Blue Horseshoe TransTech Division to feature present at Best Practices in Managing Work Standards Conference

Brian Lindenmeyer, Account Manager for the Blue Horseshoe-TransTech Division, will be a featured presenter at this year’s Best Practices in Managing Work Standards Conference in Rosemont, Illinois, on October 7, 2013. The focus of this conference is on how work standards are documented and maintained and how supervisors/managers use these work standards to coach and counsel associates.

The event will feature presentations on managing labor from representatives from Wal-Mart Logistics, FedEx, Accenture and Blue Horseshoe-TransTech Division. Brian’s presentation, titled “Best Practice” on Using Best Practices and Work Methods will focus on the following:

  • Documenting and maintaining best practices and work methods
  • Utilizing the work methods on a daily basis for coaching and counseling
  • The operational skills to coach and lead in a work standards environment
  • Aligning work methods to the work standards and performance programs

Measuring work in the modern world requires a systems perspective, so companies must begin looking beyond the traditional methods of measurement to achieve the most efficient operations. Discover the latest work measurement techniques at the one-day Best Practices in Managing Work Standards event.

What is Work Measurement?

Work measurement is performed to develop the standard time to perform operations. Time standards have traditionally been defined as the time required by a typical operator working at a normal pace to perform a specified task using a prescribed method, wit time for personal needs, fatigue and delay allowed. They are critical pieces of management information that apply to all kinds of work, including manufacturing, assembly and clerical. Managing this information is essential to the successful operation of organizations.

About Brian Lindenmeyer

Brian has over 18 years of experience in operations strategy and process improvement; working both as a client and a consultant. Previous projects have included strategy development, network design/optimization, operations improvement, ERP and SCM software justification and vendor selection, as well as the implementation of solutions in call centers and service operations, stores, distribution, and manufacturing. Brian earned a Bachelor of Science degree in Industrial Engineering from Clemson University, and carries multiple accreditations and certifications, including Lean Six Sigma, MOST, MSD, and MTM. He speaks frequently at regional and national conferences on operational leadership, continuous improvement, and human capital performance management.

About Blue Horseshoe – TransTech Division

Blue Horseshoe-TransTech Division is a management consulting firm that has been providing expert supply chain consulting solutions to Fortune 500 and mid-market businesses throughout the world since 1983. Based in North America, Blue Horseshoe, TransTech assesses business needs and applies world-class business applications to improve profitability and increase efficiency. For more about Blue Horseshoe-TransTech Division, visit www.transtechconsulting.com.

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Optimizing Your Distribution Network to Improve Service Levels While Reducing Costs

Today at SCOPE FALL, Mark Kaiser, Manager of Distribution Operations at Myers Tire Supply co-presented with Jeff Cook, President of Blue Horseshoe’s TransTech Division. The topic of discussion was “Optimizing Your Distribution Network to Improve Service Levels While Reducing Costs”

We shared with the attendees ways to optimize their distribution network in order to reduce operating costs, improve overall service levels, simplify the supply chain and address the concerns of various stakeholders at the most economical costs.

Some Q&A from a contest held at the presentation. How many can you get correct?

1. Where is the “epicenter” for US population?
2. Where is the “epicenter” for UPS and FedEx shipments to minimize service days and costs to US population?
3. Using standard UPS/FedEx ground service, what % of US population can be serviced by 1 facility in 1, 2, and 3 days?
4. Using standard UPS /FedEx ground service, how many facilities are required to service nearly 100% of US in 2 days?
5. Using standard UPS/FedEx ground service, how many facilities are required to service nearly 100% of US in 1 day?
6. Evenly divide 1 facility into 2. What is the % Increase (Industry Standard) in overall inventory to support those 2 facilities?
7. Does inbound or outbound activity have a larger impact on the number of DC’s and the location?
8. Do inbound and outbound freight costs increase or decrease with additional facilities?
9. What is the latest time carriers can pick up freight in order to meet their published delivery day service?
10. How many distribution facilities did Myers eliminate as part of their Network Optimization Project?

Answers:

1. Plato, Missouri. 170 miles SW of St. Louis
2. Louisville, KY
3. 1 Day – 15%, 2 Days – 75%, 3 Days-82%
4. 3
5. 18
6. 41.4% SQRT(2)
7. Typically Outbound, as there is a larger # of shipments for same volume/weight.
8. Inbound costs increase due to more shipments. Outbound costs decrease due to shorter distances
9. Varies, Target is 8:30pm
10. 29 total (From 33 facilities down to 4)

If you are interested in the full presentation and would like to talk with our team about ways to optimize your own Distribution Network, contact us today!

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Voice Picking Do’s and Don’t

Say Ready . . . Ready . . . Voice Picking Do’s and Don’t

One of the Senior Vice Presidents’ of the Blue Horseshoe TransTech division recently gave a webinar on supporting the development of an e-commerce transformation with voice picking. Having recently completed a project utilized a voice driven case pick operation, the webinar really struck a chord. Thinking about what our company has done with voice, I came up with a few dos and don’ts for companies that are considering voice picking at their company.

Do

Have a facility numbering scheme that facilitates voice picking. In the facility numbering scheme that we use at our client, the pickers are given a numeric aisle, bay, and level. This allows them to easily know where they are going.

Don’t

Use a lot of letters in your locations. A strict numeric naming scheme can reduce the time spent looking for location signs. Which works better, “Go to AB123C pick 20 CS,” or, “Go to 113 pick 20 CS?” Alphabetic naming can also be confusing to workers from non-English speaking backgrounds.

