A struggling distribution center (DC) can significantly impact the overall supply chain, leading to increased costs, customer dissatisfaction, and disastrous delays. What steps should you follow to quickly get an underperforming DC out of the ditch and back on track for future success?
Diagnose the problems
The first step in stabilizing a struggling DC is to conduct a thorough assessment of the current processes to identify potential pain points. Utilize key performance indicators (KPIs) to guide your initial assessment; lines per hour (LPH) or labor productivity is a cornerstone KPI that should be investigated first. In addition to LPH, focus on areas such as inbound (trailer backlog, put away), outbound (open order backlog, DC processing, and replenishments), inventory (exceptions, bin accuracy), and service level performance to determine the primary areas of concern. Evaluate the operation to identify bottlenecks and inefficiencies.
Next, identify significant deviations from goals and targets. Focus on critical areas that significantly impact overall performance, such as the inbound and outbound backlog. While some issues can be resolved quickly and yield substantial improvements, others, such as enhancing inventory accuracy and pick density, may require more time and additional resources.
Firefighting
Once the problems have been identified, the next step is to prioritize critical areas and start implementing immediate improvements that move the needle. Ask yourself and your team what is the biggest roadblock in your operation. Is your pick exception rate too high? Are you sitting on a large backlog of inbound trailers and prioritizing which ones to offload first? Are you continuously failing to complete all picks during the day? Identify and rectify inventory inaccuracies and out-of-stocks by conducting audits and implementing temporary measures to ensure stock availability. You’ll then need to setup a mechanism to track the metrics you’re focusing on. Pay attention to the results and put more focus on the initiatives that produce the greatest return. Focusing on immediate actions and prioritizing them best on results can help stabilize the DC and create a foundation for long-term improvements.
Stabilizing the DC
To achieve long-term stabilization, streamline processes by simplifying and standardizing procedures. Create standard operating procedures (SOPs) for key processes to reduce complexity and improve efficiency. Implement technology to automate repetitive tasks and reduce manual errors. This could include using automated picking systems or WMS enhancements/upgrades.
Enhance communication, training, and coordination among teams to ensure that everyone is aligned and working towards common goals improving productivity. Provide targeted training to ensure that employees are equipped with the necessary skills and knowledge to perform their tasks efficiently. Offer ongoing support and resources to help employees adapt to new processes and technologies.
Sustaining improvements
Continuous monitoring and adjustment are essential for sustaining improvements in a stabilized DC. Regularly review KPIs and adjust strategies as needed to ensure that the DC continues to operate efficiently. Encourage a culture of continuous improvement by involving employees in identifying and implementing process improvements.
Invest in technology to further enhance efficiency and accuracy. Upgrade the warehouse management system (WMS) and other tools to keep up with changing demands and technological advancements. Use data analytics to drive decision-making and identify areas for further improvement.
Engage employees by fostering a positive work environment and recognizing high performance. Ensure they are well trained and encourage open communication and collaboration among teams to create a supportive and motivated workforce. Recognize and reward employees for their contributions to the success of the DC.
Stabilizing a struggling DC requires a combination of immediate actions and long-term strategies. By diagnosing problems, implementing immediate improvements, and focusing on continuous improvement, you can create a stable and efficient distribution center that supports the overall success of the supply chain.