One of the key processes in any distribution center is the order picking process. If the customer’s order is to be fulfilled completely and accurately, the reliability of the individual picker in the DC is paramount. But what happens when you have a new DC start-up situation and the staffing is predominately temporary help? High-volume customer order-pick line demand? And customer-specific parts-labeling and packing requirements to be complied with before the shipment gets staged on the dock? OH BOY!
Picture this: the new DC has been established in order to facilitate the consolidation of newly acquired business DCs with the company’s existing local DC into a new North American DC. The newly acquired DCs are located several states away, and the existing local DC is aging and undersized. The new facility is centrally located within the lower 48 states in order to better serve the client base.
The newly acquired business sells machinery and equipment repair parts that require customer-specific labels on even the smallest stocking unit. AND, not only is the labeling customer-specific, but there are customer-specific packing requirements for how many pieces can go in a bag or carton, which then gets packed into the shipping carton or crate. Things can get even more challenging when you consider that some parts come pre-labeled, but not with the customer-specific label required for order fulfillment. Use your imagination.
HOWEVER, the DC faces an important challenge before they can even consider the labeling process: order pick speed and accuracy to meet customer demand. So what made this such a challenge in this case? While the obvious problems seemed to be related to picker training and order-pick equipment, DC start-up pre-planning and staffing were more likely culprits. Read on.
There was sufficient lead time available to plan how the inventory would be transitioned from the old DC into the new DC. But the actual relocation of the inventory was like lava coming down the side of a mountain—you know it is coming, and when it arrives it overwhelms everything and everyone. And after it’s over, the place is a disaster. At the DC several states away they had packed everything into a convoy of 53-foot van trailers and flooded the newly erected racks and floor space in the new DC in random put-away fashion. Surveying the current inventory stored in the racks it was clear that DC management was more focused on how quickly can they could get the inventory into the DC, not on how the inventory would flow through the DC and out the door to the customer.
Theoretically, the consolidation transition was to be transparent to the customer. Some key warehouse staff from the location several states away had accepted new jobs at the new facility. Others from that location were assigned “temporary duty” at the new DC to help smooth out the start-up operations. But the Achilles heel in this process was that the newly appointed and hired DC management staff lacked industry experience at running an efficient big-box DC.
In order to anticipate problems before they happen, it’s a good idea to have a DC management team that has had hands-on experience at what they are managing. Such was not the case here. As a result, management operated in a reactive mode as one problem after another cropped up to impede accurate and timely customer order fulfillment. Reactive management decisions led to ad hoc solutions to immediate problems, without regard for unintended consequences of such decisions. One of these reactive decisions was a solution called “batching.”
Last year, an existing global manufacturing company purchased another company that manufactures and supplies industrial and machinery repair parts to some of the biggest name farm and family retail companies in the USA. For economy of scale, they constructed a new big box DC to consolidate the company’s various business units’ inventory into a geographically centralized location to better service their American customer base.
The goal for the facility in the start-up phase was to pick, label, and ship "X" thousand order lines per day. There was sufficient time to plan how to staff and run the DC to be able to do this, but seven months after start-up, operations nearly ground to a halt. One of Order Fulfillment’s operational solutions appeared to be the root cause. The question now was WHY?
BACK to the FUTURE
As mentioned previously, preparation for moving the newly acquired business units inventory from several states away consisted of an on-site visit to that location, consultation with the business unit’s production, warehouse, and shipping staff, and a cursory assessment of how much space would be required in the new DC to accommodate the relocation of this inventory.
One of the challenges for the new DC was the customer-specific labeling and packing requirements. The new DC’s primary staff (Ops, Engineering, Inventory, QC, HR, etc.) came from an older warehouse that was being phased out in this metro location. Their product lines were primarily case pick, no re-label required, and ship predominately small package and LTL. A clean operation, with experienced pick and pack labor force that had been doing this for some time. NEAT.
