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50 things to do to free up warehouse space August 31, 2007

Posted by Lawrence Loucka in : Lean, Logistics, Supply Chain , add a comment

Business is growing and running out of space in the warehouse.  What to do before moving to a new facility or pouring concrete?  Fifty things to consider:

  1. Cross dock
  2. Narrow aisles
  3. Double deep racks
  4. Bridges over aisles, cross aisles, aisle ends, truck doors
  5. Re-slot forward pick locations
  6. Relocate slow movers and consolidate
  7. Change batteries rather than park and charge
  8. Pushback racks
  9. Pallet flow racks
  10. Carton flow racks
  11. Carousels horizontal or vertical
  12. Use uprights that only go to the top beam, close pack the top deck
  13. Shorter beams; 96" not 108"
  14. Triple wide beams
  15. Vary beam heights
  16. Double stack pallets
  17. Mobile shelving
  18. Purge excess, slow moving, obsolete
  19. Improve put away and pick cycle time and then cut safety stock
  20. Direct or Drop Ship
  21. Drop items from the catalog
  22. Put carton flow racks under pallet racks
  23. Put pick shelves and bins under pallet racks
  24. Slip sheets or low profile pallets
  25. Daily delivery of new pallets and packaging supplies
  26. Check out bound while picking or loading
  27. Check in bound while unloading or put away
  28. Store more than one item per shelf or pallet
  29. Consolidate partial pallets, cartons, bins
  30. Receive and ship on different shifts
  31. Redesign package
  32. Optimize pallet stacking pattern
  33. Select the right pallet
  34. Buy/Make to Order
  35. Buy in smaller lots
  36. Ship in smaller lots
  37. Receive and ship more often
  38. Make inbound receipt appointments
  39. Make delivery appointments
  40. Spot out bound trailers & load directly into trailer
  41. Eliminate inbound inspection
  42. Recalculate safety stock
  43. Recalculate order quantities
  44. Sell slow moving, return for credit, fire sale
  45. Donate, scrap, recycle obsolete
  46. Take assemblies apart and sell spare parts
  47. Combine parts in to kits
  48. Reduce the in and out queues
  49. Control SKU proliferation
  50. Pick directly into the shipping container

Bow Wave July 29, 2007

Posted by Lawrence Loucka in : Definitions, Lean, Lean Sigma, Logistics, Supply Chain , add a comment

Keeping due dates straight in an MRP environment is a fundamental prerequisite.  Plot a time series for the number of work orders, labor or machine hours, or dollars any you may find a significant amount of past due, due soon, and a short tail out into the future: you’ve got a demand bow wave.

John Scott Russell grew up in Glasgow where he was so fascinated by the great creak and roar of the first Newcomen steam engines at the Carntyne mines, that he abandoned his career in the church to become an engineer. In 1834 Russell accepted an invitation from the Union Canal Company to beat off the challenge from the new steam carriages and railways by designing better, faster canal boats. While testing his boats on the Union Canal near Edinburgh, he decided that it was the great bow wave the boats made that was slowing them down. As he rode along the canal in August 1834, he watched a rapidly drawn boat as it suddenly came to a halt in front of him. And something extraordinary happened: The great hump of water built up in front of the boat kept on moving as a single, huge wave, apparently without losing speed. Russell set off on horseback to follow this wave, and chased it for over a mile along the canal before it started to weaken.

Bow waves sap energy from the boat and reduce fuel economy; as well, large bow waves can damage shore facilities such as docks if a large boat sails past at high speed.

So too for a build up of work in front of an organization.

Reducing the size of the bow wave is a major goal of maritime architecture. Demand Smoothing, Master Scheduling, and Heijunka are supply chain tools for doing the same to manage the build up of work.

Supply Shortage July 26, 2007

Posted by Lawrence Loucka in : Consulting, Supply Chain , add a comment

 What to do when there’s an industry-wide shortage?

 

Month-end Madness March 1, 2007

Posted by Lawrence Loucka in : Consulting, Lean, Lean Sigma, Supply Chain , add a comment

Do you have a “hockey stick”, where most of your bookings occur right at the end of the month, quarter, year? If you have a “hockey stick”, it is very hard to have consistently predictable revenues. Growth, profits and market value suffer when revenues are not predictable. Many companies experience 50% or more of their quarterly sales coming in during the last week or two of the quarter. The V.P. of Sales loses a lot of sleep, the CEO gets irritable and the rest of the executive staff loses confidence.

When orders look weak midway through the quarter, management applies pressure to “pull next quarter’s orders in”. The reps’ only choice may be to offer a discount to entice customers to cooperate.  Whether or not they are successful in the current quarter, there is a reinforcing effect and customers learn to hold orders to the end of the quarter to get a lower price in the future. The net effects are a "hockey stick" and lower prices which can lead to significant profitability and cash flow concerns.

Vicious Cycle: With constant pressure to manage operating expenses the supply chain can end up reinforcing the month or quarter end splurge as supplies are expedited to meet the spike in demand, or replenish the stocks that shipped out all at once.  Expediting or pulling in digs a hole creating future shortages; a self perpetuating cycle of feast and famine. 

What to do?  Change the systems - discounts, incentives, compensation, culture.  A tall order but it can be done. 

Safety Stock Calculations January 29, 2007

Posted by Lawrence Loucka in : Definitions, Lean Sigma, Logistics, Sigma, Supply Chain , 2comments

When I first learned inventory planning the math was rather simple.  On top of the cycle stock (expected demand during lead time) I would add a percentage or a number of days.  Here’s a web app that uses this percentage approach.  If the lead time was 2 weeks I  might carry 3 or 4.  I soon learned that demand for some inventory items is more volatile than others, and some suppliers less reliable than others.  I’d either have too much or not enough, and I’d never get in trouble for having a little too much.  So I started using (average demand * lead time) + (one sided Z factor * demand standard deviation) for the target inventory level; a little better approach.

Here’s another formula from Inventory Management Review; Safety Stock:  {Z * SQRT (Avg. Lead Time * Standard Deviation of Demand ^2 + Avg. Demand ^2 * Standard Deviation of Lead Time ^2}.

Over at QuickMBA ; To calculate the safety stock, first calculate the standard loss function, designated as L(z). This function is dependent on the values of the desired fill rate  f,  the demand  μ  and its standard deviation  σ ,  the time between orders  p,  and the replenishment lead time l : L(z)  =  ( 1 - f ) µ p / σ  ( p + l )1/2.  Once L(z) is known, z can be found in a look-up table and the safety stock can be calculated by: Safety Stock  =  z σ ( p + l )1/2

Here’s a new one recently published by Kent Linford in the APICS Magazine Nov/Dec 2006.  SS = √ [( σFE)2 x (LTI/FI)beta + ( σLT)2 x D2] x Z x (FI/OCI)beta

Where:

SS = safety stock
FE = forecast error
LT = lead time interval
FI = forecast interval
pick a beta between 0.5 and 0.7
D = average demand during lead time
Z = normal distribution service factor based on desired service level
OCI = order cycle interval

Dave Piasecki at InventoryOps.com uses; safety stock = (standard deviation)*(service factor)*(lead-time factor)*(order cycle factor)*(forecast-to-mean-demand factor)
Jon Schreibfeder has anoher approach.

Got any other versions?