What is Best In Class, anyway? Seems it could be a matter of personal opinion in some instances. When you look at the industry holistically it is hard to compare. Many have different product requirements, picking methodologies and customer shipments (whether the customer is a company store or Business to Business or Direct To Consumer). But I can tell you after 20-plus years of visiting warehouses and distribution centers, there are some elements that exist in some of the best run facilities.
When Walmart was a customer of mine, other facility managers would say, “Wow, they are the best; what kind of automation do they have?” There was the immediate assumption to be the best that they must have the latest and greatest automation, Star Wars-like facilities. What Walmart does that others find so hard to do is not top secret, and quite simple. They execute and they make the supply chain a major asset to their overall business strategy. In many companies they view the supply chain or distribution process as a necessary evil. Leaders in the distribution center or supply chain do not sit on the executive team and many times are not consulted when there is some valuable information that they can share. In the organizational structure, many companies just don’t get where the distribution center fits so they just stick it under an executive who has no clue if the company is operating the best in class or worst in class. This is usually a recipe for disaster. Companies that recognize the importance of this segment in business are the ones that are succeeding.
The first element that I have found that exists in the best-of-class facilities should now be obvious. It is execution! Execution in a facility can be all inclusive of many different sub-elements. Communication both within the facility and with corporate, employee morale and attitude, process design, use of the most efficient equipment and software and, yes, occasionally automation. It’s interesting that most of the sub-elements mentioned above are FREE and just require a leader to put the right amount of each into an organization! Communication is so very vital and often times non-existent in some of the top companies. For example: A large direct to consumer company who has a decent warehouse operation and a pretty savvy manager with a thirst for continuous improvement had a situation with marketing who decided to give an item free with a purchase of a standard product. The warehouse manager knew immediately this was crazy and would cost the company lots of money. He communicated his concern and got the traditional response, “Just do it; marketing says so." The manager decided to keep track of the additional shipping cost. The standard product came in a small standard size box but the free item with free shipping was long and narrow costing extra to ship. After the promotion was over, the manager was brave enough to present his case and the additional cost of shipping the free item, eroded the profits of the standard product dramatically. The change that occurred in this company was also dramatic. The distribution expert was asked to sit in on all further promotion ideas and product decisions so that he could guide sales and marketing on the cost and impact of their ideas. Yeah! That’s one for the good guys, you dedicated individuals who want the company to prosper that execute in your facilities.
Employee morale and attitude is so very vital. Best-in-class facilities ask feedback from their associates and reward them for their input. In the best-in-class facilities, individuals are treated as vital members of the team and morale is very good. Whether you do a cheer, a pizza party, or family days, associates are people and following the golden rule will change the attitude and morale in your facility.
Process design can also affect employee morale. Associates know when there’s a bad process, when they walk more than they should, when there’s redundancy, when the product is in wrong locations and other bad process steps. They know because they live it every day and shake their heads when they have to work twice as hard for conceivably nothing. Process design should be examined frequently in every functional area of the warehouse. If products, customers, shipments change, there should be an analysis of the process again, continuous improvement is the key.
Use of the most efficient equipment and software is critical. I’m not a big proponent of buying equipment without a healthy return on investment. Rule of thumb if the ROI is less than 12 months, you have to find a way to get leadership to listen to your needs. One quick tip on using the most efficient equipment or software: Identify any paper or data entry in your facility. If you have these two things, you have opportunity!
When Walmart was a customer of mine, other facility managers would say, “Wow, they are the best; what kind of automation do they have?” There was the immediate assumption to be the best that they must have the latest and greatest automation, Star Wars-like facilities. What Walmart does that others find so hard to do is not top secret, and quite simple. They execute and they make the supply chain a major asset to their overall business strategy. In many companies they view the supply chain or distribution process as a necessary evil. Leaders in the distribution center or supply chain do not sit on the executive team and many times are not consulted when there is some valuable information that they can share. In the organizational structure, many companies just don’t get where the distribution center fits so they just stick it under an executive who has no clue if the company is operating the best in class or worst in class. This is usually a recipe for disaster. Companies that recognize the importance of this segment in business are the ones that are succeeding.
The first element that I have found that exists in the best-of-class facilities should now be obvious. It is execution! Execution in a facility can be all inclusive of many different sub-elements. Communication both within the facility and with corporate, employee morale and attitude, process design, use of the most efficient equipment and software and, yes, occasionally automation. It’s interesting that most of the sub-elements mentioned above are FREE and just require a leader to put the right amount of each into an organization! Communication is so very vital and often times non-existent in some of the top companies. For example: A large direct to consumer company who has a decent warehouse operation and a pretty savvy manager with a thirst for continuous improvement had a situation with marketing who decided to give an item free with a purchase of a standard product. The warehouse manager knew immediately this was crazy and would cost the company lots of money. He communicated his concern and got the traditional response, “Just do it; marketing says so." The manager decided to keep track of the additional shipping cost. The standard product came in a small standard size box but the free item with free shipping was long and narrow costing extra to ship. After the promotion was over, the manager was brave enough to present his case and the additional cost of shipping the free item, eroded the profits of the standard product dramatically. The change that occurred in this company was also dramatic. The distribution expert was asked to sit in on all further promotion ideas and product decisions so that he could guide sales and marketing on the cost and impact of their ideas. Yeah! That’s one for the good guys, you dedicated individuals who want the company to prosper that execute in your facilities.
Employee morale and attitude is so very vital. Best-in-class facilities ask feedback from their associates and reward them for their input. In the best-in-class facilities, individuals are treated as vital members of the team and morale is very good. Whether you do a cheer, a pizza party, or family days, associates are people and following the golden rule will change the attitude and morale in your facility.
Process design can also affect employee morale. Associates know when there’s a bad process, when they walk more than they should, when there’s redundancy, when the product is in wrong locations and other bad process steps. They know because they live it every day and shake their heads when they have to work twice as hard for conceivably nothing. Process design should be examined frequently in every functional area of the warehouse. If products, customers, shipments change, there should be an analysis of the process again, continuous improvement is the key.
Use of the most efficient equipment and software is critical. I’m not a big proponent of buying equipment without a healthy return on investment. Rule of thumb if the ROI is less than 12 months, you have to find a way to get leadership to listen to your needs. One quick tip on using the most efficient equipment or software: Identify any paper or data entry in your facility. If you have these two things, you have opportunity!