In order to get the newly acquired business side of the new DC ops going, management decided to rely on a couple of “core cadre” from the out-of-state location as advisers to help get the processes established with the new labor workforce, and oversee the picking, labeling, and shipping operations for the new product line. The workforce labor game plan was to rely on local temporary staffing agencies to provide experienced warehouse labor until a full-time permanent workforce could be hired. HR established working relationships with several such agencies in the metro area, and basic experience guidelines were provided. Forklift experience was plus if they could get it.
So, start-up came and went. As product flowed in to fill the racks, a customer-specific labeling and packing operation was established underneath the centrally located warehouse mezzanine. Also located in this area were the warehouse shipping documentation prep area, the warehouse shipment final stretch wrap and marking area, and the busy, small-package shipment processing area. Customer order activity was heavy with plenty of freshly-picked orders feeding the labeling operation underneath the mezzanine.
DC management was focused on daily pick line count (the productivity metric for order pickers) and pushed “speed” as their measure of success. Pick accuracy was assumed to be a given since HR was hiring experienced temps. In fact, the pickers were so good, that it wasn’t long before the floor area underneath the mezzanine could not accommodate staging of orders picked awaiting customer-specific labeling.
Then another issue began to manifest itself. Temporary labor pickers 1) were not familiar with the descriptions or physical appearance of the new product line parts, which 2) contributed to significant mis-picks, which 3) bottlenecked the labeling operation (when the mis-picks were discovered), or 4) generated customer complaints when the wrong parts were shipped, or when wrong parts were labeled as parts actually ordered. NO PROBLEM. DC Management’s collective opinion was that this was nothing more than a training issue which would resolve itself as the pickers became more familiar with the new product line. RIGHT?
But another new problem had started to rear its ugly head as well. Mis-picked product was being set aside at the labeling station, and at the end of the shift it was being “staged” to an available open floor location at the far end of the DC. There was a large open area where rack had not been put up yet, which was being used by receiving to stage inbound shipments. Still there was lots of space here to stage mis-picked inventory until it could be put back into inventory. All the DC needed to do was improve the accuracy of the pickers, and this problem would go away. RIGHT?
Ever so slowly, the pile of mis-picked product grew from a few skids into a sprawling, football-field-size pile of mixed crates and skids of multiple SKUs, some labeled, some packed. One day, DC management staff finally came to the realization that the pick-label-pack-ship process was out of control. They desperately needed to find and eliminate the root cause of this train wreck. The solution? BATCHING!
We are seven months into the new DC start-up. We are the North American DC of a global manufacturing company operating an new DC where we have consolidated several business units inventory storage requirements into this new, centrally located facility to better serve our collective customer base. One of the business units has some very special customer order-specific parts labeling and packing requirements, which have proven to be quite an operational challenge for our warehouse labor. The majority of our new DC’s labor workforce are temporary help who are unfamiliar with our product parts description and physical appearance. Is it a bushing or a bearing? Is the single pack of two bushings, two eaches, or a single item? I picked from the right location, but the picker could not tell it was that the part, and that location did not match the description for the part to be picked. Ah, the challenges!
So, if the temporary help pickers had problems recognizing the part, did the temporary help manning the parts-labeling table operations have the same problem? YEP! OH BOY! So what was the solution to this problem? BATCHING.
BATCHING (specific to this DC’s situation) is a process in which orders picked are staged, audited, and insured complete and correct prior to moving to the parts labeling and packing operations and/or shipping for shipping paperwork prep. It is an order pick post check/order labeling – packing pre-check order fulfillment intermediate process designed to overcome identified shortcomings related to use of temporary labor for pick and pack operations and minimize the potential for errors related to rigorous customer order labeling and packing requirements. Sounds like a logical solution, right?
Batching is a non-solution to a simple problem that the DC management had failed to address in a timely and aggressive manner—picker accuracy and accountability. Instead, DC management continued to focus solely the number of order lines picked as the key measure of warehouse productivity. This only served to exacerbate the problem, as the mis-picked items now started to pile up in the batching area. Uh-oh!
