Simplify Warehouse Productivity – 3 First Steps!

Supply chain pressures are increasing everyday especially as customers want your product faster, cheaper and to their liking. Look at the choices they have – a gazillion e-commerce websites, traditional retail, B2B now entering direct to consumer, and more. Front office is doing everything to keep customers engaged and loyal, and one surefire way is by committing to, and delivering, product as ordered.

The onus is thus on Supply Chain Operations to ensure warehouse inventory is accurate, product readily available to pick & ship, and cycle time through the warehouse as short as it can be. This is assuming that the product quality is good and there is a reliable carrier for delivery.

Most of the warehouse directors or managers that I work with focus on operations cost, employee productivity and inventory accuracy, and they are measured on these metrics as well. However, one of the key things missing from these metrics or focus areas is the customer! While these supply chain operators would argue that the traditional focus areas are meant for the customers, I would argue, Not Really!

So let’s start simplifying things.

FIRST, change the focus from how well you can operate well to “how efficiently can you service the customers”.

A simple customer satisfaction equation looks something like this

fn[Product Quality, 1/(Cost), 1/(Time)] = Customer Satisfaction

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Customers want good quality product for the lowest possible cost with the shortest delivery time. This ought to be the measure or focus for your warehouse operations as well. Again, in a simple fashion, this is how the above parameters become relevant for operations.

  • Product Quality – ship product in good condition (no damages)
  • Cost – you could help lower product cost by lowering operations cost
  • Time – How fast you can ship the product from the time it is ordered. This is the biggest lever in your control
Customer Satisfaction Measure Warehouse Operations Relevance
Product Quality Good to High Quality Ship product in good condition (no damages)
Product Cost Competitive or Lower Lower operations cost would help lower product cost
Order to Delivery Time As Fast as Possible Reduce cycle time by shipping faster from warehouse

This is fundamental change management. Start aligning your warehouse metrics and the mindset of your operators with the customer value drivers defined above. It may not be easy to change your personal metrics that easily but if you change the operational philosophy, you will see how quickly it would influence the higher-ups.

SECOND, work on your biggest lever – Time. To understand this better, let’s clarify a very common notion i.e. “People’s productivity normally implies product is moving faster”. Not true. It depends on how many steps are in the process and if you are measuring individual productivity or the productivity of the entire process.

For e.g. In a pick and ship operations, there are 4 key steps

  1. Planners release work to the floor
  2. Pickers pick product
  3. Packers pack product
  4. Shippers load and get it on the road

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Total cycle time from the time warehouse receives the order, plans, picks and ships them = 3.5 hours

In most operations individual productivity is measured. While each of the 4 process steps could be 100% efficient, it does not mean your whole process was productive and cycle time to the customer was low.

Look at this example differently.

  1. Planners release work to the floor >> Wait time because operators are not available
  2. Pickers pick product >> Picker skips pick due to shortage >> Comes back to the pick when product is available
  3. >> Long queue for packing >> Packers pack product
  4. >> Shipping station backed up or truck is not available currently >> Shippers load and get it on the road

Simplifying Productivity8

With each of the intermittent delays overall cycle time is 3 hours longer than what most operations would measure.

Do you think you serviced the customer efficiently? Only on quality but not on cost and time. Where’s the cost if people were 100% productive? It’s in the inventory sitting on the dock, in multiple trips of warehouse to pick product, and in wait time (if you believe time is money). Time impact is clearly evident, as individual productivity does not necessarily translate into speed of shipping product.

THIRD, start thinking in terms of system productivity. Begin with measuring your current cycle time and benchmark it against your own data. What were the factors or conditions for faster vs. longer shipping times? Identify a pattern of most common factors that could be addressed operationally and cycle time will at least become consistent if not start showing improvement.

Some simple ways to benchmark your own operations are:

1)    Perform process studies during busy and slow times in any given day or week

2)    Analyze samples of data from the process studies and look for patterns. E.g. is wait time from planner to picking consistent in fast and slow times? Are packers over loaded? Is high volume causing people to take short cuts and create new bottlenecks?

3)    Analyze operational balance in the warehouse. E.g. could receiving dock to stock cycle time be impacting picking cycle time? Why is inventory not in pick location when picker gets there? Are planners releasing the right orders? What are the inputs and outputs of the whole system and constraints?

4)    Address the obvious factors and perform the process studies again

5)    Repeat steps 1 – 3 until you have exhausted operational improvement opportunities. There is a tipping point after which you need additional tools or help.

Finally, once you have changed people’s mindset and streamlined your operations as whole, then apply metrics to measure performance, this time differently. You could still keep individual productivity but under the umbrella of total system productivity.

There is more to simplifying things in your operations while handling complexity. However, start with the basic steps that are a foundation to larger changes. I will write more about this in coming months. Till then, Happy Simplifying!

Simplifying Productivity5

Note: Above recommendations have been successfully implemented by my clients in Retail, Life Science and Energy industries, who saw a 12-20% reduction in distribution cycle time and 1-3% operating cost reduction in their warehouses.

