Driving warehouse capacity and efficiency for an SME Client
The Background
The client here is a business growing extremely rapidly in a very specialist sector, primarily focused on B-2-C e-commerce operations. Having identified a gap in the market for their specific type of product the business leadership team worked hard to establish an enviable market position encapsulating superb branding and amazing customer service offerings to their growing customer base.
Having already outgrown their original distribution centre operation, our consulting team was asked to help them evaluate how they achieve their next level of growth as they move from start-up to mature business.
The business had also attracted external investment and those investors were keen to understand what the business could do to continue its accelerated growth curve. The investors had suggested a range of operational considerations that could add value to this business.
It was identified that warehouse operational capacity could soon be a significant issue for the business and this should be evaluated to understand the best course of action in the short and medium term. What was important to the managing director was that the business leadership team should not become too distracted by areas outside their sphere of expertise such as logistics and supply chain management. This led them to the decision that expert consulting assistance should be used to help them develop a robust understanding of ‘where next’ for their operations.
Although this was a rapidly growing business, it was still very much within the SME sector. Therefore they were extremely keen to understand what expertise could be applied with minimal cost outlay. Given that this operation occupied warehousing of less than 8kft2 it was clear that this could not be a large scale, long-term consulting review. Our approach to this project was to keep costs and time to a minimum to meet the client’s budgetary limitations whilst still delivering high impact and useful recommendations.
The task
To understand the business challenges, the task here was to observe and understand how it currently operates. This included reviewing the operational warehouse layout, methods for handling product on arrival and checking into the warehouse, how product is replenished for order picking, the order picking process, and the order packing and dispatch process. These processes had added levels of complexity given the fact that this client served multiple consumer channels via different websites and intermediaries.
There was also a need to capture basic product throughput data, understand the SKU product handling characteristics and growth experienced by the business.
Experience tells us in reviews such as this that there can be a myriad of reasons as to why operating solutions grow and develop in the way they do, and this was no different.
The fact that this operation was small and only employed a few people added to the challenge for this client. It can often be said that small warehouse operations can be just as hard if not harder than large ones to manage. The impact of small tight layouts can create congestion and risk of error, and should one or two staff members call in sick, that can take a big proportion of labour out of the available pool of resource thus impacting the ability to meet customer demand.
The actions
This project was a single consultant review. The consultant spent time in the client’s warehouse carrying out observations, process timings and discussions with key members of the site management and operational teams.
It was clear to the consultant that the development of the solution had been heavily influenced by the way things were originally done when the business first started out. This was then built upon and grew to a point when IT infrastructure was overlaid onto the solution. Understanding interaction between The IT solutions and the customer order picking activity was critical to helping the client understand where improvements could be made.
The consultant reviewed how and why each element of the operation was conducted in the way it was. The operational layout was reviewed and discussed with site management to understand the background as to why things were done in a certain way.
Operational layouts including the amount of Rack space, aisle width deployed, types of mechanical handling equipment and storage capacity were assessed and captured.
Whilst the business has not historically been great at capturing data, enough had been provided to enable the consultant to understand the mix of throughputs between the different products, understanding which products were the ‘hero lines’ that sold in large quantities and which products were much more sundry to the core offer.
Whilst the analysis was brief, it was highly worthwhile in identifying potential opportunities to drive changes to process and operational layout enhancements within the warehouse facility.
In addition to the on site and data evaluation, the consultant assessed the potential for this business to migrate to a third party operated solution. This was one of the options presented to the managing director as a recommendation by the business’ investors. A major factor in understanding whether or not this was the right approach was the culture and people focus of the business. It had become apparent through discussions with site leadership and business leadership that this was of paramount importance and must be protected.
The consultant produced a set of recommendations, about how to extract greater capacity from the current operation. These recommendations were substantiated with physical layout schematics, demonstrations of supporting data, and process re-documentation.
The Results
Whilst this review was a short warehouse improvement review, the impact and results for the client were extremely beneficial. Using client data to clearly demonstrate the rationale behind making change, a process to modify the customer order and picking preparation was put forward that enabled the business to significantly streamline its operational processes and add significant capacity headroom to the operation.
The above would be achieved by managing the top selection of products by throughput very differently to how they were managed in the current state operation. By doing so, our client would be able to very efficiently manage the pick and dispatch of products that accounted for over 90% of volume throughput.
This recommended development alongside a number of other key but easily understandable physical layout changes to product flow and pack bench organisation enabled the consultant to recommend an approach that extended the capacity, life, and therefore the decision deadline for exiting the current site by at least two years given the predicted levels of growth within the business.
This time was invaluable to the client insofar as it enabled them to significantly sweat an asset way beyond where they thought they could get to, but also aligned to this, enabled them to delay unnecessary investment in a warehouse change and design programme that would simply not be required at this stage.
A clear and logical timeline as to how and when to make changes and conduct the next stage evaluation for the business was presented. This recommendation set out precisely when the business should look to re-evaluate progress and then establish its next course of action.
Having clarity on both short to medium term capacity and efficiency as well as a clear plan for next steps was precisely the kind of outcome this SME business needed to help it move forward to drive its business to the next level.
All of the above was achieved within two weeks from the first time the client spoke to our consulting team to understand if we could help them. The speed of this turn around was of significant assistance given the fact that this growing business was in the middle of a round of funding, and it clearly helped steer their discussions and decisions about where to focus business capital in the upcoming months.
This warehouse capacity and efficiency review enabled our client to accelerate their supply logistics operations and achieve significantly greater certainty about how to deal with growth by applying our expert warehouse operations and design consulting expertise. If you would like to find out more or to talk to a member of our consulting team about how ASCALi can help you accelerate your supply chain and logistics, no matter how big or small your operation may be, please contact us here.