Do

Layout your facility and store your products in a manner that facilitates voice picking. Successful voice picking facilities have one item of one lot in each pick location. This allows you to minimize the number of prompts the employees have to be given to make a successful pick.

Don’t

Try to do voice picking before you have optimized the storage and processes in your warehouse. Some companies will try to implement voice before improving their layout, storage configurations, and picking processes. This can lead to an overcomplicated voice implementation that will not deliver the expected results.

Do

Train employees in the actual working environment. When creating the voice templates and teaching employees how to use the system, make sure that you are doing it in the actual environment were the work will be done.

Don’t

Train your employees in a quite conference room in the back of the facility. When the voice software is trained in a quite conference room, employees will often not speak the same way they would when they are working in the warehouse. I have seen many people trained in quite spaces be unable to get accurate results from voice picking, because after picking 110 cases of product, their voices sound different than when in the training environment.

Voice picking can be a key component of a successful facility improvement project. For more information on Voice Picking and the technologies that enable successful voice picking, you can sign up for a recording of our Sr. VP Jim Butler’s webinar from the Modern Materials Handling website.
For more information on how Blue Horseshoe helps integrate best of breed ERP and WMS solutions with automation and voice, you have to read our post about the coverage we are getting about the work done at Wirtz.

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Customer Spotlight: Regis Corp.

Original Article by Supply Chain World

As the largest owner of hair salons in North America, Regis Corp. already has some substantial advantages over its competition. According to Vice President of Logistics Bruce McMahon, one of those is how the company’s size benefits its supply chain operations. Whereas smaller salon chains and independents have to handle their purchasing individually, Regis Corp.’s size in the marketplace makes it easy for the company to supply all of its salons directly and through a single order.

Regis Corp. owns and operates approximately 8,000 salons throughout North America, and McMahon says this scale allows Regis Corp. to operate its supply chain with the greatest efficiency possible. Thanks to its state-of-the-art distribution network, the company can supply its salons with the right products at the right time and with one streamlined process. With more than 13,000 SKUs within its inventory, this kind of efficiency is crucial for Regis Corp.

Even though the company already boasts perhaps the most efficient distribution network in the industry, McMahon says Regis Corp. continues to push for improvements. The company plans to open new distribution centers in strategic locations in the United States, and continues to refine the technology it puts to use in its system. As long as the company continues playing to its strengths, Regis Corp. will be an example of operational excellence for the long term, McMahon says.

Bigger is Better

Because Regis Corp. is significantly larger than its next-largest competitors, the company has the luxury of being big enough to bypass the traditional distribution process in which stores order from distributors. “With our distribution infrastructure, we’re able to go direct to vendors,” McMahon says. “If there’s anything that sets us apart, it’s that our size allows us to have that distribution structure.”

Regis Corp. buys directly from major vendors including Paul Mitchell and L’Oreal, consolidating the orders of nearly 8,000 corporate-owned and franchise Regis salons into a single purchase. “We buy once a week from Paul Mitchell, and there’s one invoice,” McMahon says.

The company’s ability to purchase for all of its salons at the same time makes for a streamlined and cost-effective solution. Transportation costs are lower and the delivery schedule is arranged so that salons only have to receive one delivery at a time. “It is much cheaper to have UPS walk into your salon with two boxes once instead of twice with one box each time,” McMahon says.

Careful and Cautious

Although Regis Corp. avoids many of the logistics hassles and headaches most salons have to contend with, there still remain some challenges that it must be careful with, McMahon says. One of the company’s biggest challenges is simply juggling an inventory of more than 13,000 SKUs and finding a balance between a broad selection and an efficient throughput.

Also, because the majority of the products it handles are liquids, shipping them to salons is more difficult than with dry goods. UPS handles nearly 95 percent of the shipping for Regis Corp., and McMahon says the two companies have worked together to develop packaging with enhanced integrity. As a result, Regis Corp. has reduced damages caused during shipping by more than 500 percent in recent years.

Another significant challenge is the fact that salons usually want to receive all of their deliveries at the same time. Because the typical shipment size is 10 boxes, McMahon says proper planning is essential. “Anytime you have a retail company that allows you to put your delivery to the stores on a schedule, that schedule becomes critical,” he says, adding that Regis Corp. works to maximize trailer fills as trucks are sent out.

Rethinking the Plan

McMahon says Regis Corp. revises its strategic five-year plan every two years to keep up with changes in the industry. As it stands, a major portion of the company’s current five-year plan is to add distribution centers in cities such as Chattanooga, Tenn., and Salt Lake City to join its current facility in Minneapolis.

McMahon says Regis Corp. is proud of the technology it utilizes in its distribution center, and continues to investigate new ways to integrate technology into its operations. The company uses a warehouse management system called LogisticsPro that interfaces directly with its inventory system. Combined with warehouse control and execution systems, Regis Corp. can select from a number of options for shipping product depending on the conditions. With the help of UPS’s Quantum View system, Regis Corp. can track 99.995 percent of all boxes from the distribution center to the salon.

