Lean Process Improvements in Warehousing and · PDF fileLean Process Improvements in Warehousing and Distribution Leigh Henderson, Lean Six Sigma Leader Scott Jagger, Operations Distribution

Lean Process Improvements in Warehousing and Distribution

Leigh Henderson, Lean Six Sigma Leader

Scott Jagger, Operations Distribution Manager

IDEXX Laboratories

About IDEXX

Lean at IDEXX

Cost and Delivery are not knobs, they are results; Quality is the knob, Employee engagement is the means

And the Customer is the reason.

Increase velocity and

capacity

Reduce Waste

Lean at IDEXX

IDEXX Distribution Purpose Driven Excellence

Perfect order fulfillment with next day delivery to support the well-being of

people, pets, and livestock

Excellence Inside Story – Part 1

Plan

• All direct sales model for Companion Animal Group (CAG) business in the US with free overnight shipping

• Eliminate third-party distributors

• Strengthen relationships with veterinary practices

Impact

• Hired Sales Professionals– Sales Representatives

– Field Support Representatives

– Professional Service Veterinarians

• Scaled Order Fulfillment– 2 Distribution Centers (DCs)

to 5DCs

– Parcel shipments doubled at initial 2 DCs

Excellence Inside Story Timeline

July 2014: IDEXX Announces Go Direct Strategy

August –December 2014: Three 3PLs launched and IDEXX DCs prepare for changes

January 1, 2015: Go Direct

Go Direct: Place order before 9:00pm EST and receive order next

day

US DC and Carrier Network Map

Reno, NV

Ft. Worth, TX

Memphis, TN

Harrisburg, PA

Westbrook, ME

UPS 3PLUPS 3PL

UPS 3PL

About the Memphis Distribution Center

Memphis, TN

Picking Methodology 90% Zone with Automatic Conveyance10% High Bay

Order Profile by Week Monday: 30%Tuesday: 22%Wednesday: 19%Thursday: 17%Friday: 12%

Order Profile by Day 60% of Orders arrive after 2:00pm

Order Cut – Off Time 9:00pm EST

About Memphis Customer Orders:Temperature Conditions

0%

5%

10%

15%

20%

25%

30%

Frozen Only Cold Only Ambient and Frozen Cold and Frozen Ambient and Cold Ambient, Cold, andFrozen

Memphis Distribution CenterBefore and After Go-Direct

Monthly Volume Before (2014) After (2015) % Change

Packages 29,700 46,100 55%

Lines 23,700 34,000 43%

Deliveries 45,800 71,100 55%

Ratios Before (2014) After (2015) % Change

Lines per Package 1.5 1.5 0%

Lines per Delivery 1.9 2.1 8%

Packages per Deliveries 1.3 1.4 8%

Basic Direct Order Fulfillment Process

Order Creation: Routed to DC/3PL based on location,

inventory, and time of day

Pick: Cooler, Freezer, or Ambient

Pack: Pack contents according

to storage and labeling conditions

Ship: Parcel must arrive to customer

next day

Business Case

• Memphis pack process had highest cycle time and greatest variation

• 10 out of 12 pack stations in use at pre-go direct volumes

Memphis Story

3P MethodologyProduction Preparation Process

Evaluate Against Team Developed Criteria

Select Final Configuration

Option 1

Option 3

Option 1

Option 2

Option 3

Option 3

Develop Alternatives

Forming the Cross Functional Rapid Improvement Process (RIP) Team

Team Role IDEXX Role

Champion Senior Director

Leader Distribution Supervisor

Lean Facilitator Lean Six Sigma Leader

Area Experts 2 Packers1 Pack Lead

Outside Eye Quality AssuranceFacilities

Improvement Process Timeline

• Phase 1: “Plan” August 27 – 29

• Phase 2: “Do” September 10 – 12

• Phase 3: “Check, Act, Plan”

