Many lean purists believe that all warehouse functions are nothing but pure waste. Unfortunately, efficient and effective logistic operations in the global economy create significant competitive advantages and simply cannot be ignored. The Lean warehouse is necessary and plays a crucial role in the entire supply chain. The use of facilities for inbound material logistics and outbound finished goods distribution are the bridges that connect all the imbalances and lack of flow in the entire stream. Leaders inside the warehouse must be knowledgeable about Lean warehouse techniques. By using lean principles, warehouses will see a remarkable improvement in organization and product flow as well as their ability to meet the demands of customers.

Creating a Lean warehouse is not something you accomplish overnight. It takes vision, planning, strategy, tools and tactics. You need to develop team members into problem solvers and then provide a leadership infrastructure to support their efforts. Identifying and solving problems may seem simple enough, it can prove to be elusive for some leaders.

The results achieved through your Lean warehouse efforts can be powerful. Improved customer fill rates, decreased inventory levels, decreased inventory carrying costs, improved inventory accuracy, increased asset and team member utilization are all benefits of a Lean warehouse. The concept of standardization is a key Lean warehouse principle. Creating standardization of processes is to create tasks are easily repeatable with planned zero waste. The creation of standard work allows your warehouse team to understand processes from the point of view of inputs, procedures, timing and outputs.

The visibility of material flow, inbound logistics, internal warehouse flow, and outbound logistics are crucial to the Lean warehouse. We need to understand the flow of material and support the perfect order, which is the right quantity, at the right place, at the right time in the right quality. The lean concept of visual management allows leaders to understand the score of the operation so they can make decisions in real time that impact the overall flow of material to the customer. This concept is counterintuitive to many warehousing operations. Most warehouse operations simply react to what orders show up at the facility on any given day.

The goal is to create a Lean warehouse, where problems are visible and where we fix problems at the root cause. Accomplishing this will create the Lean warehouse and drive powerful business results.

The post Lean Warehouse – Improving Efficiency In Warehouse Operations appeared first on 6sigma.

Lean concepts are well known in manufacturing, but progressive managers of warehouses and distribution centers are starting to understand what lean can do for them. Warehouses and distribution centers are extensions of manufacturing operations. When leaders understand this principle, then using the same lean principles makes perfect sense in achieving total alignment within an organization.

Check out this informative video on the Lean Warehouse by Georgia Tech Supply Chain & Logistics Institute.

The post [YouTube Video] Learn More About Lean Warehouse Principles appeared first on 6sigma.

Traceability in the supply chain is one of the most important aspects of the customer experience. But, it’s not just Traceability – whatever product is flowing through the process needs to also be Visible. Some people refer to these two aspect of the eCommerce fulfillment as Click-to-Ship.

With eCommerce and online shopping representing a larger and larger share of overall retail commerce (and growing), it’s important that the customer experience is just as good or even better than if the purchase was made in a brick-and-mortar environment.

Traceability

The customer will want to know where their order is. Name the process – I guarantee there’s an order fulfillment pipeline. From the customer’s perspective, the customer wants to know:

1. That they are getting the exact product that they ordered
2. Where the product they ordered is in the order fulfillment pipeline
3. And, when they can expect to receive the product they ordered

This may seem really basic, but we know that making things simple is actually really hard to do. And, furthermore, while what I’ve explained may seem common sense, it’s also not very common practice.

Visibility

A close cousin of Traceability is Visibility. Not only must the sequence in the order fulfillment pipeline be documented, it must also be visible – visible to both internal stakeholders and, more importantly, visible to the customer.

A Supply Chain Example

Below is a hypothetical map of what an order system might look like. This system involves a front-end store, credit card verification, and warehousing activities:

The example above shows both the steps, the sequence, and also the relative volume through each step in the flow. The example is primarily made for internal stakeholders that need to manage flow and volume of product. But, the elements in the example can be modified so as to be shown to the end customer. At the level of the customer, they are concerned with their specific order, not in aggregate like the example above shows.

Christmas Morning Experience

Customers receiving their order is a critical step in the customer experience. If you think in terms of touchpoints, the last and most memorable touchpoint is receiving the package, opening it, and then enjoying whatever it is the customer bought. If that step is not done well, all the previous steps before it will have been done in vain. And, customer recovery is neither cheap nor easy to do.

So, get it right the first time: make it visible; make it traceable.

The post Visible Supply Chain Means Traceability and Accountability appeared first on 6sigma.

Amazon has 2 peak seasons: (1) inbound peak and (2) outbound peak.

Inbound peak is Amazon’s buying spree from its suppliers. The key piece here is the Sales and Operations Plan (S&OP) that gets published internally and is disseminated to Operations. This report attempts to show the predicted high-demand SKU’s (ASIN’s) and the amount that ought to be purchased. Inbound peak begins around August and ends roughly around September or October. At this time, all labor and budgeted hours is shifted to the inbound side of things.

Here’s a picture of an Amazon facility, during inbound peak:

Outbound peak typically happens at week 45, or close to Thanksgiving. This is when labor and budgeted hours are shifted to the outbound side of things. This is the time when Amazon makes most of their revenue during the year and there’s a lot of pressure to deliver and meet customer expectations. It’s an exciting time and a time and everyone at Amazon feels like they are making history.

Amazon apparently did very, very well this year in fulfilling customer orders. Below is a small snapshot of what the 2006 Holiday Season looked like for Amazon:

The above chart is just a sample of the units being shipped by Amazon. Multiply the above numbers by 13+ fulfillment centers and also drop-shippers; the amount of volume that Amazon deals with is amazing.

