The bigger picture
By Gary Forger, Editorial Director -- Modern Materials Handling, 5/1/2005
Sometimes when you get into a discussion about supply chains, the focus is on everything except materials handling. Try to bring it up and you might hear, "we're talking bigger picture. Not just what happens within the four walls."
The next time you hear that, direct them to this issue and the stories on Michaels, the arts and crafts store, and Delphi, supplier of wiring harnesses. Both have made materials handling the centerpiece of that bigger picture.
Now the two are quite different companies. One is a retailer focused on distribution to 850 stores nationwide. The other manufactures parts in Mexico for Mercedes in Alabama.
At Michaels (It's all about the supply chain), five DCs distribute the same 16,000 plus SKUs to the stores in their region. An additional 24,000 SKUs are shipped directly from suppliers to stores.
In July, that approach will change. Drastically. To gain better visibility of inventory over the entire supply chain, all SKUs will flow through the retailer's distribution network. However, that doesn't mean all DCs will stock all SKUs.
Each DC will continue to stock and distribute a number of core SKUs for their region. In addition, each DC will handle some of the 24,000 SKUs now shipped directly to stores. For instance, the DC in New Lenox, Ill. will be responsible for picking 8,000 of those SKUs for all stores. Those picks will then be shipped to the other four DCs which will use flow-through handling and sortation systems to crosssdock them to stores. That will make it possible for Michaels to handle more inventory than ever, have better visibility of it and cut nearly a month off delivery time to stores.
Delphi's (From Juarez to Cottondale) 1,200-mile supply chain is built to synchronize production and delivery of wiring harnesses to two Mercedes plants in Cottondale, Ala. Each wiring harness is built for a specific car and must be delivered just-in-time/just-in-sequence.
This supply chain is 8 days long. Mercedes releases orders to Delphi, which builds harnesses on days 1 and 2 in Juarez. Then they are trucked to Cottondale on days 3 to 5. Once there, the harnesses are staged for two days in an AS/RS run by third-party logistics provider ARD Logistics. Mercedes issues its order for specific harnesses about 200 minutes before they expect JIT/JIS delivery. To the people involved, the success of this system is all about the integration of systems with the AS/RS which sequences harnesses—a make or break proposition.
So the next time materials handling isn't at the center of a supply chain discussion…
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