September 13 – October 20

• Phase 4: “Do” October 21 – 24

Plan

DoCheck

Act

Phase I –Assessing the Current State

Phase I –Assessing the Current State

Phase I –Assessing the Current State

Phase I –Assessing the Current State

Phase I –Assessing the Current State

Time Study Results

Phase I – Future State Planning

Phase I – Future State Planning

• Each design evaluated by team developed criteria:– Available desktop work space– Available floor space– Ergonomically friendly– Minimal restocking– Low Cost– No need for additional/personal items– Expected positive impact on productivity– Flexibility to future changes– Ease of access to supplies

Phase II

Plan

DoCheck

Act

Phase II – Implement Design on One Pack Station

Phase II – Implement Design on One Pack Station

Phase III

Plan

DoCheck

Act

Phase III – Check, Act, Plan

• Solicited feedback frequently from employees using the prototype station

– Employees did not like the automatic tape dispenser

– One additional box type moved to overhead storage

– Large boxes relocated to be easier to reach and shelving utilized for spare paper and tape

Phase IV: Final Implementation

Plan

DoCheck

Act

Phase IV: Final Implementation

Before After

Phase IV: Final Implementation

Before After

Phase IV: Final Implementation

Before After

Summary of Major Improvementsfrom 3P Methodology

• Standardized pack stations based on employee feedback– Utilized space directly off of the conveyor to hold

totes– Frequently used items store within closest reach– Labeled where items belong to promote 5S

• Standardized oversized box and insulated box storage

• Added a water spider to replenish supplies to the pack stations and minimize the number of times packers left their stations

Results from 3P Methodology

• Packing cycle time reduced approximately 40%

• Results have been sustained for 2 years

– Packers have made additional improvements: • shopping list

• flag for water spider attention

• Strong sense of ownership by RIP participants

Excellence Inside Story – Part 2

• How will we know if we are

– Ahead?

– Behind?

– On Track?

Excellence Inside StorySame Day Shipment for Highly Seasonal Orders

• Season: Time period over which pattern of demand is repeated

• Season 1: Day of Week

• Season 2: Time of Day

Season 1: Day of Week

0%

5%

10%

15%

20%

25%

30%

35%

Monday (+ Weekend) Tuesday Wednesday Thursday Friday

Season 2: Time of Day

0%

2%

4%

6%

8%

10%

12%

14%

16%

18%

Perc

ent

of

Lin

es

Hour of Day (CST)

Percent of Daily Lines Created by Hour

ModelLi

ne

s

Hour (CST)

Actual versus Forecast

Dropped by Hour Forecasted Volume by Hour

ModelLi

ne

s

Hour (CST)

Actual versus Forecast

Demand Cumulative Forecasted Cumulative Volume

Cumulative Flow DiagramC

um

ula

tive

Lin

es

Time (CST)

Actual Flow

Demand Cumulative Picked Cumulative Packed Cumulative Shipped Cumulative

Workflow Visibility Progression

Manual – Next Day Reporting

• Pull and aggregate 4 reports

• 30 minutes of work

• How did we do yesterday?

Automated –4x/Day

• Reports and analysis automated

• How did we this morning? This afternoon? This evening?

Automated –Real Time Data

• No reports required

• Data pulled directly

• How are we doing right now?

During peak hours the run time is 4 hours

Process for Reporting Data 4x/Day

Process for Real Time Reporting

SAP HANA Modeling

Purpose Driven Excellence: Perfect order

fulfillment with next day delivery to support the

well-being of people, pets, and livestock

• Reduced packing cycle time by 40% through 3P improvement methodology

• Enabled workforce to be highly prepared, flexible, and reactive by understanding delivery arrival and fulfillment patterns in innate detail

Thank You!

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Session: WP/27

Lean Process Improvements in Warehousing and Distribution

Leigh Henderson & Scott Jagger

IDEXX Laboratories

[email protected], [email protected]