Amazon’s focus on Customer Obsession remains a tenet that remains with me to this day. Amazon.com is an amazing company, doing incredible things, and making history. It has its problems but, for me, Amazon.com remains a company to be admired.

The post Amazon Packages Shipped Per Day appeared first on 6sigma.

Almost all transactions have Traceability and Visibility as a requirement. From the customer’s perspective, they ought and need to know the status of the transaction. The company, then, needs to provide feedback and status to the customer whenever she needs it. Take, for example, the following transaction types:

1. Library Book Check-out: User physically searches for books; user check books out; for each book checked-out, there is a 10 business day expiration date; when there is 2 days left in the check-out timer, an email notification is fired to the customer as a reminder.
2. Online Subscription: User follows the sign-up process; user pays with credit card; credit card is verified; user is admitted to full subscription access page; an email is sent, notifying the customer of the amount charged on credit card and that the transaction was successful.
3. Online Ordering System: User searches online; user selects items and places items in shopping cart; user pays with credit card; credit card is verified and an email is sent to notify the customer the amount charged and the items bought and an estimate of when the items will be delivered.
4. You order the #4 meal at McDonald’s; you wait for a really long time and nobody behind the counter comes to tell you the status of your order.
5. etc., etc.

We’ve all experienced transactions where a notification is sent and feedback is delivered to help us know exactly where we are in the process and, for hard-good transactions, where our stuff is and when we’ll receive it.

Traceability and Visibility

But, there are some processes where Traceability and Visibility are not available. Often, we hear of statements like I entereed my credit card number and nothing happened. It felt like a black hole. Statements like this point to the fact that users’ need to know status and receive feedback ” they want to be involved in the transaction.

Diagramming Traceability and Visibility

Below is a hypothetical map of what an order system might look like. This system involves a front-end store, credit card verification, and warehousing activities:

Because time is an element in any process, we can collect time-based data and, because the time-based data can be approximated by a statistical distribution, we can approximately predict when the transaction enters a process and when it might exit the process; this line of argument can be extended from start-to-end and this type of traceability and visibility allows the firm to provide accurate feedback and status to the customer.

But, it also allows the firm to do something else: it allows the firm to collect natural metrics and then improve its operations. For example, if we see a large backlog and items begin to queue in front of a process, that might signal management to transfer labor to that process to drive-down the backlog, or for management to implement improvements in front of that process so that items don’t queue there in the future. The ability to make improvements is only possible when we can follow and visually see the how the process and operation is performing.

Do you know how your company is performing? Is your operation a black hole to the customer?

The post eCommerce Order Fulfillment Pipeline: Black Holes and Supply Chains appeared first on 6sigma.

There are more recent article on Pizza Tracker and Where’s My Pizza Supply Chains from the customer’s perspective.

To appease my wife’s appetite (and mine), I decided to purchase some Giordano’s for overnight delivery. In this post, I’ll discuss good pizza and the supply chain it takes to deliver it, including the strategic role of The Warehouse.

I ordered 2 Cheese pizzas and they arrived the next day in a box containing an internal dry-ice box. We let the pizza’s thaw in room temperature and cooked them and enjoyed eating them. It felt as if we were living in Chicago again. Absolutely convenient.

There is a network of 48 Giordano’s restaurants and they are all in Illinois; they have been featured on NBC (GE), Fox (NWS), New York Times (NYT), and the Chicago Tribune (TXA), which has brought much popularity to the Giordano’s Pizza brand and now they now ship nationwide and, I’m guessing, the online sales channel is probably capturing a good chunk of the revenue.

The Pizza Supply Chain

In reverse order, starting with an Illinois-based customer, the Giordano’s Pizza Supply chain looks like the following (hint: diagramming a supply chain works best when you start with the customer and work backwards):

Customer => 48 Restaurants => 1 Distribution Center => Individual and Local Raw Material Suppliers

Because Giordano’s operates only in Illinois, it only needs 1 distribution center to house the raw material and take advantage of price-quantity discounts. Because of the close Illinois proximity, it can also do more frequent deliveries to individual stores of less product, ensuring freshness. This follows the Toyota model of smaller batches, but more frequency in material delivery.

For non-Illinois residents (like me), there is an added few steps to the supply chain:

Customer => 3PL Freight Partner (FedEx) => 48 Restaurants => 1 Distribution Center => Individual Raw Material Suppliers

The Role of a Warehouse

Why have a warehouse at all? It takes labor, capital, space, equipment, and information systems. Unfortunately, most firms cannot avoid this expense all-together; reduce, yes, but the Warehouse actually plays a really important role in the supply chain. Namely, The Warehouse is a strategic response to Supply & Demand, Transportation Costs, and Value-Added Processing.

Supply & Demand

A major challenge in managing supply chains is that demand can change very quickly, but supply is takes longer to change — that is, supply is not as responsive because there is usually some transformation that needs to happen, such as raw materials to finished goods, which takes time. But, demand is not very forgiving or patient and can change almost instantly. Supply is more “sticky”.

As a response to unknown or seasonal demand, the Warehouse plays a strategic role in assuring that there is product available, so that customers don’t find themselves wanting and firm doesn’t find itself unable to meet demand and face loss of sales, goodwill, and morale for the employees.

