Why shipping and receiving affects the entire process
A recent idea that reduced product weight by 60%, cut fuel bills and cut tyre costs down by 6%. With a fleet of over 100 vehicles, this is just one small project idea out of five to emerge from a program of high impact change management. Internal procedures and methods are easy to devise but hard to turn into reality. Whether starting from scratch or overhauling existing systems, this general prompt list is a useful guide. Equipping and design becomes considerably easier when you have a map with a clear way marked out for you. Set out as a 10 point list of general rules and consequences, the idea is to help you think through the subject headings and support the thought process in an orderly set of steps. This method will help produce a workable system with a minimum of shocks and surprises which inevitably dog all change management. All quality systems benefit from totally thinking through the job. Micro-managing the process now will save you a lot of money and time later and equipment selection will be a lot less hazardous.
Design – Start with a design for the entire system otherwise you will discover to your cost that changes rarely just affect one small area of your business. Rule 1, therefore, is don’t fiddle about with small areas of malfunction because you are likely to make things worse.
Traceability – If you don’t have time to do it correctly at the outset where are you going to find the time to put it right? Rule 2 – spend some time thinking about how to get what you sent to your customer back to your supplier again without bankrupting yourself in the process.
Handling – If you think handling and storage systems are expensive wait until you pick up the bill for labour, injuries, duplicated and damaged stock. Rule 3 – design your operation to be able to efficiently deal with through put. Everything in its place and a place for everything..including charging batteries! (18 months ago, a few weeks after taking delivery of their new fork truck, one of my customers allowed the battery to run right down. This truck cost nearly £38,000, the replacement batteries were just short of £5,000. They also lost a lot of time whilst things were sorted out).
The Smallest unit of measurable cost – How much control do you require? Pallet sized or pint sized, are you selling bricks or diamonds? This is your reporting size for your monthly performance review and it seriously effects how you interface with your supporting distribution and logistics work. Rule 4 – round up the pennies and the pounds will look after themselves
Storage – Considerations for this includes on or off site stores, work in progress and what you expect suppliers and customers to hold for you. Never hold on to junk or old stock, get rid of it and use the cash or space for something more productive. Rule 5 – be very sure of your operational space needs. These are your fixed overheads and if it is not working you will find these costs expensive and risky to deal with. Use other people’s overheads as a first low cost option before committing yourself to long term leases. Fixed costs have that title for a reason!
Picking Systems – Typing is quicker than walking so start with a well thought out, efficient list. Avoid warehousing or production work at the same time as picking work. Make sure your shelves have all your picking requirements ready to pick. Keep stock recognisable for both picking and counting, either by eye or scanning. Keep stock in easy reach of pickers or picking machinery. Rule 6 – apply the Grand Prix principal, the fastest stock movers get pole position!
Equipment – You will need it. Rule 7 – treat your business like your children. Get the very best and keep the discipline and training as a matter of priority. If you think training is expensive you certainly won’t be able to afford ignorance!
Packaging – This needs to get the product to its destination properly identified and no more. Make it like Christmas for the new owner but at the same price as Christmas paper. When it is opened it should still have that magical pleasure of Christmas and like Christmas if it going to be thrown down chimney pots it should be protected from Santa’s little helpers and reindeer shocks. If you are going to send out as many Christmas presents as Santa does, make sure you have good cross dock and marshaling systems that do the counting and sorting quickly. Rule 8 – think the journey though from the shelf to the opening ceremony. You don’t want it back in bits. Sending goods out twice wastes resources and alerts the customer to possible system issues.
Packing – This is an operation and needs to flow with everything on hand and with as few process interruptions as possible. Connect it quickly to issuing invoices or contents notes, or receipts if it has been prepaid. Rule 9 – make packing as continuous and uninterrupted as possible as it cuts down mistakes due to distractions.
Minimum Order Values – Add up the time your product takes to turnover on an activity basis. Batch them up into the minimum quantity which produces enough gross profit to pay for it or make that your minimum charge regardless of quantity, then factor in good will…or not! Rule 10 – study your order book carefully and make sure the value you add covers your costs.
Bonus Idea – All systems should consider the environment. All systems should allow for a tidy work place. Make sure your products are well protected but yet easy to access. Products which have their own boxes or cases should consider the on going role and environment by keeping to the point and be well supported with maintenance and application ideas. Never miss the chance to let the user know what else you do, especially if it improves their day