McMahon says Regis Corp. strives for continuous improvement, and emphasizes the application of lean and Six Sigma principles whenever possible. The company’s entire management team has been trained to Six Sigma yellow belt level through the University of Tennessee. Even though Regis Corp. already does so many things right, McMahon says there’s always an opportunity to do something better. “At times it’s humbling when you look at something you’ve been doing for many years and then the ah-ha moment arrives when you realize you don’t have to do that anymore,” he says.­­­

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A Roadmap to Operational Excellence through Labor Management

PART TWO

In my last installment, we covered the first 3 habits of highly productive supply chains. Before we cover the last four, let’s review what we’ve covered to-date:

The 7 Habits of Highly Productive Supply Chains

  1. Get out of the muck, but stay grounded. Establish a vision for organizational readiness, and being the process of getting grounded in the execution of excellence.
  2. Clarity = Simplicity. Knowing who your real customer is will eliminate the background noise and ensure roles are understood, and leadership can focus on eliminating the stress within each associate.
  3. Execute the game plan – always. Operational leadership, those who live in the trenches, their goal is execution. Establish the simple, clear vision – and develop a strategy that will deliver business results daily.

A clear & simple vision with one strategy in mind can foster the sustainable growth required during these economic times through small incremental change. Breaking through to the next level requires a clear vision, allowing leaders to focus on the development of your most important asset – your people!

Let’s get cover #4 and #5 of highly productive supply chain habits:

4. Point, Aim, Shoot, but make sure you Focus. Great organizations train associates to see through fog of the complex business environment, training associates to see each resource as an opportunity causing success or as a weakness that may cause you to fail. One trend is the amount of information overload that is happening…the electronic chatter going on around them. Make sure your operational leadership has time to think, even if it means putting the Blackberry in a drawer for 15-30 minutes.

5. Alter Roles. Employees have certainly seen their role change, at least what they are responsible for; but typically the title, job description, and pay haven’t. What’s important is to realize that the old silos many organizations had no longer exist – which is a good thing. It’s time for companies to embrace the idea that all levels have influence, and foster collaboration. This is your opportunity to train and teach your associates to see and identify waste and opportunities to save resources, become green and simply save green (money).

Consistent feedback, whether it’s praise or counseling, along with listening to associates provides the right framework for continuous measurable improvement. Now that you have established a vision with a clear executable strategy – it’s just the beginning. The real opportunities lie in fostering the organization to identify waste to save resources (become green) to save green (money)! In order to maintain this state of operational excellence through Labor Management, let’s look at the last two habits:

6. Constantly improve and adapt. Establishing a vision with a clear executable strategy is the beginning. Effective execution doesn’t mean clinging to what always used to work. Now more than ever, managers need to be flexible and seek small innovations constantly. Maybe it’s a wave (formation) change, or a staffing (line-up) adjustment, anything that may reduce costs and increase productivity…but most importantly it should be quick to adopt.

7. It’s all about wins and losses. Ask any coach recently who is now working at a new program if anything matters aside from the wins and losses. It’s sad but results are all that matter. And no results are capable without people, or players. Granted, we all like to say that people come first, but in the end it’s all about results. This issue really creates a problem since we wonder which one to focus on – results or people – but you can do both. Regardless of whether you are winning or losing, you must maintain an atmosphere in which your organization has all the tools they need to succeed. This comes down to coaching and building a team commitment, but also providing each member of your team the clarity and flexibility to be effective.

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Top Logistics Trends for 2013

Another year, another roller coaster of threats and opportunities as it relates to exceeding the demand placed on companies’ supply chains. While some may tend to focus on the threats, amidst economic uncertainty and a more competitive landscape, it’s important to also focus on where opportunities exist to exceed the demands of customers.

Here are ten key logistics trends that will certainly drive many of the decisions organizations will make to improve their supply chains.

1. Contingency Planning

2012 saw continued supply chain disruptions due to manmade and environmental disasters. At the beginning of the year, automakers and computer manufactures saw supply disruptions continue from the 2011 Earthquake in Japan. As the year progressed, many were affected by the drought in the Midwest which started to hit commodity prices at the end of the year. Global operations were also affected by the power outages in India and unrest in Africa and the Middle East. As the year came to a close, the Northeastern US was hit by Hurricane Sandy, which knocked out the supply chain capabilities of many organizations. In 2013, companies need to take steps to prepare their supply chains for any number of contingencies that while unpredictable, can be mitigated with the right planning.

2. Workforce Management / Labor Planning

As the US economy slowly recovers from recession, several changes still remain for human capital within the supply chain. Hiring seems to be trending upward, but productivity per FTE is declining. The employment increase has been brought on by higher voluntary turnover, not new hires. Organizations that understand and adapt to this paradoxical environment will be best positioned for higher returns on their human capital investments

3. Logistics Clusters

A logistics cluster is a location that has political, environmental, or business factors that give companies an advantage when locating their operations there. While there is a lot of debate in the industry on exactly which cities contain these clusters, it is important that companies determine if locating in one of these clusters is right for their business.

There have been a number of articles that have pointed to the importance of logistics clusters when determining where to locate supply chain operations. This discussion will continue into 2013 as companies continue to invest in new facilities or move operations to locations that are better suited for their business.

4. Phased Expansion

As improvement in the economy affects labor market, it also affects how companies handle expansion of their operations in 2013. As companies look to expand their operations, they are looking for a clear approach to smart expansion. Gone are the days of, “If you build it they will come.” Companies are now taking a balanced approach to facility and network expansion.

There is a need in many companies to have someone look at their operations and determine the best approach to facility and network expansion. Due to still tight budgets in the coming year, a balanced analysis of returns over the next 3 to 5 years is seen as a smart plan for the coming year.

5. Network Optimization

As buying patterns for companies and consumers shift, many suppliers are not effectively optimized to handle changing markets. In past years, companies did not have the resources to invest in a full network analysis. As more manufacturing is being insourced to the United States and Europe, there is a need to evaluate current network operations and develop an optimal network strategy for the coming years. The end of 2012 saw many articles published on the topic of insourcing. This is seen to be a major topic of discussion in 2013 and will be an idea that many companies will need to look at in the coming year.