The Warehouse allows the firm to respond quicker when demand changes. The Warehouse acts as a buffer to changing demand, unreliable transportation, congestion in any part of the supply chain. As an added part of the complexity of supply chain management, the points of congestion in the system must also be managed.

Some questions to consider:

1. Given the approximate location of 80% of the customers and considering costs, response time, political climate of the country, and transportation reliability, what is the ideal geographical location of material sourcing, manufacturing, assembly, and warehousing?
2. What inventory buffer stock levels are appropriate for The Warehouse to hold? Replenishment levels? Use-to-Exhaust policies?

Consolidate Product Reduces Transportation Costs

There is a fixed cost everytime product is transported. Given the price of fuel currently and the instability of the US Dollar to other currencies, this is especially true. To amortize or reduce the pain of this fixed cost, it’s necessary to fill the carrier to capacity. In the industry, this is typically called “Truck-Load” and the opposite is “Less-Than-Truckload (LTL)”, regardless if transportation is achieved by truck, plane, or boat.

The pizza example above takes advantage of product consolidation well. Imagine if tomatoes, mushrooms, pepperoni, ham, pineapples, etc., were shipped directly from the material supplier to the 48 stores? The transportation costs alone would eat away any margins, not to mention the over-labor and over-effort that might be involved in that type of operation.

Provide Value-Added Processing

The final assembly could be done at The Warehouse. For example, if you produce a product that is private-labeled for your customer, then the product differentiation could be done at The Warehouse. Generic parts can be shipped to The Warehouse and then labeled to the customer specifications to achieve differentiation.

Back To The Pizza

The pizza was super good. This real-world example also gave me an added appreciation for good bootstrapping small business that gets things done to serve the needs of the customer.

The post How I Racked Up 6 Figure Student Loan Debt for Pizza appeared first on 6sigma.

This company sent me a list of questions to consider. I didn’t answer them, but I thought I’d share those questions here. It is clear that whoever this company is, they are interested in specific warehouse management metrics for ecommerce fulfillment.

Here are my observations, based on the questions that they asked me:

• Whoever this company is, they are interested in reducing lead time from company to customer. But, also interested in reducing lead time from supplier to company.
• The company is interested in logistics issues such as the last day to order for guaranteed arrival by Christmas day. And, interested in what is different this year than from last year.
• These questions were especially interesting: this company is interested in multi-item orders and their characteristics. You don’t get that often. I found this interesting. This company clearly understands the unique difference between single item orders and multi item orders. Not many folks outside of fulfillment operations understands the subtle nuances.

Below are the survey questions. What do you think? Is this just another company trying to better understand their competitors or a company truly trying to improve by understand benchmarks? I think it’s a company truly trying to improve, but also wanting to learn from other companies in the eCommerce Fulfillment space.

1. The following is a very short survey about your peak-season shipping and fulfillment performance last year vs your peak-season shipping and fulfillment goals for this year. All information is confidential and will be reported in aggregate only. It will take less than five minutes to complete. Thank you for your participation
2. Do you have intimate knowledge of the key metrics related to your company’s peak-season online shipping and fulfillment metrics, including last year’s performance and this year’s goals?
3. Do you have budget responsibility for your company’s online shipping and fulfillment capability?
4. Average number of days to process (order to shipper) multi-item orders
5. Average number of days to ship (shipper to customer) for multi-item orders
6. What was the last day to order for guaranteed arrival by Christmas last year? What do you expect it will be this year?
7. What was the percentage of multi-item orders that arrived on time last year? What do you estimate it will be this year?
8. What was the single biggest challenge to delivering multi-orders on time during peak season (Cyber Monday to Christmas Eve) last year? Select only one.
   • left the dc too late and shipping was not upgraded
   • carrier fault
   • non guaranteed shipping method (smartpost, surepost)
   • did not hae the inventory
9. What specific investments, if any, have you made to improve your peak-season delivery of online orders?
10. What is the single most important investment you have made in the past 12 months to improve your peak-season delivery of online orders?
11. What is the biggest shipping- and fulfillment-related tactic your competitors could pursue that would negatively impact your holiday sales this year?

The post eCommerce Fulfillment Strategy Survey appeared first on 6sigma.

But, wait, real quick here’s a picture of my waiting in the lobby – that’s my water bottle and notebook on the table. . .and, as a side note, the day I was at the Nike Campus, Kobe Bryant was in the cafeteria hanging out. I didn’t get a picture with him, but I could have thrown my bowl of Thai Noodles at him – he was that close.

Reputation Management to Innovation Opportunity

Nike’s manufacturing footprint is huge. As of this writing, they have manufacturing contracts with over 785 factories, across India, Vietnam, Philippines, and South America. And, over the years Nike has been criticized for its lack of oversight of its manufacturers. Initially, they approached the problem as a way to manage reputation. But, now they are seeing their oversight and relationship with contract manufacturers as an opportunity to innovate.

But innovation isn’t in a vacuum. Innovation at Nike must be within the context of (a) serving the athlete, (b) grows the company, and (c) delivers inspiration. While you won’t see Lean lingo, the context matters. This is effectively Nike’s “True North” if we were to speak in terms of Hoshin Kanri.

Nike has 2 overarching goals in their strategy:

1. Make Today Better
2. Design the Future

Pretty simple and can easily be remembered by all employees. Under these two main pillars in their strategy, Lean begins to take context.

Design the Future: Nike Lean Manufacturing

Nike has determined that their finished goods manufacturing is where they have the largest impact on people and the environment. Within that context, they want to be a catalyst for positive change. Consider these numbers:

• 785 Contract Manufacturers
• Over 1 Million factory workers
• More than 500,000 unique products

Those numbers are staggering and humbling at the same time.

