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If you've never personally built a pallet in a warehouse or distribution center, you may have no idea of the complex nature of the process. And what's difficult enough to begin with becomes even more challenging when the orders being stacked come in completely varying dimensions.
Building what amounts to a 3D jigsaw puzzle can be time-consuming, expensive and dangerous. Time-consuming because the process often becomes entirely manual; expensive because of lost productivity, and the stability of the pallets can be questionable; and dangerous because of the increased instances of serious back strain reported.
The Liquor Control Board of Ontario, this year's winner of the Supply Chain Innovation Award sponsored by SupplyChainBrain and the Council of Supply Chain Management Professionals, is one of the world’s largest purchasers and retailers of alcoholic beverages. It handles 50 million cases a year – 60 percent of its total volume – in one DC alone. On-site inventory amounts to around 2.7 million cases annually, involving more than 8,000 SKUs. Conveyors automatically move each case to the appropriate store-order accumulation lane. That's where the challenge begins – or used to. Cases of multiple sizes arrive at the lane in random order, and workers had to construct a stable pallet by hand. The job used to require 68 employees in two shifts, managing approximately 250 cases per man-hour.
Not anymore. Not since the LCBO automated the process that determines precisely when a case is to be inserted into the cubing process. It was essential that the solution work with LCBO's traditional, tier-oriented pallet loaders and conveyance systems.
The LCBO is rolling out the process to other DCs in its network, and managers at the liquor control board are confident that the solution would be applicable to a number of industries where products are moved by pallet.
If there's one thing that the folks at Lennox Residential know, it's that nobody wants to wait for the air conditioner or heating unit to be repaired. For years, Lennox Residential had served its U.S. customer base through two DCs in Iowa, one for products, the other for parts. The facilities supported 66 Lennox-owned retail stores. But as business grew, that arrangement was no longer viable. The solution, which garnered Lennox Residential the innovation runner-up award, lay in the transition to a hub-and-spoke model of distribution. Lennox ended up creating eight regional and 19 local DCs, serving more than 180 stores and supporting five manufacturing facilities. The new network allows Lennox to reach 95 percent of demand by next morning, 98 percent by next day and 50 percent by same-day delivery when necessary.
It's imperative to have good data when deciding where to site manufacturing, distribution and services facilities, but too much data can simply freeze planners. Hewlett-Packard is constantly reevaluating where it sources, makes and stores product – and where to locate a centralized distribution center. A data-centric method may come up with the “best” location for a planned facility, which is anything turns out to be anything but optimal for a number of reasons.
Rather than rely entirely on data and complex mathematical formulas, HP’s Strategic Planning and Modeling Group came up with the concept of Geographic Analytics. Its approach, visualizing the data on a map, might seem simple in retrospect, but who said innovation had to be complex?
No entity can adequately and effectively wage business – or war, for that matter – if it doesn't have a real-time handle on its capabilities. Often, that means knowing precisely what materiel it has to hand or in the pipeline, and what the condition of that gear or equipment is at that moment. The U.S. Marine Corps is no different in that regard.
For years, the USMC assembled data on a daily, weekly, monthly or quarterly basis, but when all was said and done, the process was cumbersome and error-ridden. In 2006, a consulting agency gave the Corps an “F+” for its data collection and management efforts. The answer was to begin the implementation process of a total product life cycle management program. Now, any authorized user anywhere in the world, at any time of the day, knows exactly what ground equipment is available, its location and its status.
As it happens, HP has two finalists in the this year's innovation competition. The procurement processes of its global inkjet printer production operations were siloed and highly wasteful. That was principally due to having multiple design centers, manufacturers and suppliers across the world. Development engineers designed products with a diverse set of eyes, creating unique designs and selection of parts. That meant that its supply chain organization was burdened with procuring a large component mix and providing manufacturing with a diverse set of designs to support.
Commissioning a Design for Supply Chain team, HP created a tool to help drive design commonality and cost savings – some $150m to date.
In 2008, Shared Support Services of Southeastern Ontario was created to maximize supply chain efficiencies of its seven member hospitals so that savings could be reinvested in direct patient care. That plan was to outsource its logistics and warehousing needs, but first it needed to find a 3PL with the right technology, not to mention expertise in the healthcare field.
Among other things, outsourcing the central warehouse and distribution to a 3PL would result in regional efficiencies by, for example, reducing storage space and inventory at hospitals and freeing up the space for other hospitals’ activities. Clearly, it was the right decision as 3SO, as the non-profit is called, has saved some $50m so far.
Join us in lifting a toast not only to the Liquor Control Board of Ontario but to each of our finalists. They represent the very best in innovative thinking in supply chain management. Cheers!
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