Supply Chain design studies often target understanding the impact of new sourcing options such as switching suppliers, opening or closing facilities, new product line introductions, or business acquisition integration. Each opportunity has potentially great financial advantage, but also carries risks as well. The task then is to understand and quantify the risk – reward trade offs of operating cost vs customer lead time, inventory vs. service, fixed vs. variable cost. Unfortunately the various business goals need to be balanced and the complexities managed of customer demand, product dimensions, geography, shipping modes and rates. Sometimes a spreadsheet will do, often you need a more robust tool.
One complaint of modeling and simulation often heard is that the only one who understands the model is the modeler. Fair enough when the math is dense and the model a bunch of programming code.
 Supply Chain Guru by LLamasoft is one of the best of the many logistic network optimization and simulation software packages on the market today. With SC Guru model building is very visual. Sure there is a ton of data to manage; addresses, sales orders, shipment details, product dimensions, sourcing, inventory, and transportation policies. With the visual modeling native to the package you can display and interact with your data easily. As a user you can quickly create views of the supply network based on product or customer groups, geography, shipping lanes. Building the network diagram is as easy as with Visio or any other flow charting tool. Geo maps are easy to populate with built in longitude and latitude lookups. Distances come easily through the PC*Miler functionality.
Making the analysis more visual opens up the network study to greater team participation and leadership comprehension, and hopefully a better business result.
In warehouses, distribution centers, or even stores the placement of each item can be a science, sometimes it’s an art, often it just is what it is. Stuff goes wherever it will fit, entropy kicks in and randomness takes over. Then before you know it there’s little rhyme or reason as to which items go where.
Product Slotting is defined as finding the optimal location of product in a warehouse or distribution center for the purpose of improving material handling efficiency. Sometimes called inventory slotting, profiling, or warehouse optimization slotting identifies the most efficient placement for each item. Product slotting depends on a variety of factors such as picking volume and frequency, receiving and put-away volume and frequency, package dimensions and weight, picked package size, storage package size, material handling equipment used, layout of the facility, labor rates, etc.
Continue reading Slotting Defined
 Cut the package size, customers may want less right now.- Increase the package size, customers will take what they can get.
- Have a 2 for 1 sale.
- Bundle a slow mover with something else.
- Change the safety stock service level from 98% (or where ever you have it) to 95%.
- Reduce the number of A items.
- 2%10 net 60.
- Double up your cycle counting.
- Start and Inventory Reduction process if you don’t already have one, retool the one you do have.
- Encourage more vendor consignment stock.
- Add some technology and reduce transaction delays.
- Find closer suppliers.
- In-source some of your suppliers.
- Switch from make-to-stock to make-to-order, or finish-to-order.
- Move inventory and material control to your production people.
- Blow up the warehouse and move parts to point-of-use.
- Switch to 3rd party logistics. Have a 3PL but don’t see the benefit, the fire them and get a new one.
- Create a logistics function; consolidate and leverage.
- Forward Cycle Count – count items needed in the near future, find the stock outs before they bite you.
- Pull a few Kanban out of circulation, wait and see what happens, pull out some more, if it gets ugly put one back.
If the proposed Employee Free Choice Act becomes law, I suspect that many smaller business owners have assumed that they won’t be a target. Under the old logic, if you employ around 50 people or less, you are probably right. But the problem is that the old logic no longer holds true. Unions earn “revenue” in only one way, through dues. The only way they earn dues is through increased membership. Naturally, they will want to target the bigger employers first (more bodies = more members = more dues), but it won’t take them long to get to you, especially since EFCA makes it so much easier to organize. So to deny you are a target is risky and naive.
Acting as if you are at risk, on the other hand, provides the “burning platform” for change inside your company. If it takes the unions a little time to make their way to you, be sure to use the time to build engagement with your employees and the best way I know how is by utilizing Lean methodologies. In the event that EFCA doesn’t pass (don’t bet on it) you will be that much further ahead of the game by engaging your employees in improving their jobs and in direct correlation, your business.
I would like to share a short story of how I used Lean in a similar situation but the result was 180 degrees from EFCA.
At a point in my not too distant past I had multi-plant manufacturing and operations responsibility for both union and non-union plants. One of the union plants had a strong plant manager. Together we established a vision for the plant, put a good team around him to support and help him run the operation. Additionally we introduced Lean and began to engage the entire operation in both problem identification and problem solution and waste elimination. We actively listened to those producing the product and sought their input on how to not only improve the operation but to also make their jobs better. We implemented a new communication process where we frequently updated the workforce on happenings throughout the division as well as the entire company (ie: new customer accounts, financial performance, customer complaints), established lunch feedback meetings with the plant manager, required supervisors to engage their teams in the improvement process and hold face to face performance review sessions. Our focus was to make sure everyone was treated like valued, contributing team members rather than just an employee making a widget.
The efforts of this transformation produced numerous financial benefits for the plant and company but also yielded an unexpected result for the team members. Through this transformation the culture changed which in turn grew an effort, led by union members, to decertify the union at this site. The vast majority of the membership felt very good about the leadership, the future of the plant and company and did not feel the need to be represented.
At the end of the day, I firmly believe that making sure you have good leadership in place who are truly engaged with the workforce, utilize methodologies like Lean you won’t have to worry about EFCA or anything else like it that may come down the pike. Instead, you can keep your focus and energies on doing what you want to be doing and that is continuing to grow your business.
Dan Wachter
 Running out of room? Consolidating operations? Relocating to a new location? Need to liberate some cash? It’s time to purge your warehouse! When looking at all the stuff that’s accumulated in your warehouse over the years you’ll often find orphans, cripples, mistakes, bad dreams lurking in the far reaches of the racks and tucked away in the back corners. Where to start? You can use the white glove test – the thicker the dust on the case the more likely you can do with out it. Or look to see how many physical inventory tags are on the box – more than two, then throw it out!
Excess and Slow Moving inventory is defined as the quantity above a specific need such as beyond a certain time period of demand or days of supply. Excess can also be determined as inventory beyond current safety stock level plus lot size (order quantity). Excess inventory is almost always a result of poor stck demand management. Excess stock can result from over delivery from a supplier, but morelikely bad ordering and demand management. It’s easy to blame the buyer, but buyers rarely create the sales forecast, maintain the sales orders, set the performance metrics, or the service policies.
A common analysis is to rank sort the parts by their recent sales as shown in the graph here. Where to attack? Head for the Tail is a common approach. If it’s not selling let’s dump it, goes the conventional thinking.
ABC Analysis can be misleading; some times the tail has pearls, or at least consequences if you blindly purge.
Some things you’ll find in the Tail:
- Lifetime Buy – part, material, component is going out of production and you need time to find substitutes. Common these days with RoHS and electronic parts.
- Brand New parts – don’t have any sales yet obviously.
- Seasonal "Murphy" Stock – winter is coming and a key supplier is on the other side of the Rocky Mountains.
- Economic Order Quantity, often abused, but can be a good business decision.
- Supplier order volume deep Discount – a really sweet deal, see EOQ.
- Commodity price hedging – if you are a commodity buyer you know what I mean. Example copper prices in 2006 and 2007:
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