Factory Sourcing

Quality begins at Factory Sourcing – that is, the process a contract manufacturer has to enter in order to be selected as a Nike manufacturing partner. The sourcing process is more rigorous than it was and Nike has improved the quality of the manufacturing partner and the time it takes to select a partner.

In terms of time it takes to become a partner, it now takes Nike 152 days versus 246 days. That means it takes Nike 38% less time evaluating a manufacturing partner. This is a massive improvement.

In terms of quality, Nike has increased its requirements but doesn’t leave the partner hanging dry – Nike actually spends time and energy and resources helping the contract manufacturing partner reach Nike’s new standards. As of this writing, Nike has 0 manufacturers in Gold, 1 manufacturer in Silver, 535 in Bronze, 156 manufacturers in Yellow, 77 contract manufacturers in Red. As you can see, Nike’s bar of excellence is high and Nike actively not only audits its manufacturing partners, but also helps them improve [1. http://www.nikeresponsibility.com/report/content/chapter/targets-and-performance].

Manufacturing Excellence

According to Nike, in order to design the future, Lean Manufacturing must be part of the solution for them. In their words,

Lean manufacturing has been a hallmark of our approach with factories and is the foundation of how we advance sustainable manufacturing. Lean manufacturing is a business system and continuous improvement philosophy that aims to deliver the highest-quality product while eliminating waste, including lost time and material. At Nike, we also believe lean can empower workers and teams. The success of the lean approach depends on the implementation of physical changes to production processes, increased leadership capabilities and the development of an empowered workforce. Lean manufacturing seeks to engage the minds of those closest to the work to solve the problems that prevent them from delivering quality product on time, every time.

As we all know, people are at the heart of any operation. Nike has spent a lot of energy in training and upskilling their contract manufacturers in Lean. From their perspective, Lean helps their people in the following ways:

• Leadership: factory leaders use Lean to drive business performance
• People: workers are engaged and enabled to drive business success through continuous improvement
• Process: factory processes are predictable and agile in response to customer demand

And, they believe that

The lean approach also seeks to engage the minds of those closest to the work to solve the problems that prevent them from delivering quality product on time, every time.

In fact, they use Jeffrey Liker’s model found in his book “Toyota Culture, the Heart and Soul of the Toyota Way” as an example of how they need to align people and strategy and lean in their training.

I have to say that this is the aspect of the Lean deployment that impresses me the most. Why? Most organizations will start Lean primarily in the Daily Management section of the model and it stays there. Most of us know this as Shop Floor Management, or even the Toyota Floor Management Development System as I know it.

But at Nike, they go deeper and higher and more broadly. In their words, this is how training is done in order to help their people – notice the level of Lean Six Sigma Training conducted [2. http://www.nikebiz.com/crreport/content/workers-and-factories/3-9-1-our-approach.php?cat=hr]:

The curriculum contains 10 modules that each focus on a key area of the Culture of Empowerment Model. Each module is designed to share HRM best practices related to lean manufacturing, and contains interactive exercises that allow factory managers to assess their current state and identify improvement opportunities in areas including recruiting, selection, employee development, performance management, worker-management communication and retention.

The curriculum also contains instruction and exercises on lean problem solving and planning tools including PDCA (plan, do, check, act) and A3 reports, which facilitates knowledge sharing and collaboration in a concise document. These tools are used throughout the capacity building to define follow-up projects that factory managers implement after completing the training.

And, they also take temperature checks with their people, to see if the Lean deployment is meeting their needs. In a survey conducted by an outside firm, the results seem promising and Nike has also take this data from survey results to help further improve their people operations:

And, as with most organizations that are focused on continually improving, Nike is doing that and hold themselves accountable. As of this writing, here is their assessment of their Lean journey so far:

In conclusion, I applaud Nike’s commitment to making Lean Manufacturing part of their strategy. Notice that Lean is not an end in itself, but is an aid to further progress toward meeting the Nike promise and achieving their goals  and strategy.

Here’s an older video of their fulfillment and distribution operations – a part of their supply chain. Keep in mind, this is before they started their Lean Journey. It’s interesting nonetheless.

The post Nike Lean Manufacturing: An Example of Good Policy Deployment appeared first on 6sigma.

Lean isn’t a destination for distributors, it’s a journey. The reshoring trend is a huge part of creating a lean supply chain, and creates the foundation of lean inventory management.

There are at least 3 critical items that allow you to reduce costs and increase service level in warehousing:

1. Tight and Necessary Warehousing Processes, including the right tools such as good Barcode Solutions.
2. What Warehouse Metrics do you have in place to help you determine if your processes are going well or not.
3. You warehouse location is optimal in the first place to meet service level commitments.
4. These together will help you reduce costs in your warehouse.

More U.S. based companies are bringing manufacturing back to the states or the North American region for a variety of reasons. First, distributors are tired of dealing with long lead times waiting for products to travel from Far East suppliers and its effect on their inventory management. Second, there’s the risk of a breach of intellectual property rights [1. http://www.bloomberg.com/news/2013-03-28/obama-urged-to-act-on-china-s-alleged-cyber-theft.html] if products that are sourced to other countries are reproduced under an off-brand label. Third, the savings from lower wages in foreign countries are no longer standard as wage rates increase nationally [2. http://www.economist.com/node/21549956].

