Wheat or Rye?

by Mike Starling

Prologue – The Road to Now

toast.jpgTo say things were not going well at the DC would have been a gross understatement. Things had not gone well since the start, and in the seven months since then, things had gotten progressively worse. A sense of impending doom permeated the entire operation as processes ground time and people down. The six-day-a-week, twelve-hour shifts looked like they would never end.

The mild winter and the early spring jumped sales early and hard. The facility was not ready for the huge, early orders. Receiving had a hard time keeping up during those months, and much of that flow was too much of product they did not need, and not enough of what they did need. Finding staff proved to be a bigger challenge than expected, so management turned to temporary staffing agencies to pick up labor. Many of the company’s key managers, although they were smart people, did not have extensive distribution experience.

The operation lost ground quickly, and the first reaction was to bring in more temporary workers. And then some more. Within a month, the building teemed with temp workers, almost three for each full-time employee. Lift trucks were scarce, as were RF terminals. Soon the law of diminishing returns kicked in. More temps meant more mistakes, and more congestion. Aisles clogged with people and equipment as more people attempted to get more product picked.

Desperate times inspired desperate actions. The management team introduced new processes, moving the labeling and packing area to an open floor area, building makeshift tables, and creating new processes, attempting to audit the work and capture errors. Errors grew. It took longer to get orders processed. The company mobilized, shipping managers from corporate positions and “trained” personnel from other facilities. More change and more input brought disappointing performance.

Customer complaints started turning into threats to end business relationships—threats that came more frequently, and from the most important customers. Each week the DC promised to do better, to do more. Sometimes they did, only to see performance slide back, the operations unable to sustain the volume.

Eventually the CEO suggested bringing in consultants. Desperate to avoid more outside interference, the logistics team quietly hired some outside help of their own, a team that could provide on-the-floor management and leadership while working on solutions to quickly fix the problems.

Act 1 – Now

The EVP of Sales is in the building today to review and discuss the nose-diving sales numbers and the anticipated impact on corporate quarterly financial reporting to stockholders and stock price. Clearly the pressure is building as those outside the DC are beginning to focus on the DC itself as the root cause of the mounting problems and complaints. After an unpleasant exchange, the EVP leaves, off to the next problem, not really telling the DC management team anything they didn’t already know, nor proposing any new solutions.

“If we don’t turn this [operation] around we are all TOAST,” said the DC Manager to his staff right after his daily 10:00 am conference call with the global business management team. You could hear the frustration and exasperation in his voice as he summed up the situation.

To help you better understand the dynamics of this situation, picture this:

Every day the DC management team holds a conference call with the global business management team, which is located several states away. Every day the DC Manager and key staff fight to justify their continued existence for another twenty-four hours. While their individual expectations vary from meeting to meeting, the call routine has become rote. Gather ‘round the phone at 10:00 am, ad lib the agenda, discuss trite operational minutiae, listen to the sales team whine about upset customers, cry about the customers who are making threats, come to no conclusions, make no decisions, and waste forty-five minutes of all the participants’ time. The only constants are a lack of positive action as a result of decisions made during the call and a lack of improved productivity to eliminate the ever-mounting pick-order line backlog. Today is no exception.

Typically the DC Manager lets the DC Shift Manager or DC Engineer take the lead on the call for the DC team. The engineer is the point man for development and implementation of operational processes and procedures. Both the Operations Manager and the engineer are young and inexperienced, clearly fish out of water, unfamiliar with the inner workings of a global businesses distribution center. On the other end of the phone is a production-focused sales management team that does not understand what it takes to run an efficient and productive DC. This is a case of the blind leading the blind.

The DC staff has a growing sense that they might be on the losing side of a potential corporate coup d’état. But the 10:00 am conference call is on their calendar, and they have an obligation to fulfill. So at the appointed time the lemmings all gather for the daily exercise.

The mood of the DC staff in the room is a painful mixture of defensive arrogance and a growing apprehension about what the future might hold for each of them if this situation does not turn around quickly.

Prodded by his colleagues, the DC engineer pleads for help, makes excuses for the continued lack of progress and productivity, and blames the temporary help and their inability to follow customer part labeling instructions. The Operations Manager whines about the overwhelming customer order volume and bemoans the inability of carriers to pick up as scheduled. Completing the call, they all hang around the conference room to complain and joke about how screwed up, unresponsive, and unsupportive the people at the other end of the call are. Solutions are not forthcoming. Nobody makes commitments or decisions that can lead to constructive action or results. The DC Staff retreats to the security of their individual offices, and the chaos rages on unabated within the four walls of the DC.

I ask you…

What would your reaction be to “If we don’t turn this around we are TOAST” if you were sitting in that DC staff meeting? Would you suspect that there might be a problem in the house? Or would you think the DC Manager was just clarifying his breakfast order?

One of the most critical factors in any new DC start-up is ensuring that you have experienced personnel in key staff and line supervision positions - people who understand the small-team tactics required to make a dynamic organization perform efficiently and effectively. These must be personnel who are keenly cognizant of customer-related priorities and who know what resources and assets are available to ensure mission accomplishment as a normal part of daily operations.

As the military genius Sun Tzu said long ago, “The successful general plans for victory before taking the field, while the loser seeks to understand how to achieve victory after taking the field.”

When your host thinks he is “toast,” you can guess which of Sun Tzu’s generals he is. What we have here is a classic example of a lack of start-up planning that directly contributes to the implosion of a global organization’s newest DC and the whole DC staff becoming “toast.”

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