AS THE world's financial markets continue to provide sleepless nights for businesses, with every sign of growth seeming to be undermined by news of a softening jobs market and weaker demand, many logistics operators and warehouse managers are scratching their heads about how to best manage their operations for the future.
Throughout the economic downturn, logistics companies looked to streamline their distribution centre operations and cut back on investing in equipment and infrastructure.
However, now many are realising that to actually improve their processes and efficiencies to encourage business growth, they need to rebalance operations metrics from one traditionally focused on tight inventory and cost controls, back towards customer satisfaction.
Rebalancing the warehouse
The trend towards a "rebalancing" of key operations metrics is expected to become more prevalent across many industrial, manufacturing and retail supply chains. As many businesses realise it is no longer enough to just operate in survival mode, and commit to more consistent and accurate demand forecasting, they will be more confident to pursue higher levels of customer service.
But having the inventory and labour available to capture more revenue and market share in spite of the wider economic uncertainty will take more than confidence in demand planning. Being poised to grab their competitive share as the economy improves; many companies will have to re-double their focus on creating the truly agile distribution centre.
Keeping afloat
When the global economy began to slow down, almost all companies – large and small – were thrown into some form of planning chaos. The primary impact was adjusting to the radical drop in general demand.
The loss of visibility through the supply chain impacted most all of the participants. And while the downturn affected some more than others, a majority of companies lost the forecasting capabilities they were accustomed to. Nothing looked similar to past practices. Consequently inventory positions were reduced as fast as possible and orders dried up. The ripple effect hit every aspect of operations including knowing when products would be ordered to ship and having the right mix of labour to fill orders and maintain an effective operation.
Unfortunately, the companies that fared the worst were those that had not taken advantage of past success by making continued investments in solutions to make them more agile, flexible and capable on the floor of the distribution centre. They simply didn't have systems in place to help them adjust to the impact of the downturn or manage their way out of the situation. Stuck with poor planning tools, less than flexible mobile computing equipment and a workforce that was not fully cross-trained in multiple disciplines; these companies had a lot working against them.
Those companies that fared the best had previously invested in the kinds of business process improvements and technology solutions necessary to negotiate the perils of the recession. From improved WMS planning and labour management tools, to having flexible tools on the floor with multi-modal equipment that can do everything from voice picking, to near/far range scanning in put-away and inventory applications, to signature capture at the receiving doc, many companies were able to react quickly, manage their labour costs, and retain their best associates.
Especially in areas where labour became the critical cost and capability for creating efficiency and performance, those companies that had seen the future and made the investments found themselves on top of the competition and ready to thrive. And, while they may not have had the optimal inventory availability as before, they were still able to tell their customers what they could expect and when, with timeliness and accuracy, therefore positively managing their customer service in a proactive way. These are the companies that will have the tools and leadership in place to take full advantage of the upturn in the economy and win more revenues and market share.
The new normal
It is fair to say the jury is still out as to whether the entire manufacturing and retail supply chain will see a return to the pre-recession days, or whether conditions are set to soften again, or whether we will crawl back toward something that may be called the 'new normal'. But for those who made investments that saw them through the difficult days, there are a few things these leaders can do to take advantage of their current position and protect against future downturns.
Firstly, always be looking out for new solutions to old or nagging issues, large or small. The term 'death by a thousand cuts' can define many small problems, each one bleeding an operation of precious resource. By themselves they don't reach the level of severity that would cause the problem to jump off the metrics report and demand a solution. But taken together, particularly if they are linked and impacting a major financial KPI, they must be addressed.
Secondly, remember the people on the floor are a very expensive part of virtually every operation and at the same time are a key to unlocking optimal efficiency and productivity. Look to upgrade aging equipment to the latest form factors and system interfaces, especially for companies that are pushing the historical upper limit of their KPI's.
Even a small improvement in user ergonomics, in the motion tolerance of an imager for fast paced scanning operations, or an improvement in accuracy and safety from a voice to WMS interface can create an advantage. For most best-in-class operations, there is typically no silver bullet. Maybe it's planning ahead for new application upgrades, or examining existing data for streamlining best practices. Maybe it's calculating the ROI of replacing current equipment with a new purchasing or services model.
Regardless, viewing the distribution centre as a highly interdependent system where all the workflows must serve the other, even with the slightest improvement in one process, can have a strong ripple effect. And the added satisfaction for the associates on the floor, from management's investment in their personal success, often yields unexpected and real bottom line benefits.
It is these combined benefits that will deliver the competitive edge required to regain the optimal operational balance and tilt the table back toward superior customer satisfaction metrics to keep and win new business. But the most important thing for warehouse operators to do today is not to imagine what things will be like at some point in the future, but to ask and decide "what can we do now?" and get on with it.
Cameron Wilson is the southern regional manager of Australia for Intermec.
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