A $40M Toronto-based wholesale apparel distributor had outgrown it's Distribution Center (DC) and headquarters facility, and was in the process of planning a move to a new, larger facility nearby. Their business operates primarily as a catalogue/e-commerce fulfillment platform, with ~7,000 active skus and another ~4,000 inactive skus. Over 80% of orders shipped are "pick-pack", miscellaneous item orders. The current DC occupied a total of 135,000 ft2, comprised of a 110,000 ft2 primary building (attached to headquarters) and a 25,000 ft2 supplemental building in the same industrial park. The new DC was planned to be a total of 135,000 ft2, all in one contiguous space.
Focus Areas & Results
Order-Picking Area:
Began review with sku velocity analysis at the order-level
Determined that ~900 skus drove >65% of the picking activity
Used data above to build recommendation to integrate a "fast-pick" area in a two area pick-and-pass process to optimize productivity
Also used findings to support:
Recommendation for a strong slotting/bin profiling initiative
Recommendation to develop a full case fast-pick area as well
Development of productivity projections by area and compared to historical actuals
Coordinated autocad/engineering resource to build layout including three primary picking areas as noted above
Modeled several versions to insure various and general capacities
(pallet positions, pick-facings, etc.) given the overall space acquired (5 year model)
Projected productivity increase of 100% (35 LPH to 70+ LPH), for an annual savings of >$264K
Quality expected to improve >10% as we transitioned to sophisticated slotting
Check/Pack/Ship Area:
Current process was manual and involved 100% checking pick-pack orders
Designed process and layout which included automated/power conveyor diverts (by carrier/mode), automated print-apply label application, semi-automated taping machine, and flexible conveyor for fluid/continuous truck-loading.
Also developed a recommendation to decrease order checking to focus on those orders "most likely" to contain an error (historically difficult merchandise; new/temporary employees; etc.)
Projected productivity to increase by 100% (eliminating 3 of the 5 employees involved) for a savings of ~$100K.
Miscellaneous Operational Changes:
Returns Processing
Process and layout changes recommended
Projected savings >$5K
Cycle Counting
Recommended eliminating bi-annual physical inventories in lieu of robust cycle counting
Although cycle counting was limited, they were doing both.
Built a recommended cycle counting regimen they were to review with external auditors
Projected savings >$10K
Flexible Labor Staffing
Were only using full-time staff (regular and temporary)
Recommended use of part-time employees and staggering more of outbound shift work
Projected savings >$20K
Corrugated Recycling
Were using 100% new, company-branded cartons for outbound orders
Recommended re-use of a specific size of vendor inbound cartons that matched size
Projected savings >$18K
Coordinated mini-RFP using three material handling integrators
Recommended company develop an inactive inventory disposal process internally BEFORE they moved to new location, and then invest in Product Life Cycle Management (PLM) training and system implementation to insure optimal area results going forward.
Overall/Final Results
Company opened new facility in March 2010 with:
Sufficient capacity to service their articulated 5 year business plan
Much-improved operating capacity through automation and segmentation of work areas
A much more efficient process (>$414K in expense savings; >$396K in payroll savings)
A higher quality process from slotting/bin profiling focus results
Broader project work there also resulted in:
>$157K (14.3%) savings in outbound small package transportation cost
Primarily gained through provider changes, pricing reductions, and process changes
>$101K (10.1%) savings in international inbound transportation cost
Primarily gained through provider changes and pricing reductions
