WQ Review (Warehousing Quarterly Review):

Best Warehousing and DC Practices

In today’s economic downturn, the value of investing in people, processes and
technology in distribution centers is essential to ensure breakthrough performance.

By Warren Sarafinchan, CITT

Considering that many distribution centers control multi-million dollar budgets and inventory as well as managing large workforces, these operations are a vital link in an efficient, integrated supply chain.  In today’s economic environment, all functions in an organization need to deliver against target levels in order to ensure sustainability.  Distribution centers are no exception.  This article will outline strategies organizations can use to operate their distribution centers to meet increasingly challenging expectations.  The focus will be on people, processes and technology.

Create a High Performance Work Environment

Team members in the distribution center play a crucial role in the delivery of an organization’s objectives.  Engaging the hearts and minds of all team members in the DC will result in improved results measured by exceptional health and safety results, meeting customer service expectations and achieving financial targets. 

The following are important people-centric considerations when operating a distribution center.

Create a Safe, Productive Environment

The physical environment associates are working in is directly correlated to the facility results.  Facilities that are safe typically experience a lower number of workplace injuries, increased labor productivity and a reduced number of order selection errors, to name a few.  Although there are many elements to creating a safe workplace, active leadership by facility management and employees through a highly functional Joint Occupational Health and Safety Committee is the underpinning of an effective program.

Invest in Training and Development

The operation of a safe and efficient distribution center requires a well-designed training and development program for all team members in the facility.  Typically, this plan encompasses technical training such as WHIMIS, product handling and the operation of material handling equipment, to name a few.

Recognizing the important role distribution centers play in the supply chain, many organizations are placing high-potential candidates in key leadership roles in the centers.  Training investments are being made in these individuals to arm them with the skill-sets required to deliver benefits in the short term while developing long-term talent.  This includes a combination of technical training in supply chain management and broad-based business training, as well as leadership.  Professional designations such as CITT are increasingly becoming the standard for leadership roles in supply chain management.

Create an Engaged Workforce

Associates from all levels in your distribution center should be encouraged to present any ideas they have to drive improvements to the operation.  There are many examples where ideas directly from the floor have created significant business value to an operation.  It is critical not to undervalue ideas and input from associates directly doing the work.

Beyond the traditional methods of obtaining input, consider utilizing the following approaches to increase employee engagement in your distribution center.

  1. Start a program of employee roundtables facilitated by senior leadership in the organization.
  2. Engage the entire team in the business planning and management processes. 
  3. Develop self-funding goal-sharing programs designed to share savings with all associates when ideas are implemented and targets are achieved. 

Invest in Leading Practices

Surprisingly, there are organizations that have limited process control in the day-to-day management of their distribution center facilities.  Best-in-class organizations operate their distribution centers by utilizing many of the same processes that are found in manufacturing facilities.  For example, Six Sigma is a proven methodology used widely in organizations to drive increased process control that has resulted in significant improvements in cost performance, customer service and product quality.  Utilizing the Six Sigma DMAIC methodology (Define, Measure, Analyze, Improve, Control), coupled with a wide variety of investigative tools, issues will be identified proactively with root cause isolated.  Appropriate actions can then be taken to drive sustainable go-forward results.  Exhibit one below provides an outline of the DMAIC methodology.

Figure One

 

Invest in Technology to Enable Process Improvement

Investing in the right technology in your distribution center is a strategic decision in the drive to increase service levels, improve cost performance and tighten quality control.  Technology investments in a distribution center can range from a warehouse management system (WMS), voice and light directed work instructions to automated picking systems, conveyors and gantries.  It is critical to consider that the implementation of technology in and of itself will not deliver savings.  There needs to be equal effort invested to implement supporting process changes, coupled with training and development for all team members in the facility.

Conclusion

Many have heard the phrase “you are only as strong as your weakest link.”  This thinking can appropriately be applied to supply chain management.  All links of the supply chain must have high levels of performance in order to achieve overall service and cost performance.  Distribution center operations are a part of this chain and must be managed with the same level of sophistication as any other part of your organization.  Industry-leading organizations are investing in the people, processes and technology in their distribution centers to deliver breakthrough performance.  Given the current economic conditions worldwide, it is important for organizations to maximize the returns from their distribution center operations.

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