6. ERP Enhancements

Many companies have found their ERP (Enterprise Resource Planning) systems stretched to their limits as their businesses change and grow. Many systems installed 5 to 10 years ago do not have all of the functions needed to manage transportation, warehousing, or order management with the effectiveness of modern systems. As the economy improves in 2013, companies will look to replace or enhance their current systems with more effective modules or solutions.

7. WMS Upgrades

Believe it or not, many companies either do not have a functional WMS or have a WMS system that is unable to do tasks such as directed put away, zone picking, or interface with an ERP or TMS system. As companies look to upgrade their systems in 2013, WMS upgrades are ranking highly on many VP of Operations wish lists.

8. Advanced Analytics

Many companies are starting to use the massive amounts of data that their systems produce to get insights about their operations, customers, and employees. As companies invest in their systems to generate more data, there is a greater need than ever for someone to provide advanced analysis so that companies can get greater insight into their businesses.
2012 generated a lot of news about analytics, and 2013 should only continue that trend.

9. Supply Chain Transparency

Companies requiring greater transparency to their supply in order to meet increasing customer demand. With many retailers providing their customers with live inventory, consumers in all areas of business are demanding live visibility to all areas in the corporation. As markets remain uncertain in 2013, management also needs greater visibility to all areas of the supply chain so that business decisions can be made quickly.

10. Supply Chain Safety

Governments around the world are starting to promote rules and regulations to increase supply chain safety. In the US alone, new regulations are published almost daily that require businesses to increase the safety of the supply chain. 2012 also saw many disasters both manmade and natural that caused businesses to consider how to better improve the safety of their supply chain in the coming year.

Obviously, trends do not emerge on January 1 and end on December 31. Supply chain professionals need to consider various factors that may impact their supply chain. The ten trends outlined here may or may not be impacting the decisions you are trying to make as you prepare your supply chain for the future. Regardless of your situation, TransTech-A Blue Horseshoe company- can help evaluate and implement the solutions needed for a sustainable and profitable supply chain.

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Promat Show 2013

Discover the latest solutions to move your business forward as the industry’s leading innovators showcase their latest manufacturing, distribution and supply chain equipment and systems at ProMat 2013 held January 21-24 at Chicago’s McCormick Place.

ProMat 2013 is the one show where you will see in person, in action the best solutions and innovations the industry has to offer and meet the leading providers face-to-face. There is no cost to attend the exhibits and conference sessions. Register Today!

Location: McCormick Place, Chicago, Illinois
Promat 2012 website
Booth # 3482
Jan 21-24

Attend our Seminar…

Optimize Your Distribution Network To Improve Service Levels While Reducing Costs

Seminar Number WED2:15H
Date Wednesday, January 23, 2013
Time 2:15 PM – 3:00 PM
Location Theater H

What You Will Learn

Determine the optimal distribution network that reduces operating costs, improves overall service levels, simplifies the supply chain and addresses the concerns of various stakeholders at the most economical costs.

Key Takeaways

    • Technical infrastructure requirements
    • Costs and benefits including operating expense, balance sheet and profit and loss impact
    • Implementation timeline
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A Roadmap to Operational Excellence through Labor Management

PART ONE

In my prior posts, I’ve covered a lot on the reasons for Labor Management in distribution. At this point if you are still skeptical on the benefits, hopefully this roadmap will help you with achieving operational excellence and understand the cultural enhancements from focusing improving productivity through methods and measurements.

If you are still wondering, “Why Labor Management?”, let’s review the benefits:

  1. Labor Management helps operations with its greatest challenges: Productivity, Utilization, Management/HR Issues, Overtime, Safety and much more
  2. The payback (ROI) is typically 8-12 months, and often less! Industry analysts and journalists routinely call this a Gold Standard for ROI.
  3. Labor Management helps justify future MHE and automation requirements. It’s important to get all that you can from your existing assets before you replace them!
  4. Labor Management is the basis for REAL activity-based costing (ABC). Do you know what customers are most profitable? Do you know what value-added services are costing you bottom-line profits?

Typical reactions to failures, or even a simple economic downturn, gravitates companies to focus on how it’s always been done – using historical measurements as the baseline. Rarely does a company without Labor Management have the ability to look at current state and determine if they are even meeting current potential to support future state decision making. This typical solution mentality leads to typical results. If you use traditional metrics, traditional training and tradition end-of-period reporting – is there any reason to believe you are going to achieve anything more than typical results? Without individual accountability, and no real visibility into lost time, companies are going to guess at what is really the source of the lost productivity, utilization and increased costs.

There are some things you can do to make sure you achieve the results of a Labor Management system, and more importantly, sustain them. Here are the 7 habits of highly productive supply chains. Just like coaches do with players on athletic teams, managers must practice the basics – the blocking and tackling skills – in order to execute on game-day. Let’s cover the first 3 habits to ingrain into your culture for success.

