Distribution Center Profiles And Best Practices Executive Seminar September, 2005

Distribution Center Operations Foundation questions for the Distribution Center Operations discussion … What will be the most important trend in DC Operations in the next three years? What are the biggest opportunities to move to best practices in receiving, putaway, picking, packing and shipping? Are you satisfied with your current WMS capabilities? What would you change? What is the most important metric in measuring DC performance?

Profile – DC Size To put today’s discussion in context, we will first provide a few profile statistics for the participating DC’s. The majority of DC’s are in the 201K to 500K square feet size categories.

Profile – Orders Filled Outbound order volume is predominately to stores, but wholesalers are a significant outbound destination. Outbound order profiles vary significantly between participants, particularly in lines per order, but the averages are as follows ...

Profile – Volume Flow To better understand the importance of each process in the DC, the breakdown of product flows is as follows … There will be more discussion on encouraging crossdock and flow through operations in the Streamlining session.

Profile – Inbound and Outbound Modes Truck and ocean are the dominant inbound modes. LTL and ocean are much smaller on the outbound side, but parcel becomes important. Inbound mode can reflect average shipment size, available load information and unloading flexibility. Outbound mode can reflect average shipment size and loading efficiencies.

Factors Driving Volume Peaks Are there significant variations in inbound and outbound volumes? By day within week? By week within month? By month within year? Strategies to reduce variations? Strategies to handle overflow?

Trends in DC Operations What trends have you seen in the last 3 years? What trends do you anticipate in the next 3 years?

DC Layout Wish List If you could make changes, what changes would you make to your current DC layouts?

Receiving Information What information do you have to efficiently plan and prioritize unloading operations. Do you electronically receive inbound shipments based on ASN’s? How many vendors are certified for automated receiving?

Receiving Initiatives What is being done to make receiving operations more efficient?

Crossdock Operations What are best practices for crossdock operations?

Putaway Operations What are best practices for putaway operations?

Picking Operations What are best practices for picking operations?

Value Added Services What value added services are being provided by DC’s today? What is the trend for the next three years? Should DC’s be doing more? Should they be doing less?

Slotting Methodologies What are best practices in slot management?

Slotting Objectives Which objectives are the most important in developing an optimal slotting plan?

Slotting Opportunities The benefits of automated slotting can be significant, but not all DC’s have taken advantage of the technology.

Labor Standards How are labor standards determined?

Labor Productivity How is labor productivity data used to drive improved results and recognize the top performers? What is best practice?

Warehouse Management Systems What WMS capabilities are being used today? How tightly integrated is the automation in a typical DC?

WMS Satisfaction Ratings While satisfaction ratings are subjective, it does appear that WMS technology could be improved. What should vendors be emphasizing?

Performance Metrics – Best DC What are the biggest opportunities for improvement?

Performance Metrics – All DC Average How does the best DC compare with the average DC? Are the opportunities and challenges different?

Distribution Center Operations – Learnings Additional material handling equipment tops the wish list of DC facility upgrades. There are several key opportunities to upgrade receiving operations including expanded use of ASN’s for unload planning and automated product receipts. Automated slot management tools can result in significant productivity improvements, but they are not used in many DC’s. Expanded use of crossdock and flow through operations is the ultimate key to improved performance. (More about this later.) Current WMS applications have left significant room for improvement. Are vendors working on the right capabilities?

Questions?