Learn to prioritize your facility’s challenges

Reduce handling costs. Improve customer service. Increase throughput. Understanding which of these is most important to your operations will go a long way toward optimizing your facility.

By Bob Trebilcock, Editor at Large -- Modern Materials Handling, 11/6/2007

Determining where to focus your attention is often a matter of where your operations are feeling the most pain, says Drew Hale, a partner with The Progress Group. 

“The first thing we try to find out is whether they’re coming to us because they think their costs are too high, their customers are really unhappy with them, or they no longer have the capacity to get it out the door,” says Hale. “The next step is to figure out if they’re focusing on the problem or the symptom.” 

For example, a customer may say their costs per case are too high. In reality, they have a quality control problem that causes them to double check – and double handle – everything. “Solve the quality problem, and the extra costs go away,” says Hale. 

• Take an early look at inventory accuracy. This is one important way to start the investigation, Hale says. “Poorly controlled inventory processes are often the cause of inefficiencies throughout the operation,” he says. “We often begin the discovery process at the receiving dock and then track the processes throughout the facility.” 

• Determine what metrics are being used. “The lack of relevant metrics is another indicator of management problems,” Hale says. 

• Look at the quality of outbound shipments. “We want to know if they are going out on time and are accurate,” says Hale. “When there are issues on outbound shipments, you’re most likely going to find a myriad of cost issues because management ends up applying Band-Aids to compensate for fundamental quality problems.” 

Once that basic work is done, it’s time to collect data from operations and create meaningful metrics. Hale says that process begins with an analysis of the different types of orders and the processes in place to fill them. “The reason we look at orders is that 60 to 70% of what goes on in a facility is tied up in shipping,” says Hale. 

In addition to an analysis of orders, it’s important to understand labor productivity and costs. “One way to do that is to look at a simple aggregate statistic, like shipped lines per total paid hour,” says Hale. “You first make day-to-day comparisons, and then do some samples on an hour-by-hour basis. That will keep you from concluding too much from averages and point you to where the problems might lie.” 

Hale urges clients to understand and embrace the 80/20 rule. “The easiest solutions are nearly always found when you separate the top 20% or orders or products from the bottom 80% and focus on those,” says Hale.