Bringing production back to the U.S. can offset these risks. Lead times are already long when dealing with overseas suppliers, but add in weather setbacks, product abnormalities, port strikes, customs issues or transportation disasters and these disruptions threaten your inventory management.

These days, it’s taking even longer to ship finished products. Lisa Ellram, a professor who specializes in supply chain management, tells the Associated Press that in order to conserve fuel, cargo ships have reduced their speed by 20 percent [3. http://bigstory.ap.org/article/made-usa-back-style-small-businesses]. That means it takes an extra four or five days for a container ship to travel from China to the U.S.

Using international suppliers today is like getting trapped in quicksand: it was easy to jump in with both feet because of the allure of cost savings, but it’s hard or impossible for a supplier to get back out because they’ll never recoup their capital.

Regionally-based supply chains condense lead times and promise products that are delivered consistently and of a higher quality. Plus, in many cases, distributors will receive tax incentives for producing them in America.

Yes, reshoring can mean significant savings for distributors.

Distributors’ inventory management is best-served by regional centers. Distributors don’t need to mass-order products when the supplier is nearby. High-volume items will be moving continually through the system with an automatic reorder made possible thanks to warehouse inventory software [4. http://www.symbiantsolutions.com/product-overview/warehouse-management/]. Items with a lower level of demand can be stocked in smaller quantities with no worry of the product running out or becoming obsolete because distributors can stock quickly in small amounts with a local supplier.

The demand for U.S. goods is on the rise. A survey last year from ThomasNet found that 95 percent of manufacturers plan to buy more from domestic companies [5. http://bigstory.ap.org/article/made-usa-back-style-small-businesses] or keep purchases at the same level as 2011.

Warehouse inventory software also allows distributors to ship just in time, an option many customers are demanding these days. More companies are adopting the Amazon model and trying not to have to stock product, instead shipping directly from the manufacturer. The manufacturer fulfills the order, carries the inventory and handles all the risk while the distributor acts as the risk-free middleman by just monitoring the virtual warehouse and handling invoicing. The Amazon model frees up capital for the distributor while still allowing them to gain margins from a variety of products with a limited pass through.

Warehouse inventory software is the key for this new era of distribution. By using warehouse inventory software, distributors can process, track and sort their inventory from a variety of manufacturers. Especially for mid-tier or smaller companies, only warehouse inventory software can handle such unique system requirements at an affordable price tag.

But distributors need to beware of making the mistake of thinking they are lean just by reshoring. Lean is all about eliminating waste, eliminating anything that doesn’t provide value to the end customer and mastering a waste process that doesn’t add additional cost. If you receive a product, unpack it, shelve it, relabel it and ship it again, is that really providing value to the end customer? Or are you just creating additional steps?

Once operations are on the same continent, distributors should then focus on creating an efficient warehouse. They can minimize routes for picking and reduce the amount of times a product is handled.

David Hutchinson is the CEO and co-founder of Symbiant Technologies. He has over 25 years of experience implementing ERP and technology systems in both public and private sector organizations. He has received several awards, including the Richard Drew award for Creative Thinking by 3M Corporation.

The post Inventory Management: Is Reshoring US Manufacturing the Answer? appeared first on 6sigma.

But, no matter how great your barcode solutions are, you must have these items in place for your warehouse strategy to work:

There are at least 3 critical items that allow you to reduce costs and increase service level in warehousing:

1. Tight and Necessary Warehousing Processes
2. What Warehouse Metrics do you have in place to help you determine if your processes are going well or not.
3. You warehouse location is optimal in the first place to meet service level commitments.
4. These together will help you reduce costs in your warehouse.

To many, this might seem common sense, but we all know that common sense is not common practice.

Enjoy the post and learn more about Ginger after the article.

Let’s face it. We live in a technology driven world that demands speed in every realm of life.

As consumers, we expect companies to deliver orders and provide customer service as quickly as possible. In our businesses, we require instant retrieval of current information to run a successful company.

Think about it”if you offer the same products at the same price as your competitors”yet it takes you longer to deliver the goods”chances are that customers may opt to shop next door. Then you lose both the sale and the customer, which isn’t the desired result.

Barcode Solutions: Big Benefits For All

By design, barcode solutions”which are a type of automatic identification and data collection system”help companies compete in today’s competitive landscape. With affordable hardware and specialized software for expediting everyday tasks, such as managing inventory and tracking assets, you can not only deliver orders faster and improve customer service, you will:

• Optimize inventory levels

One of the biggest drains on cash flow is excess, slow-moving, and/or obsolete inventory. Barcode inventory tracking allows you to manage and optimize your inventory so your business is back in control.

• Respond quickly with real-time data

Businesses looking for a competitive advantage must have instant access to information. With barcode systems, companies can analyze data in real time so they can quickly respond to industry changes and customers’ behaviors.

• Reduce errors

Data entry errors and slow or inaccurate updates create problems that can negatively impact a company’s entire operations. Automated systems dramatically reduce the potential for error.

• Control expenses

In today’s economy, controlling operating expenses is vital to business’ bottom line. Barcode solutions promote efficiency, which helps organizations reduce or reallocate personnel expenses while increasing productivity.

• Increase customer satisfaction

We all want to attract and retain customers. Yet doing so can be difficult. For businesses to succeed, they must meet”or exceed”customers’ expectations. Did you know barcode solutions can improve retention? For example, they can ensure deliveries are fast and accurate, which leads to lasting loyalty.

