| Spring 2006 |
Manufacturing/Distribution Advisor
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Finding the Warehouse Edge
Most warehouses support either a shop floor or a retailer—that is,
a cash register. So warehouse choices can contribute significant
competitive advantages. Consider these examples:
- After improving its picking, staging and shipping routines, a distributor
offered twice-daily deliveries, allowing customers to reduce their own
inventories.
- By negotiating mixed pallets and cross-dock deliveries from vendors, a
warehouser reduced inbound and outbound handling costs. Its new on-time
guarantee won preferred-vendor relationships.
- A distributor with a strong reputation for accuracy—in picking,
assembly, shipping and billing—shifted to premium pricing.
How can a company exploit its warehouse systems for competitive advantage?
Software, hardware and reams of tactical advice are available, but let's look at
foundations.
Define a position. A sharply-defined position lets you align and focus
your efforts. At one end is low cost for acceptable service; at the other is
stellar service for an acceptable price. Starting from warehouse-cost-per-unit,
figure out where you can best compete.
Encourage quality thinking. Achieving and maintaining high accuracy on
a fast cycle is hard work. Success factors include:
- A continuous improvement program with concrete goals.
- A focus on causes, not symptoms. Don't inspect every outgoing shipment—
instead, find errors in picking, packing and labeling and fix them through
training and automation.
- A team approach, involving and rewarding employees' attention to quality.
Build partnerships. Look to your upstream neighbors for cost savings.
The bar-coded batch labels, mixed pallets or cross-dock delivery that your
vendors or manufacturing plant may provide can dramatically improve your own
operation.
Be flexible. Customers need different services, inventory levels,
transport options and price structures—but many distributors offer only a
one-size-fits-all option. Classify your customers into groups, and focus your
logistics on meeting the needs of each group. Be open to special handling
requests, because many can be accommodated with a bit of planning.
Measure performance. Track pounds, pieces or picks per hour. Tracking
dollars isn't as helpful—you store items, not dollars. Keep your measures
simple and focused on what individuals can control. And assess them over time
for trends.
Incorporate technology. Try this: Cost out your shipping errors,
reduce that figure by 99 percent (the prevailing barcode accuracy rate) and
compare the result to the cost of a bar-code or radio-frequency ID system. Be
sure to include one bar coder for your receiving department—to label inbound
freight from technophobic vendors.
Most likely, there's hidden value in your warehouse. Let see if, by
working together, we can help you find it.
Editor's Note: Bober, Markey, Fedorovich
& Company frequently works with clients on matters such as
this. Please call your partner / manager contact if you would like assistance in this area.
Manufacturing/Distribution Advisor is produced quarterly by Bober, Markey, Fedorovich & Company's
Manufacturing/Distribution
Services Team. If you would like additional information about the services that we can provide to manufacturers and wholesale distributors, please call or email our team leader, James E. Merklin, CPA, M.Acc. at (330) 762-9785 or
jimm@bobermarkey.com.
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