The 7 Habits of Highly Productive Supply Chains

  1. Get out of the muck, but stay grounded. Establish a vision for organizational readiness, and being the process of getting grounded in the execution of excellence. Quite often companies I visit have management that is either pulling weeds, or they are dreaming up pie-in-the-sky ideas on how to improve. Yes, operational leaders need to stay close to the action and they should often lead by example. But if you are pulling weeds, you may miss the opportunity. With that said, now is not the time blue-sky strategizing. Sustainable growth, particularly during these economic times, entail small but important changes take place. By establishing a vision for organizational readiness, you begin the process of getting grounded.
  2. Clarity = Simplicity. Now that you’re out of the muck (and sky), establish a clear, simple vision. Just as your leaders need time to focus, associates that are being led need it as well. But what many companies fail to realize is that those players they have out on the playing field rarely know what to focus on at any given time. One of the best examples of this is asking people who their customer is. It’s great that we all know who the company’s customers are, but what’s important is that the receiving department realizes their customer is the put-away department. Eliminating the background noise for each department, and each individual will allow your leaders to make sure that each role is understood, and focus on eliminating the stress within each individual.
  3. Execute the game plan – always. We often talk about the right strategy and models are very important to deal with the troubles that come along, and these points are critical. But for the operational leadership, those who live in the trenches, their goal is execution. Upon establishing a simple, clear vision, develop a strategy that will deliver business results daily. One technique is to establish an organizational readiness framework that focuses on continuous measurable improvement.

For the remaining 4 habits, tune in for the next installment of my thoughts on how to achieve excellence through effective Labor Management.

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The Basics of Labor Management – The Pitfalls, Myths and Keys to Success

In my last post about Labor Management, I indicated there were three cornerstones to the program – Planning, Monitoring and Measuring. This is nothing new to those who are familiar with Labor Management and engineered labor standards.  For those who are still not sure how Labor Management and a discrete engineered standards program can help improve productivity with minimum capital investment, let’s look at why Labor Management continues to be a topic of discussion.

Avoid Common Pitfalls – Measure, Monitor and Manage

Labor Management for distribution centers is a continual topic about supply chain journals, market analysts, and presentations at every trade show.  Why does this program seem to continue to have such media coverage but the embracement by companies is still not as mature as things such as warehouse management (WMS), automation (MHE) and other technologies?  Particularly when the benefits of a Labor Management implementation are presented at 15-30+% – sometimes as high as 45% – without major process changes?

To answer this, let’s address where the ROI really is in a Labor Management implementation, how you can avoid the common pitfalls, and most importantly how you can achieve sustainable success that is promised from engineered standard measurements, real-time monitoring and labor planning.

If you think you don’t need Labor Management because you already have Units Per Hour (UPH) and complex WMS reports that show key metrics by department or even individual, think again.  Remember, you cannot manage what you do not measure!  If you are only measuring the units per hour by function, than that is all you can manage to.  And the variation is orders and products is enough to make this an inconsistent measurement.  (Okay, if all you pick is one item of the same size in the same quantity from the same location – then yes, UPH is fine.)

Regardless of the economy, companies always need to know what it costs to run their business.  Labor is one of the largest costs and Labor Management is designed to help you manage it.  Additionally, Labor Management has evolved to provide real-time planning, quality monitoring, and dashboards that make it easier for managers and supervisors to know where the opportunities lie for improvement.

Top Labor Management Myths

For those still unsure of if Labor Management is a priority, or for those that have already dismissed the benefits as being realistic, let’s debunk the myths.

    1. MYTH: Installing a LMS will save us 15-30% without doing anything else. Yes, installing Labor Management does not save you 15-30% alone.  But a LMS will show your managers specifically where opportunities lie much faster and easier than typical reports.
    2. MYTH: Labor Management requires significant maintenance to maintain accurate measurements. Labor Management standards need to fair and consistent.  Too often people use the word accurate.  In fact, I would argue that accuracy is not even a word that should be used in this context.  Regardless, labor management can be as accurate as you want it to be, but in reality the multiple variables allow the standard to be fair and consistent for each associate regardless of the tasks being completed.
    3. MYTH: Labor Management systems require an incentive program to achieve the savings depicted. While the projected savings of 25+% do typically include an incentive program, companies should not ignore the 15-25% – or 10% for that matter – that can be achieved with just the LMS, engineered standards, and a continuous improvement program around the best practices.

 

How to Build a Foundation for Success

In order to achieve these savings and not approach the common pitfalls, it’s important that companies focus on the fundamentals.  While this list of 4 items does not encompass an complete implementation plan, these are definitely the foundation to success:

    1. Define the right way to do the job. Companies often indicate they have Standard Operating Procedures (SOPs), Job Descriptions or other process documentation.  The problem with these documents is that explain what to do for a job.  They do not explain HOW to do the job.  Best practices, preferred methods, or any true LEAN process document will outline the key steps on how the job should be completed.
    2. Coach your employees to the best method. Supervisors need to become coaches who help show where time is being lost in poor methods.  For example, in a pick to pallet operation, parking in the middle of the aisle vs next to the slot will cost you a significant amount of time.  Show me an SOP that calls out where to park the pallet jack.
    3. Measure what you want to manage. Remember, you cannot manage what you do not measure, but be realistic.  Pareto principle should apply when considering what to measure.  Where is 80% of the labor used – it’s likely only 20% of the operations.?
    4. Praise great performance as much as you counsel poor performance. Labor Management systems should be used to encourage and acknowledge great performance more often that counseling subpar performance.  This is often forgotten by management.  Remember, people like goals and like being acknowledged when exceeding expectations!

Hopefully this has given you a solid starting point for considering Labor Management as your next initiative.  In my next series, we will look at a roadmap of 7 key habits to instill into your operations management team to exceed the expectations and become a true learning organization on continuous improvement.