The Price of Success is a No Brainer

For companies of any size and industry, the relatively low price of barcode scanners, printers, mobile computers, and labels makes the decision to invest in a barcode solution a no-brainer. Having organized, accurate data directly impacts an organization’s overall health.

Luckily for business owners, the cost of this success is priceless!

About Ginger Ebinger

Ginger Ebinger is the Marketing Manager for SystemID Warehouse, the nation’s leading value-added reseller of AIDC products and solutions for small-to-medium-sized businesses. An evangelist for all things barcodes, Ms. Ebinger routinely shares helpful information that keeps companies competitive.

The post Barcode Solutions: Gain a Competitive Advantage and Better Inventory Control appeared first on 6sigma.

In my last two posts I answered the why’s, what’s, where’s and who’s of inventory management. Instead of doing another question-themed post, this time I’m going to talk about the positive results your business can receive by using lean inventory management.

Before going into the article, keep in mind these items:

There are at least 3 critical items that allow you to reduce costs and increase service level in warehousing:

1. Tight and Necessary Warehousing Processes
2. What Warehouse Metrics do you have in place to help you determine if your processes are going well or not.
3. You warehouse location is optimal in the first place to meet service level commitments.
4. These together will help you reduce costs in your warehouse.

1. Less Waste

The food industry makes for an easy analogy. Restaurants work with products that have a short shelf life. If you order too many tomatoes, for example, then the extra tomatoes will go bad before you can use them and the money you spent on them will be wasted. Lean inventory management, by definition, means you have very little room for error. You can’t afford to hold onto products that don’t sell well or that you simply don’t need.

2. Higher Inventory Turnover Rate

This is the game of how quickly and accurately your supply can meet demand. Returning to the restaurant analogy, demand is what the customer wants and the supply is how quickly the kitchen can deliver their food. The waiter takes the order, gives it to the chef, and the meal is prepared. The waiter is busy taking orders and the chef is busy cooking, so who makes sure there’s always enough raw ingredients to prepare the meals? Because it’s hard for those in the trenches to see the inflow and outflow needs, the best way to keep a high inventory turnover rate is to have a lean inventory management system in place.

Customers aren’t going to wait for you to have the right ingredients; they expect you to always have them. Your inventory management system needs to track past trends and monitor current inventory levels. The warehouse manager needs to see all inventory levels at a glance and make decisions accordingly. Your inventory management tool shows the pulse of your inventory.

3. Lower Costs

Ever heard the advice don’t shop for groceries on an empty stomach? In the manufacturing world this translates to don’t order what you don’t need. Stockpiling surplus goods is lazy inventory management and wastes the company’s money. A lean inventory management approach keeps reorders accurate and lowers costs by preventing inventory overstocks.

4. Faster Operations

When you dedicate yourself to making your business lean, you’ll have to turn your inventory management system into a well-oiled machine. This means just-in-time (JIT) deliveries, accurate re-orders, and precise inflow and outflow. Inventory software can do wonders for speed and accuracy. The faster the warehouse manager gets accurate data, the faster he can make smart warehouse decisions.

5. More Flexibility

How fast can your warehouse adapt to a sudden spike in product demand? A fat warehouse can’t move as swiftly as a lean one. Your warehouse needs to be flexible and adapt to changing conditions. If warehouse A needs more of a product that warehouse B has, then the warehouse manager needs to know that warehouse B can fill the need and transport the inventory in a timely manner. Your warehouse needs to be a lean and mean supply and demand machine.

About Robert Lockard

Robert Lockard works at Fishbowl, the maker of the No. 1 requested inventory management solution for QuickBooks users.

Robert Lockard is a copywriter at Fishbowl, the maker of the No. 1 requested inventory management solution for QuickBooks users.

Robert is a prolific writer, having written more than 600 blog posts, hundreds of Web pages and dozens of news articles. He studied public relations at Brigham Young University and graduated with a Bachelor’s degree in 2006.

He has written on a variety of subjects, such as real estate, online marketing, QuickBooks inventory management and film reviews. Robert lives in Orem, Utah with his wife and two children. He loves running, biking, reading and watching movies with his family.

The post Lean Inventory Management: 5 Results You Can Expect appeared first on 6sigma.

Read more about Robert after his article.

In my last post I gave a word to the wise about the why’s of using inventory management software. This time I’m going to delve into the details of what, where and how to manage a warehouse.

The What

The purpose of a warehouse is to store parts and products that you need to fulfill customer orders. So it makes sense that you want to stock up on products your customers want and avoid holding onto a bunch of slow-selling products that will just sit in your warehouse for months. That’s what we call lean warehouse management.

The “What” also means what warehouse processes and warehouse metrics you need in order to meet demand and customer satisfaction. Often times, this means making use of a critical tool in warehousing, the warehouse management system.

To keep your warehouse lean, start by tracking sales trends to see which are your most popular products. We’ll get to how to do that in a minute. By figuring out which products are your top sellers, you can make smarter decisions about when to reorder products, how many to order and which locations to send them to. Plus, you can set up your warehouse to make it easier to get to those hot sellers.

The Where

Even if you have all the right parts and products in your warehouse, if they’re not well-organized and easy to find they won’t do you much good. You need to have an efficient system for receiving products, putting them in the right places and then locating them when an order comes in. But it’s not just the stuff inside that you should be concerned about, but you should consider where the distribution center should be located.

