also identify some change management issues. People don’t like change and may try a new process but unless you diligently enforce the change you will find the team slipping back to the old habits. 

The fourth building block is people. It is very costly to hire a new associate, so why not keep the ones you have? What programs do you have in place to retain the associates that have been identified as A players. No matter how well you have laid out a best in class distribution network focusing on design, technology and processes, you will not be successful unless you focus on the people. Do you have accountability in your facility? If you have a system or process to identify who picked, packed and shipped each item you increase productivity. Without this measurement, most times it will not get done quickly or accurately because there is no accountability. Do you have a reward system? It is amazing how a little pizza party for an achieved goal will increase the odds of achieving that goal. People want to feel challenged, appreciated and valued. Do you have a continuous feedback method or process? Many times managers give feedback only when it is bad instead of acknowledging the good along with the bad. Identify the personality of your key people and design incentives, reports and feedback the most effective way for their particular personality. Executives, supervisors and managers underestimate this building block and it is the main reason for turnover, loss of productivity and worker disenchantment. Focus on this element and you will be surprised what the sheer force of employee willpower will be able to accomplish.

For the full presentation on this topic, be sure to attend the PARCEL Forum in Chicago Hyatt Regency O’Hare October 23, 10 AM.