Dock to limbo?

Getting your product from the receiving dock to stock so it's available to promise shouldn't take that long. Here's how one manufacturer turned around its receiving operations.

By John M. Hill, vice president, TranSystems -- Modern Materials Handling, 10/14/2008

Anyone who’s familiar with their Dante knows that limbo is the space on the edge of hell. In distribution centers I see all the time, limbo is also where far too much inbound inventory ends up.

Several years ago, for instance, I visited the new 2.1-million-square-foot distribution center of a $3 billion electrical products manufacturer in the Southeast. 

Upon entering the facility at the receiving docks, I was struck by what appeared to be an ocean’s worth of inbound pallets loaded with finished goods. Not tall enough to count the number of pallets, I asked the company’s vice president of distribution for an estimate. He replied, “Hard to tell, but far more than there ought to be.” 

I asked, “On average, how long does it take to receive a pallet, get the information into your system and store or crossdock it to shipping?” (Note that if the data is not in the system, the materials cannot be used to fill orders. Worse yet, if they are, inventory profiles will never be accurate.) 

He looked at me with chagrin and muttered “On average, 38 hours.” 

“How do you know what’s here and specifically where a pallet with product you need is located?,” I asked.

“We don’t,” he said. “Although each pallet comes with its own paperwork, the volume precludes transcription and key entry of the data into our system upon receipt. Further, there’s little time for staging pallets in logical locations for putaway or crossdocking. We do a lot of searching.” 

Wow! Depending on the number of inventory turns (and you can be sure that it was not impressive), just think of the carrying costs associated with being unable to move products out of limbo for 38 hours. Equally dismaying was the likely impact on inventory build-up, order fill rates, warehouse labor costs, customer service, lost sales and a host of other revenue and margin inhibitors.

Fourteen months later, the company was moving products through receiving to storage or directly to forward pick areas and shipping in 4 hours. What steps did they take to effect the turnaround? 

• First, by illustrating the value to improved throughput, reduced labor costs, inventory visibility and availability for order filling and shipment, a business case was made for procurement of a real-time warehouse management system using wireless bar code readers.
• Critical to the solution was manufacturing’s agreement to introduce pallet “license plating” (bar coding) and, upon trailer shipments to the DC, transmit ASNs (advance ship notices) listing each pallet and its content by “license plate” for each trailer. This information proved to be invaluable not only for scheduling and allocating labor for receipt processing, but also for outbound order release, filling and shipment based upon existing inventory AND anticipated receipt arrival times. 
• Once implemented, the system enabled the workers to scan and disposition inbound pallets upon arrival, instantly update inventory records by receipt content and location, stage as necessary in defined staging areas or move directly to storage, picking or shipping. 

Within less than 6 months, the company cut the size of the receipts processing area by better than 70% and receiving labor costs by more than 30%. How long does it take your team to move inbound materials from “dock to stock”?