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Plan, Monitor and Measure – The Cornerstones of Supply Chain Labor Management

By Brian Lindenmeyer

It’s surprising how many companies have not yet considered Labor Management as their next initiative. Especially since most companies would agree that you first need to measure what the current state is to understand if the future state is an improvement right? The old phrase of “you cannot manage what you do not measure” was one of the focal points of the prior blog, so let’s pick up where we left off regarding managing your most important (and typically largest variable) supply chain cost – your workforce!

There are three cornerstones to Labor Management – Planning, Monitoring and Measuring. Your Labor Management program should be designed to support all three of those and each of them require one another to be effective. You cannot plan or monitor what you do not measure, just as you should not try and measure what you do not need to plan or monitor. For example, if you have 1 person handling returns out of 100 people, is it necessary to measure that returns process with 5 variables and discrete handling and traveling characteristics?

Planning with Labor Management

An effective Labor Management system should be designed to help you plan labor requirements by area, function, wave, or any other critieria that drives the execution of your distribution center. This plan should be derived from multiple variables supported by standards that are based on what it should take to complete the job.

Monitoring with Labor Management

We all know that the only thing right about a forecast is that it is wrong. So while a labor plan may give you a starting point, it’s important that a Labor Management system give your operational leadership the ability to monitor the workforce productivity in real-time. This real-time access to individual productivity will help managers make the necessary decisions about labor re-balancing requirements as the work plans progress during the day.

Measuring with Labor Management

Industrial Engineers know that seconds are for track meets (not labor standards) just as operation managers should know that UPH (units per hour) is for facility reports. Industrial Engineers who know work methods and measurements know that standards are in decimal minutes; and operation managers should know that labor performance of an individual is driven by work content. Utilizing multi-variant discrete standards provides a great view of labor, and coupling it with the workforce management systems to effectively track labor from clock-in to clock-out will uncover the lost time and productivity that can easily be regained. And by regained I mean get more out of what you already got.

In my next segment, we’ll look at the basics to Labor Management – where to begin and what to look for as you consider this initiative for your supply chain operational excellence.

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Managing the Most Important Part of Your Supply Chain. The People.

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Managing the Most Important Part of Your Supply Chain. The People (Labor)

Supply Chain Logistics Series: Labor Management

by Brian Lindenmeyer

As an industrial engineer who has worked in a variety of industries and verticals, my focus has always been how to get more out of what you’ve already got. And more often than not, in the supply chain of companies, it’s about labor. Labor management is one of those topics that has been around for a long time, but doesn’t seem to go away. While there are companies that have had fantastic results year after year, there have also been companies that have gone away from using the tool like they did before. Often the reason is that they claim that they have no embraced LEAN or some other continuous improvement initiative – but to say that Labor Management is not a part of LEAN is going to be something we discuss in other conversation.

The one thing I’ve learned in looking at the successes – and failures – of Labor Management implementations is that you get what you “P” for. And “P” could mean “pay”, but also “praise”, “practice”, among others.

So let’s look at why it’s important to manage labor, how you can set the right foundation to support continuous improvement, and ultimately understand how to effective plan, monitor and measure the results of your improvement.

  1. You cannot manage what you do not measure.

    My father was also an Industrial Engineer, and as a professor emeritus he stressed this to his students (and his three boys). There are a lot of measurements out there in the Supply Chain: Perfect Order, On-Time Delivery, Fill Rate, Units Per Hour, but in the end, what are you managing? PEOPLE. So if you are not measuring people, how do you expect to manage them properly?

  2. At the same time, you cannot manage all that you measure.

    The advancement in technology has created an easy means for companies to get into information overload. Reports, dashboards, KPIs, and alerts are just a few of the items that every company is proud to display. However, what is more important when you are driving, the rear view mirror or the windshield? Too often we get wrapped up in what reports show, but that’s only going to show you where you’ve been, and the key is looking for metrics and measurements that can help you navigate to a future (better) state.

  3. Understand what motivates your most important asset.

    I’m not going to say that Labor Management programs are going to point this out. But if you understand how to interpret the information Labor Management provides you, then you can equip your leadership team with the necessary tools to foster continuous improvement and operational excellence.

In the next supply chain segment, we’ll look at the cornerstones to Labor Management – Planning, Monitoring and Measuring.

ABOUT TRANSTECH CONSULTING

TransTech Consulting, A Blue Horseshoe Company is a privately held management consulting firm that has been providing expert supply chain consulting solutions to Fortune 500 and mid-market businesses throughout the world since 1983. Based in North America, TransTech assesses business needs and applies world-class business applications to improve profitability and increase efficiency. For more about TransTech, visit www.transtechconsulting.com.

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Blue Horseshoe named One of America’s Fastest-Growing Private Companies

Inc. magazine 500-5000 list of fastest growing companies in America

For the second time, Inc. magazine ranks Blue Horseshoe on its Inc. 500|5000, an exclusive ranking of the nation’s fastest-growing private companies. The list represents the most comprehensive look at the most important segment of the economy—America’s independent entrepreneurs.

As an Inc. 5000 honoree, Blue Horseshoe now shares a pedigree with Microsoft, Yelp, Zappos, Exact Target, Jamba Juice, Under Armour, Timberland, Pandora, Patagonia, Intuit, and other notable alumni. In addition to Blue Horseshoe, the 2012 list added such powerhouses as Publix Supermarkets, CDW, Levi Strauss and a little social media company called Facebook.

“We are thrilled to be named to the Inc. 500|5000 list for the second time,” said Chris Cason, President of Blue Horseshoe. “Delivering quality solutions, listening and reacting to our customers, and creating a rewarding and shared learning work environment are a few of the major contributors to our success. We are honored by this prestigious recognition and look forward to the future success of Blue Horseshoe.”