A good way to set up your warehouse is to group products together. Find out which products customers often order together and then store them near each other. Sometimes the connections can seem obvious (like peanut butter and jelly), but other times you might see buying patterns you wouldn’t have guessed without doing some research. Also, you should put your top-selling products close to the warehouse entrance to save time on receiving and shipping.

The How

The best way to identify what your top products are and where you should store them is to use warehouse management software. With barcode scanners, you can track orders, sales and more. Then they can filter all that information into reports, revealing information that would otherwise be tedious to compile. To find the right products to ship, you can use those same scanners to lead you through a map of your warehouse.

It can even help you monitor seasonal trends. If a product is popular during the summer, but not the winter, you can only stock up on it during the right time of year and not be stuck with too much the rest of the time. For manufacturers, you might consider using manufacturing inventory software to not only keep your warehouse well-organized, but also to speed up the production process with multilevel bills of materials, automatic work orders and other tools.

Next time I’ll talk about the positive results you can expect by using lean inventory management tactics.

About Robert Lockard

Robert Lockard works at Fishbowl, the maker of the No. 1 requested inventory management solution for QuickBooks users.

Robert is a prolific writer, having written more than 600 blog posts, hundreds of Web pages and dozens of news articles. He studied public relations at Brigham Young University and graduated with a Bachelor’s degree in 2006.

He has written on a variety of subjects, such as real estate, online marketing, QuickBooks inventory management and film reviews. Robert lives in Orem, Utah with his wife and two children. He loves running, biking, reading and watching movies with his family.

The post What, Where, and How of Warehouse Management appeared first on 6sigma.

Read more about Robert after his article.

Every company needs an inventory management system. Whether you’re in wholesale, retail, service or virtually any other industry, you have to keep track of your products. Here are five reasons why it’s so important to use small business inventory software:

1. Stop products from spoiling.

If you have too many products in your warehouse, you increase the risk that they will become obsolete, damaged, spoiled or stolen before you can sell them all. Depending on which industry you’re in, you’re probably more worried about some of these risks than others. For example, if you’re in the technology industry, you don’t want your expensive products to become outdated, damaged or stolen, but you probably don’t care about their freshness date. Food producers, on the other hand, put product spoilage high on the list of inventory management concerns.

2. Stop paying hidden costs.

Having too much inventory doesn’t just increase your risk of paying more in the future; it costs you more money all the time. Where will you store the extra inventory? You may need to buy a larger warehouse than you really need or rent trailers if your warehouse isn’t big enough. Plus, you have to provide security to prevent theft. And don’t forget about the money that’s tied up in inventory that you could have used to hire personnel or grow your business in other ways.

3. Stop disappointing customers.

On the other end of the inventory spectrum, if you have too few products in your warehouse, you face a whole other set of risks. Your customers don’t want to wait too long to get their orders shipped to them. So if you run out of the products they’re looking for or if your picking, packing and shipping processes are too slow, you could drive customers away.

4. Stop wasting time.

Inventory management can be time-consuming, especially if you’re trying to do it by hand or in Excel spreadsheets. Speed is everything in business. How fast you reorder products, ship customer orders and update your inventory records could make or break your company. That’s why an automated inventory management system is so important. Scanning product barcodes and setting up automatic reorder points can save valuable time by streamlining complex processes.

5. Start planning ahead.

You can’t afford to be purely reactionary in your inventory management. You need to start planning ahead and being proactive. Instead of being unprepared for sudden spikes in sales, try to notice these trends ahead of time by monitoring social media channels for mentions of certain products and looking at historical records to spot seasonal upticks in sales. All of this is easier said than done. It goes back to having a powerful inventory management system to free up your time and do most of the data analysis for you.

About Robert Lockard

Robert Lockard works at Fishbowl, the maker of the No. 1 requested inventory management solution for QuickBooks users.

Robert is a prolific writer, having written more than 600 blog posts, hundreds of Web pages and dozens of news articles. He studied public relations at Brigham Young University and graduated with a Bachelor’s degree in 2006.

He has written on a variety of subjects, such as real estate, online marketing, QuickBooks inventory management and film reviews. Robert lives in Orem, Utah with his wife and two children. He loves running, biking, reading and watching movies with his family.

The post Why Use an Inventory Management System appeared first on 6sigma.

There are at least 3 critical items that allow you to reduce costs and increase service level in warehousing:

1. Tight and Necessary Warehousing Processes
2. What Warehouse Metrics do you have in place to help you determine if your processes are going well or not.
3. You warehouse location is optimal in the first place to meet service level commitments.
4. These together will help you reduce costs in your warehouse.

Where to build a distribution center, fulfillment center, or warehouse is a strategic question. The answer to “where” are drivers to costs and the customer experience. Where to build your next warehouse is an incredibly important question to answer. After you answer the “where” question, then we need to discuss what warehouse processes and warehouse metrics ought you establish.

There are, of course, many factors to consider:

• What is your expected inventory profile?
• What is your geographic distribution strategy?
• State and Municipalities incentives? State and Local Government Incentives?
• Proximity to the Logistics Carrier (such as UPS World Hub or Ground Transport)
• The pool of local talent available in the area.
• Inbound and Outbound transportation costs.
• Access to interstate highway systems or inbound sea import locations.
• Crime rate, Housing, Educational Facilities
• State Taxes, Nexus
• Building construction codes and zoning restrictions

The above are important criteria and should be considered. A popular technique for selecting a new facility location based on different weighted criteria is the prioritization matrix.