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Infographic at http://infogr.am/Simplifying-Warehouse-Productivity

Posted in change management, management, productivity, supply chain, thought leadership, transportation, warehouse management | Tagged , , , , , , , , , , , , , , , | Leave a comment

It’s easier to change technology than people! Managing Change…

In the world of analytics, social media and digital revolution, there is one age-old concept that companies still struggle with – CHANGE. Having worked with over a dozen clients, most of which are Fortune 500 companies, I have learned one thing – its much easier to change technology but difficult to change human behavior.

Take for example. A well-known company, like many others, is going through some turbulent times and wants to manage cash flow very carefully while continuing to service their customers well. All executives are aligned on the common goal. However, when it comes to executing the plan, you cannot get anyone to agree. Business units don’t want to “shake up things” too much, IT wants to protect the aging systems and Finance doesn’t want to pay for anything risky. Yet, everyone is aligned on the common goal of “managing cash flow”.

Another example that comes to my mind is from several months ago. A client wanted to expand operations in Asia and had the right business case, brand recognition, market support and skillsets to do so. In this case IT, Finance and Corporate Business were all in agreement and ready to execute. However, the country general manager was not in favor and his rationale was that growth would be too fast to sustain. His real reason, that we found out later, was that this change would have lessened his authority with a regional business model.

It is not uncommon to see this kind of resistance to change in most companies. Everyone wants to adapt to changing market conditions and customers but when it comes to self-change, many transformation initiatives fail or run into significant roadblocks.

This brings us to the point on how to manage change. Some of the lessons I have learned along the way from my own experiences and from some of my colleagues.

ChangeMgmt

First, Find the Nay Sayers – there will always be some. In the early stages, there are more. Key is to identify them quickly and try to neutralize them early on. There are always some left but try to maximize the ones on the positive side.

Second, Get to the Real Issue – like the country general manager in the example above. When we were able to understand the issue behind his position, it was easier to develop an alternate model that would address his authority concern while launching the expansion plan. Focus on people and their concerns. What they say or do is often a cover.

Third, Create a Spark – in the first example where Business, IT and Finance were all resistant, it was very difficult to get anything started. In one of the meetings we brought their projected income statement showing negative cash flow in subsequent quarters. Their future was in front of their eyes. Message was clear and it sparked the need for change.

Fourth, Respect everyone – change is not about organizations or systems or cash flows. It’s about people. If we get the right buy in from people at all levels, change will be successful. So, however long it takes, listen to everyone and try to address as many concerns as possible. Don’t disrespect or stomp on people. Carry them along!

Last one for this blog, Have the right Leader – this is not something new. Lack of a change leader will impede the progress. Nominate someone who represents the change, lives it, practices it and preaches it. We all look for role models in our personal and professional lives. Elect the most common role model for your change!

In the dynamically changing socio-economic market conditions, make CHANGE a weapon to be more competitive!

Posted in advocacy, analytics, behavior, change management, leadership, management, productivity, thought leadership | Tagged , , , , , , , , , , , | 1 Comment

Science of Persuasion – simple steps via cool animation!

I came across this tweet “Science of Persuasion” by www.influenceatwork.com.

What impressed me is the following

  • Using animation was really cool and it has a long lasting impact on the audience – many management gurus and consultants are now using animation because a picture is worth thousand words. In this case, moving pictures with a narration register very well in your memory. This new style is certainly more effective.
  • Concept has been simplified such that anyone can learn and apply we all have to persuade others in our jobs. It’s not just for sales people. A consultant has to persuade the client, a financial analyst has to persuade the market, a clerk has to persuade the boss, a business analyst other departments, a teacher to students (and vice versa), parents to kids (and vice versa).  There is persuasion all around us and everyday. With everyone trying to persuade the other, how do you do it effectively and in simple steps. That’s what I liked about this animation.

I have captured the key steps here for quick read but you can watch the full video on You Tube. http://youtu.be/cFdCzN7RYbw

2013-07 Simple Persuasion1

Always be the first to give. Don’t wait for others. People will reciprocate and so should you. 2013-07 Simple Persuasion2

Create the need when it does not even exist. Sometimes people are not sure what they want. 2013-07 Simple Persuasion3

People trust expertise but it takes a lot of effort to get to that level. Leverage other experts to endorse you. 2013-07 Simple Persuasion4

Make small commitments and deliver accordingly. No harm making large commitments either but see what you can deliver soon and effectively. 2013-07 Simple Persuasion5

Get to know people. Don’t see people as a transaction or objects. Understanding people will help achieve better results (for both sides). 2013-07 Simple Persuasion6

When going gets tough, look for mass consensus. Majority always rules especially if someone is trying to block you with their personal agenda.

Simple and Effective. You could apply these in your next meeting, next discussion. Good luck persuading!

Posted in advocacy, leadership, management, productivity, social media, thought leadership | Tagged , , , , , , , | Leave a comment