For more than 30 years, Inc. has celebrated the fastest-growing private companies in America. To rank among the 2012 Inc. 5000, the companies had to thrive through three of the toughest stagnant economic years. Median growth rate of 2012 Inc. 500|5000 companies remains an impressive 97 percent. The companies on this year’s list report having created over 400,000 jobs in the past three years, and aggregate revenue among the honorees reached $299 billion.

Blue Horseshoe has also recently been awarded as the Winner of the 2012 Microsoft Dynamics Distribution Industry Partner of the Year Award, a 2012 Microsoft President’s Club Member, a finalist for the Microsoft Dynamics Regional ISV of the Year (United States) Award, and the Infor 2012 Values Award.

Companies on the list will be featured in the Inc. magazine September issue and awards will be presented in October at the 31st Annual Inc. 500|5000 Conference & Awards Ceremony in Phoenix, Arizona. Complete results of the Inc. 5000 can be found at www.inc.com/inc5000

“Now, more than ever, we depend on Inc. 500/5000 companies to spur innovation, provide jobs, and drive the economy forward. Growth companies, not large corporations, are where the action is,” says Inc. Editor Eric Schurenberg.

About Blue Horseshoe

Blue Horseshoe is a privately held solution services firm based in North America (with offices in Carmel, Indiana, Columbus, Ohio and Denver, Colorado), providing Enterprise & Supply Chain Applications, System Design and Implementation, as well as Strategy & Management Consulting services to Fortune 500 and mid-market businesses throughout the world.

Created by a group of seasoned business leaders with over two decades of unique business, engineering, and supply chain experience; we are committed to being a different kind of consulting organization. We are consulting professionals, not professional consultants. We assess business needs and apply world-class business applications to improve profitability and increase efficiency. For more information call 317.573.2583 or visit www.bhsolutions.com.

About Inc.

Founded in 1979 and acquired in 2005 by Mansueto Ventures, Inc. is the only major brand dedicated exclusively to owners and managers of growing private companies, with the aim to deliver real solutions for today’s innovative company builders. Total monthly audience reach for the brand has grown significantly from 2,000,000 in 2010 to over 6,000,000 today. For more information, visit http://www.inc.com.

About the Inc. 500|5000 Conference

Each year, Inc. and Inc.com celebrate the remarkable achievements of today’s entrepreneurial superstars—the privately held small businesses that drive our economy. The Inc. 500|5000 Conference & Awards Ceremony brings together members of the Inc. community, both a new class of Inc. 500|5000 honorees and the list’s alumni, for three days of powerful networking, inspired learning, and momentous celebration. Please join us October 3–5, 2011, at the JW Marriott Desert Ridge Resort & Spa in Phoenix, Arizona. For more information about the 2012 Inc. 500|5000 Conference & Awards Ceremony and to register, visit http://www.inc500conference.com

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Blue Horseshoe Honored as 2012 Microsoft Dynamics Distribution Industry Partner of the Year

[Carmel, IN,] [USA] — Today, Blue Horseshoe proudly announced it has been selected as the winner of the 2012 Microsoft Dynamics Distribution Industry Partner of the Year Award. The company was honored among a global field of top Microsoft partners for demonstrating excellence in innovation and implementation of customer solutions based on Microsoft technology.

Microsoft Dynamics partner of the year

“This prestigious recognition by Microsoft supports Blue Horseshoe’s ongoing commitment to deliver superior products and excellent customer service to clients on the Microsoft platform,” said Chris Cason, President of Blue Horseshoe. “Our hardworking and skilled Microsoft experts are dedicated to driving innovation, creating value, and improving business results for clients across the globe.”

Awards were presented in multiple categories, with winners chosen from a set of nearly 3,000 entrants worldwide. Blue Horseshoe was recognized for providing outstanding solutions and services in Microsoft Dynamics Distribution Industry.

The Microsoft Dynamics Distribution Partner of the Year Award recognizes the partner who exhibited excellence in providing innovative and unique solutions based on Microsoft Dynamics to customers in the distribution industry. The winner demonstrated industry knowledge and expertise, as well as consistent, high-quality, predictable service to Microsoft Dynamics customers. They also demonstrated business leadership and success through strong growth in new customer additions and revenue.

“We are pleased to recognize Blue Horseshoe as the Microsoft Dynamics Distribution Partner of the Year. They have demonstrated strong value and distinction across multiple vertical markets by extending Microsoft Dynamics AX industry capabilities and delivering on the needs of our mutual customers.” – Doug Kennedy, vice president, Microsoft Dynamics Partners and Support Services

The Microsoft Partner Awards recognize Microsoft partners that have developed and delivered exceptional Microsoft-based solutions during the past year. View official Microsoft press release.

Blue Horseshoe selects and implements ERP and SCM solutions throughout North America, Latin America, and Europe. Distribution industry verticals include Wholesale, Food & Beverage, Retail, 3PL, CPG, Oil and Gas, Medical Device, and Wholesale & Retail Grocery.

Blue Horseshoe’s experts help businesses to grow and improve by applying practical and economical tier one solutions that include a specific focus on Microsoft Dynamics AX, as well as supporting Microsoft Dynamics GP, and Microsoft Dynamics NAV.