The problem was further compounded by the two-shift operation. Orders started by one shift were often not completed by the next shift when it was clear that there were multiple problems with the order pick accuracy. Ultimately these “started but not finished” orders wound up being moved to the boneyard with the rest of the mis-picked, mis-labeled, mis-packed inventory left over from the labeling table operations at the end of each shift. So instead of being a solution, batching created an additional problem while slowing the order-fulfillment process down to a virtual crawl, as the labeling tables awaited complete and accurate orders to process.
The bottom line is, orders out the door to customers slowed to a trickle!
The real solution to BATCHING was to ELIMINATE BATCHING and address the real root causes related to order picking in this DC. No emphasis had been placed on picking the order complete once it has been started. All that changed!
Order pickers were held accountable at the time of their pick delivery for the accuracy and completeness of their picks. This was done by creating dedicated pick teams to service dedicated labeling table operations. The team consisted of a hand picker and fork picker. They would pick the order complete and stage it in the lane dedicated for their table. Once the order was picked complete, the label table lead and the pickers validated in the system that all order lines were picked, and printed the SKU level detail to use for a) the joint audit of the product staged and b) for the label table customer specific labeling requirements. If a pick discrepancy was discovered during the joint audit, the picker responsible would immediately take whatever corrective action was necessary to resolve the problem.
As a result of the above solution:
1. Pickers were held accountable for the accuracy of their work.
2. Mis-picks were eliminated.
3. The measurement of productivity shifted from speed (order lines picked daily) to sales dollars shipped out the door. With the improved pick accuracy and emphasis on picking the order complete BEFORE the labeling table operation began, complete and accurate order-flow steadily increased over months eight and nine after start-up.
4. No more mis-picked and mis-labeled product flowed to the boneyard.
5. Labor involved with the batching process was eliminated, and shifted to finished customer order consolidation to get more sales orders to the shipping dock.
6. Picker supervision conducted pre-pick reviews of new customer orders to prioritize workload assignment.
7. Dedicated picker-label table teams began to think and work like teams, ultimately speeding up the processing of complete customer orders.
8. Use of picker “floaters” operating cherry pickers provided quick response capability to pick complete orders if necessary to expedite “rush” and “emergency” order processing.
9. Documented Customer Order Process for the new business unit was put in place with management and supervisors executing to process on every shift.
10. DC management gained experience in DC operations and learned that product should flow through the DC rather than resembling a production-line process.
LESSON LEARNED? While BATCHING might seem like a logical solution to an immediate customer order processing problem, it is critical to pause and examine the entire product throughput process for the DC. By doing so, all problem areas can be identified, upstream and downstream, and a coordinated, overall solution can be worked out.
In his 1984 book, "The Goal," Dr. Eliyahu Goldrlatt explains a management philosophy called the Theory of Constraints (TOC), a concept most appropriate to our situation here. In the explanation of TOC we meet an overweight Boy Scout named Herbie. Herbie represented the constraint in the process of the boys’ march column in that when he was placed in the middle or rear of the column, the column had to slow its pace so that he could keep up. This was further exacerbated by the weight of the load in his backpack. By relieving the constraint of weight in his backpack AND placing him at the head of the column, the “constraint” was eliminated and the process flowed. The story summarizes the main ideas behind TOC.
TOC can be explained as follows:
1. Identify the constraint (your bottleneck, the thing slowing you down).
2. Decide how to exploit the constraint (make sure the constraint is only working on the things it needs to do, and not other stuff).
3. Subordinate all other processes to the constraint (don’t let any other process work ahead of the constraint).
4. Elevate the constraint (speed the constraint up, i.e., take the junk out of Herbie’s back pack).
5. If the constraint moves, which it often does, return to step 1 and repeat.
The lesson learned from “BATCHING” is intended to enlighten and instruct DC management so that they can eliminate operational bottlenecks by “Pushing Herbie Out the Shipping Dock Door.” This is exactly what it took to turn this DC’s operation around and make it work!