But, to answer the question of “where”, also requires a more quantitative approach that should be used in concert with the above considerations. One common approach to identifying where to build the next single fulfillment center location is a method called the Center of Gravity Method.

Center of Gravity Method

The Center of Gravity Method is an approach that seeks to compute geographic coordinates for a potential single new facility that will minimize costs. It’s an approach where the main inputs that it considers are the following:

• Markets
• Volume of goods shipped
• Shipping costs

This method is beneficial because it’s (1) Simple to compute, (2) Considers existing facilities, (3) and Minimizes costs.

How To Use Center of Gravity Method

Step 1:

• Place existing warehouse, fulfillment center, and distribution center locations in a coordinate grid.
• Place the grid on an ordinary map.
• The relative distances must be noted.

Step 2:

Then, using the equations below,

• Cx= ∑ dix Vi/ ∑ Vi
• Cy= ∑ diy Vi/ ∑ Vi

We calculate the X and Y coordinates using these equations where Cx is the X (horizontal axis) coordinate for the new facility. Cy is the Y (vertical axis) coordinate for the new facility, dix is the X coordinate of the existing location, diy is the Y coordinate of the existing location, and Vi is the volume of goods moved to or from the ith location.

Step 3:

Once you have obtained the X and Y coordinates place that location on the map.

But, it doesn’t end there. As I mention earlier, there are other factors to consider. What this method allows is a point of departure – or, literally, a starting point of where (from the perspective of longitude and latitude) you options are for where to grow your fulfillment or logistics network.

Center of Gravity Example

Let’s suppose your company wants to expand its logistics network and locate a facility within a network of three existing facilities. Given the following assumptions below, what are the coordinates for the new potential location?

Let’s assume the following:

• Warehouse 1 has a daily outbound goods volume of 2,500 units
• Warehouse 2 has a daily outbound goods volume of 1,300 units
• Warehouse 3 has a daily outbound goods volume of 5,000 units

And the current coordinates of the existing facilities:

Given the assumptions and grid coordinates above, we get the following:

• d1x= 200
• d2x= 300
• d3x= 100
• d1y= 50
• d2y= 100
• d3y= 150

And,

• V1= 2,500
• V2= 1,300
• V3= 5,000

Which gives us,

• Cx= (200 x 2,500) + (300 x 1,300) + (100 x 5,000) / (2,500 + 1,300 + 5,000) = 158
• Cy= (50 x 2,500) + (100 x 1,300) + (150 x 5,000) / (2,500 + 1,300 + 5,000) = 114

If we were to plot the new suggested warehouse coordinates on the grid, we would get:

Of course the discussion doesn’t end here. Once a coordinate or several are identified given the current logistics network context, then other factors must be considered. This is just the beginning – a point of departure.

The post Center of Gravity Method in Distribution Center Location appeared first on 6sigma.

But wait, there are other food supply chains we’ve traced. But none is as cool as this one.

Where’s My Pizza?

Domino’s Pizza took a common question for pizza delivery orders and made it into a supply chain wonder and delighting the customer along the way. You can get a behind the scenes look at Domino’s Pizza online has what it is calling the “Domino’s Tracker”, which tracks the steps involved in the pizza you ordered. The steps are:

1. Pizza Order Placed
2. Prep Pizza
3. Bake Pizza
4. Quality Check the Pizza
5. Pizza is Out for Delivery

Knowing where your pizza is in the pizza “manufacturing” process provides several benefits:

1. Showing the order pipeline of events for the pizza baking process gives the customer peace of mind.
2. Showing the order pipeline of events for the pizza baking process reduces inbound “Where’s my Pizza?” contacts. This reduces costs for Domino’s Pizza.
3. The Domino’s Tracker shows a commitment to transparency.
4. The Domino’s Tracker is fun for the customer – it’s actually pretty cool.

Taking Something Old and Making it Novel

But wait – it doesn’t stop there. Domino’s Pizza takes a question it’s been getting for years and makes it into an opportunity to improve how they operate. The Domino’s Tracker also provides a 5 question survey entitle “Help us Get Better”, which is phrased in a simple but compelling way – in a way that would make me want to complete the survey.

Then, a perfectly phrased question: “We want your ordering experience to rock. How was it?”

Then, a question to capture the end-to-end pizza ordering experience by asking a satisfaction question after the pizza arrives: “Our goal is exceptional delivery. How was your delivery experience? Can you let us know after your order arrives?”

Then a quality question on taste and overall experience.

What is great about this survey is that it’s interactive and it is asked during the transaction – immediate feedback while the experience is fresh in our memory. Most surveys are sent out after the event, but this is during, which is a very unique approach. Moreover, the questionnaire was short and shows respect for the customer’s time, which is perfectly aligned to their approach of transparency and one of the reasons behind the Domino’s Tracker in the first place.

And, the free text responses, for a time, were publicly shown on Times Square. This is probably the most honest and boldest move Domino’s takes in their approach to transparency:

Domino’s really puts itself out there by providing both the good and the bad reviews to be publicly viewed by the world. This shows a commitment to transparency and its commitment to improving their internal operations by taking those reviews seriously.

About Domino’s Pizza Supply Chain

Domino’s offers Pizza, Pasta, Breadsticks, Cheese Dips, Beverages as its main offerings. In March 2010, Domino’s Pizza opened its 9,000th store. Approximately 3,400 of those stores are outside the United States. In 2010, Domino’s Pizza made 400 million pizzas.

The post Domino’s Pizza Supply Chain: Where’s My Pizza? appeared first on 6sigma.