In addition, Blue Horseshoe has developed several comprehensive solutions designed to extend the capabilities of Microsoft Dynamics AX. The Supply Chain Suite for Dynamics AX provides “best-of-breed” capabilities around Warehouse Management, Transportation Management, and Supplier Management; all embedded within the Microsoft Dynamics AX framework to create a single Enterprise Distribution Platform.
“Blue Horseshoe’s distribution expertise and advanced supply chain solutions not only support our direct customers, but have also proven beneficial to many other Microsoft Partners and their clients,” adds Cason.

Blue Horseshoe’s Supply Chain Suite for Dynamics AX was the first US based partner to receive CfMD for Dynamics AX 2012 in the US and second to receive CfMD globally.

For additional information about Blue Horseshoe:

Visit www.bhsolutions.com and www.supplychaindynamicsax.com

Product or service names mentioned herein may be the trademarks of their respective owners.

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The Lion, the Witch, and the Warehouse. Factors to Consider when Completing a Network Design Study

by: Chris Elliott
Many consulting professionals are familiar with the prototypical story of how a manufacturing company selects a location for their new warehouse. In one version, a College Intern spends their entire summer pulling data on customer orders, shipping expenses to customers, transit times, labor rates, and other key data points that drive facility location decisions. The Intern takes this massive data set and pushes her technical abilities to the limit building the model that will predict the best location for the new warehouse.

After months of grueling work, the Intern puts together a presentation. With her manager, they present the location proposal to the CEO of the company. They propose building a new warehouse in a location central to customer demand. This will allow them to quickly service all their customers with the lowest possible transportation cost. At the end of the presentation, the CEO thanks the Intern for her hard work and tells her, “It looks like you put a lot of work into this project and your numbers look good, however, we are going to put the warehouse right next door to this office so I can keep my eye on things.”

For Operations Research minded professionals, the facility location problem typically results in developing a distance function, a cost function, and solving a mixed integer programming problem that will a solution that tells you where to locate the facility. From a technical standpoint, it seems like a very straightforward problem with a straight forward solution. The story of the Intern illustrates that in most cases when the numbers make sense, there are also many, “soft factors,” that go into decisions on warehouse location, size, and configuration that can complicate the facility location problem.

Some of the “soft factors” that you can encounter include:

  1. Land or facilities already owned by the company
  2. Distance to a key customer or supplier
  3. Location in relation to senior management
  4. Environmental, political, or workforce related issues
  5. Opinion of senior management

As you are working on developing a plan for were to locate a new facility?
Have you brainstormed all of the additional factors that will affect your facility location decision?
Do you know where to start?

At TransTech Consulting, a Blue Horseshoe company, we have helped companies across multiple manufacturing and distribution disciplines determine the best location for their facilities. Utilizing our expert knowledge of the hard and soft factors of the facility location problem, we can help you determine the correct location, size, and layout for your facility. We can also help you determine if you have too many or too few facilities and assist your organization with creating a distribution network that meets your company’s customer service objectives.

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Is Your Transportation Strategy Ready for a Changing Economy?

TransTech Consulting, a Blue Horseshoe company, discusses potential impacts to your operations from

  • increased freight rates,
  • changes to hours of service,
  • and fluctuating demand in the Transportation Industry

What do Hours of Service, Shale Gas, and the reemergence of American manufacturing have to do with your transportation strategy?

All of the mentioned items have the potential to raise freight rates over the next 12 to 36 months and should be a signal that you need to consider your short and long term transportation strategy.
With changes to the Hours of Service coming into effect in the next year, many companies are predicting a decrease in overall truckload capacity. This means that slowly rising freight rates could see a jump as trucking companies’ margins are squeezed by a need to hire more drivers to make up for losses in driver hours. This can also affect fleet operators as they will have to undertake studies to determine the effect that the Hours of Service changes will have on their ability to move freight.

In the West, Southwest, and Northeast, there is an increased demand for drivers that can haul hazardous materials to and from hydraulic fracturing wells. As more drilling permits are granted in Eastern Ohio and Western Pennsylvania, new operations will require trucking and rail capacity to move water and chemicals to new well operations and wastewater, oil, and gas away from the drill sites. Shale Gas and Oil loads are also attractive to Owner Operators because they are typically shorter runs and the pay per run is higher due to the time spent on site and reduced fuel use compared to longer runs.

While the return of American manufacturing is good for local communities hit hard by the recession, it can spell trouble for your current transportation strategy. It is predicted that as soon as 2015, wage increases in China will diminish the cost advantage of producing many products in China. This is starting to require companies to bring manufacturing back to the United States in order to keep costs down. This move could put more freight on domestic carriers, reducing overall capacity and driving up rates.

The good news is that in the short term, companies that execute a new transportation strategy and rate bid package can take advantage of a lull in the markets to lock in rates before the next increase. In the first quarter of 2012, many carriers saw an increase in margins, good weather, and only a slow increase in demand. Driver turnover for the period was also low, which means that available capacity was steady and acquisition costs for new employees was down.

Does your company have a transportation strategy in place to prepare for changes in the transportation capacity or capitalize on the short term reduction in rate increases?

If the answer is no, then you should consider a strategy review. Our team of experts can help you make decisions quickly so that you can capitalize on this unique market before it is too late and freight prices go through the roof.

Selected References:

About TransTech Consulting

TransTech Consulting, A Blue Horseshoe Company, is a privately held management consulting firm that has been providing expert supply chain consulting solutions to Fortune 500 and mid-market businesses throughout the world since 1983. Based in North America, TransTech assesses business needs and applies world-class business applications to improve profitability and increase efficiency. For more about TransTech, visit www.transtechconsulting.com.

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