A “Don’t Touch” Strategy will Dramatically Lean out your Supply Chain!

No Touch Strategy

The box I was looking at in the Pick-To-Light (PTL)  lane was full of at least 1-2 dozen different skus with as many as one to twenty of each sku in the box.  It looked like the insides of a piñata in there.  Although a piñata is used in celebrations I was quite sure that when the retail store opened the box they wouldn’t be celebrating.

All along the PTL conveyor every box looked like an explosion of different skus in different quantities.  At every station an employee was following the lights and picking a different quantity of each sku from one set of boxes and putting them in the “piñata” box.

I knew that this was the way it had historically been done, and the company had just spent millions and millions of dollars automating this historic process, but from a Lean perspective the whole approach was wasteful, slow, and expensive.

Was it really necessary to touch every single piece of every single sku multiple times?

The company had always managed their fulfillment and replenishment to the retail stores in this manner.  The stores may need only one piece of one sku on the shelf, and subsequently they expected the Distribution Centre to only replenish that one piece of that one sku.  And they expected that across thousands and thousands of skus.

But the company had embarked on curating a dramatically different product set.  Was it still necessary to allow one piece fulfillment and replenishment?  The company had not even considered this fundamental question which was why the old process had been perpetuated with new, highly advanced and expensive automation which at its core included the “PTL-piñata” fulfillment and replenishment process.

At the PTL workstations employees would open every single box that was shipped in from a supplier so that they could pick each piece individually out of that box and then put it in another box which, when filled like a piñata, would be shipped to the stores.

At the store they would reverse this entire process.  They would open each box and they would have to manually pick out and sort through every single item.  The box could contain dozens of pieces of dozens of skus  and the store would receive hundreds of these boxes each and every day.

All of this extra handling added no value to the product.  We were merely handling the product multiple times moving items from box to box to box because of an antiquated paradigm as to how to fulfill and replenish demand.   It was a complete waste of time and money.  At the same time there were constant pressures to reduce costs, increase speed, reduce product loss and damage, and increase capacity.

A “Don’t Touch” Supply Chain Strategy

In thinking through this situation it occurred to me that we needed to reconsider the fundamental paradigm on which the company had always performed fulfillment and replenishment.

We needed a Don’t Touch strategy.

There were several options that we could address:

Align Package Quantity to Fulfillment/Replenishment Quantity

First and foremost we had to work with our suppliers.  If we could reduce the quantity of pieces in each box that a supplier shipped to align with the general quantity that we fulfilled and replenished then when we received the box we would not have to open it in PTL and we could just send every box, unopened, to the store.

The Distribution Centre would not have to touch each and every piece, the Store would not have to sort through the piñata box, and we would dramatically reduce the amount of material handling, time, cost, the potential for damage and loss, and the time to do cycle counting.

And in reality this did not impact the cost of the products either.  Generally the suppliers could accommodate this change with no impact on their end.  If there was a cost it was nominal and it was the exception, but regardless it was far outweighed by the rest of the costs at the other end of the supply chain.

Cross Docking

When boxes come into the Distribution Centre most often they are received, put away on warehouse shelves, and subsequently pulled in some fashion for subsequent processing and shipping.  In its literal sense however the whole process of moving goods on and off of warehouse shelves is wasteful in that it does not add value to the product.

Wherever possible if you are able to cross dock product when it arrives at your dock and send that product directly to shipping, then you have eliminated the entire process of put away, storing and pulling.  Especially when your facility is running beyond capacity at the busiest time of year this technique will dramatically increase your effective capacity and throughput at significantly lower cost.

Further if you know where each box is destined before it ships from your supplier, you can have your supplier apply the shipping label to each box so that it can be automatically re-routed within your Distribution Centre right to shipping without the need for re-labelling.

Drop Shipping

In Retail you hear the phrase “endless aisle”.  Customers want to buy thousands if not millions of different skus, and Merchants want to be able to provide that assortment to customers.  And if you are in the E-Commerce channel you are also subject to the market demands of fast, if not free (or low cost) shipping.  But the reality is your Distribution Centre has finite physical capacity.  So how do you meet these market demands economically?

A key approach in your No Touch strategy is drop shipping.  If your supplier can ship in an outer package that is acceptable then the supplier can ship your order directly to your end consumer.  This eliminates the entire requirement for your supplier to ship product to your Distribution Centre wherein you will receive, store, pull, pack and ship the product, all of which adds cost but no value.  By eliminating the middle man, which is your Distribution Centre,  you can ship products to your consumers faster and more cost effectively with a Drop Ship solution.

Don’t Touch in Conclusion

These are some of the key elements of a “Don’t Touch” Supply Chain strategy. If you separate those activities which provide true value added services from those activities which, although they may currently be necessary, do not provide value add then you have taken the first step in identifying where you can eliminate waste with a low to No Touch strategy.

Every time you have to move, store, or handle a box or the contents therein you have an opportunity to figure out how to eliminate these steps.  All of these steps mean extra time, cost and the opportunity for generating defects.  Before you automate your existing process take a step back and consider whether you can dis-intermediate these non value added process steps from your supply chain.

Consider a “Don’t Touch” Strategy to Change the Game!

Originally published March 20, 2017.

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