Distribution Centers (DCs) are some of the most important aspects of any supply chain. An effective distribution center can be the difference between losing money and making money. As we've discussed previously, Supply Chain health can often be overlooked. Without putting the correct processes in place the supply chain won't function correctly even if every aspect was well designed and implemented. But in order to even have a chance to run an effective supply chain, the design at each step must fit the purpose. The first cog to the supply chain is the DC.
Many DCs fail to even minimally live up to the high business expectations set for them during the initial strategy and planning stages. The issues that they face are varied but the symptoms are usually the same: low throughput, processing errors that impact service levels, inadequate inventory controls, poor productivity due to inefficient design. Many reasons exist for the struggle to open successful DCs. Most struggles can be associated to either lack of consensus on the plan, project plans run over budget and cannot be fully implemented or the proposed ROI for the design is inadequate to justify the project.
Beyond those, there are 10 common mistakes that should be avoided:
- Incomplete Supply Chain Strategy
- Lack of Financial Objectives
- Overstated Inventory Levels
- Failure to Utilize Postponement Strategy
- Planning Without Data
- Failure to Apply Lean Principles
- Irrational Demand Buffering
- Ineffective Space Utilization
- Poorly Designed Value-Added Services Operations
- Misapplication or Lack of WMS Technology
Look at receiving docks in DCs. It is a fairly straight forward area where product comes in and relatively few tasks must be performed. A truck backs up to the dock and product is unloaded either manually or with some sort of fork lift. There may be a quality and count verification once off the truck, but for the most part the product is now ready for putaway into the storage area. Too often the receiving dock gets clogged with processed inventory that has not been put away. Usually this also means that orders cannot be placed against that product. The backup is usually caused by pickers focused on filling orders in hand and forgetting the putaway process. Eventually no more product can be received if nothing else is putaway simply because there is no room to put anything else.
The best way to avoid design mistakes is to always design with a process flow in place for facility operations. Before you can design a receiving area you must know what tasks will be performed there, what the putaway strategy will be and how many people will be in the area. It is not possible to design an effective storage area without knowing the picking processes and technology that will be used.
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