By Thomas R. Cutler
Will Pemble, President of Pemble.com, speaks simply and says, “People - and systems - fall apart now and then. Things go awry. A truly successful culture needs the courage to admit its mistakes, the insight to study and understand how problems were caused, and the patience and creativity to develop ways to avoid making the same mistake over and over again. “
Mistakes can show up throughout the supply chain process, yet no where more clearly than in warehousing, requiring a focused enterprise strategy. Warehouse control systems (WCS) are part of lean efficiency, and according to Jerry List, Vice President of Cincinnati, Ohio-based QC Software, “The most significant impact on reducing warehousing errors is the need for real-time warehouse data with warehouse control systems.” To avoid costly mistakes distribution centers need to be more dynamic, constantly re-inventing by expanding an existing footprint, adding new value added services and operational processes, or finding better ways to quickly and accurately fulfill orders.
Configurability and scalability of the WCS is essential. The warehouse control system enables an automated warehouse or distribution center to reach peak operating performance. Removing the inefficiencies commonly associated with under or over utilized labor and material handling equipment is essential. According to Diane Lippman, a Lean Six Sigma Master Blackbelt, “Lean principles are supported with a warehouse control system because the technology pulls product through an automated warehouse or distribution center increasing overall productivity and throughput.”
Mistakes Include Missed Opportunities for Optimization
The key to optimizing material flow by warehouse automation is tracking key performance indicators such as the current and anticipated workloads at workstations to make key material routing decisions; inbound and outbound order tasks to make key material release decisions. Failure to realize this type of optimization is another kind of mistake.
Lia Sophia Efficiency through WCS
Lia Sophia is a popular provider of high quality leading fashion jewelry; the company is a member of the Direct Selling Association (DSA), the international trade organization for industry best practices. Lia Sophia uses the QC Software warehouse control system to meet growing business demands and increase productivity. A second A-Frame was added to increase order fulfillment capacity, and packing operations were separated by order size.
Lia Sophia’s products are sold through a network of sales consultants. Each “order” represents a collection of smaller orders that are consolidated and delivered to the end-user customer by the consultant. This results in a large amount of packing documentation (individual packing list for each customer order plus a consolidated statement for the consultant.) Larger orders can therefore take a long time to pack-out and backup the packing operation. These large orders are directed by the WCS to a separate packing area, allowing smaller orders to flow through the original packing area.
Lia Sophia was able to achieve other efficiencies when the application of shipping labels was converted from a manual process at packing, to an automated print and apply process. The streamlined packing operations included separating supply orders from normal customer orders to segregate product and eliminate the extra boxes in the picking area; wave planning was enhanced to segregate orders by pick area allowing supervisors on the floor to drop orders to better manage floor operations.
Demand driven supply chain
Ultimately, finding methodologies and technology tools to implement powerful and accessible frameworks to reduce inventory levels, increase productivity, and process flow are most critical. A demand driven supply chain is best characterized by a cost-effective supply replenishment network.
A key component to a lean initiative is the use of kanban, the “pull” method of keeping production lines suitably stocked with inventory when needed and in the correct quantity. Kanban is the signal needed for inventory replenishment, and as a product is consumed, an order for the utilized inventory is automatically placed. Given the challenges of lost or duplicated kanban paper cards, digital kanban is the leanest methodology for a demand-driven supply chain.
According to Narayan Laksham, CEO of Ultriva (electronic kanban technology leader), “Inventory reduction and number of turns are key benchmarks in determining whether a solution is truly an on-demand SaaS electronic pull-based supply chain solution. Only with real-time material flow status, intelligent demand load leveling, and electronic kanban, can the return-on-investment be realized.” Indeed, those actively engaged in lean initiatives seek to reduce inventory levels, automate process controls, and enable supply chain integration both internally and through suppliers globally.
Lippman acknowledges that some activities, while not directly adding value to a product or process, such as time spent on equipment maintenance or an accounting function, are necessary in the production of goods or services and must be perpetuated. Non-value-added activities must be reviewed and constantly assessed, identified as waste, and eliminated.
Sadly many firms still maintain excessive inventories. CFO’s recognize that using extensive networks of distribution centers and warehouses to ensure prompt and reliable deliveries does not guarantee an error-free environment. Lean methodologies represent problem-solving tools and must allow enterprise-wide integration with the firm’s core strategy.
Laksham insists that, “Purchasing organizations wrongly assume that “just-in-case” inventories are less costly than the cost of downtime or lost production. Preparing for an emergency or downtime situation usually creates inventories of items never used. Lean procurement activities must be directly related to production; otherwise they are waste. Many organizations have lean strategic sourcing initiatives implemented, yet find nearly half the purchases are spot buys or unplanned. Too often this type of inefficient thinking outweighs the possible advantages of warehouse control systems.
Pemble insists, “We don't learn from making mistakes. We learn from understanding them. This is why a culture where mistakes are embraced and studied will always out perform a culture where Rule Number One is CYA.”