We help you make better decisions on a wide range of supply chain infrastructure issues. The following mini-case studies provide some answers to questions you may be asking yourself right now.
Facilities are the critical nodes of your supply chain network, where distribution and manufacturing happen. Poor design and wasted space reduce your productivity and limit performance, resulting in costly operating penalties.
We help you invest in the right supply chain infrastructure through:
Facility Sizing & Site Design
We start by conducting a hard analysis of your current operations, assessing the gaps and developing comprehensive forecasts. Using our proprietary Logistics Planning Software, we then translate that into a layout that defines what you need to build well before going to bid.
The Situation – A liquor distributor had been operating from the same distribution centre since the early 1980s. Decades later, their business model had changed dramatically and with it the SKU base grew from 2,500 to 17,000. Shipping volumes had also grown year-over-year with no end in sight. To manage this growth, the distributor began with a single outside storage facility, but this soon became three outside facilities feeding the original, main DC. Operating costs were out of control and the complexity of coordinating inventory in four locations had become a major service risk that left customers unhappy during peak shipping seasons. The distributor knew it was time for a new distribution centre and turned to LIDD for the solution.
Issues & Decisions – When you embark on the design of a new distribution centre, you must begin by understanding your needs. Those needs come from modeling your requirements in great detail and projecting those requirements into the future. Those requirements must be expressed in terms of throughput, variety and storage.
Most distributors have a wide variety of materials handling system options that can be reasonably applied to provide their needs – from conventional designs to mechanized or fully automated systems. Each approach can meet the design requirements with different capital and operating cost outcomes, as well as different risks and human resource considerations. Site availability and configuration can also play an important role in defining the right solution.
Finally, many distributors under-appreciate the critical links between IT capability and facility design. This creates a bias towards a particular design solution.
The Results – Our design for the new distribution center came after a careful look at all reasonable technologies, including fully automated “lights-out” systems. Our recommendations came with one surprise for the client: retain use of the original, main distribution centre to house slow-moving product and cross-dock that product for consolidation with fast-moving product that the distributor would stock in the new distribution centre. We recommended the re-purposing of the original distribution centre in recognition of the fact that while the facility had value as an operation, it would be difficult to dispose of the asset. Therefore, its greatest benefit would be to reduce the capital needed to build the new facility.
We help you optimize your existing materials handling systems to maximize efficiency, productivity and space utilization.
The Situation – A specialty foods company with wholesale accounts, its own retail stores and a thriving direct-to-consumer business had five more years on the lease of its distribution center. The facility was at capacity but the company wondered if there was anything that could be done to increase its capacity and avoid moving some of their business into outside storage.
Issues & Decisions – There are three dimensions to distribution centre capacity, each with their own symptoms and solutions:
- Throughput capacity – measure of the inbound and outbound volume that a building can handle
- Pick Line capacity – the number of SKUs that can be faced on the pick line
- Storage capacity – the amount of inventory that the building can hold
To solve a capacity issue, the first thing is to determine the kind of capacity problem – understanding that more than one kind of limitation can often be at play. Once we diagnose the problem, we can then prescribe the right medicine.
The solutions depend on a number of factors, including profiling:
- Operations – inbound/outbound activity, inventory turns and SKU variety
- HR structure – shifts of operation, workload balancing within a shift, day and week, labor by function
- Materials handling systems – racking, mobile and fixed conveyance, pick line
- Profile of the facility – size, shape and clear stacking height, building condition, location of obstructions, master site conditions and use
The Results – We developed a re-engineered materials handling system that increased storage capacity by 15% and re-set the pick line, which substantially reduced congestion in the direct-to-consumer fulfillment area. In addition to physical renovations to the materials handling system, we helped them increase inventory turns and revamped dock scheduling to flatten volumes across the working day.
The Situation – A grocery wholesaler distributing specialty foods from a 350,000 sq.ft. DC knew their picking productivity was below what it should be. They knew they had a long pick line and with an ever-growing SKU base, they were not maintaining their slotting.
Issues & Decisions – Slotting is the fundamental organizing principle of the distribution center with important impacts on:
- Most direct labor functions in the DC, particularly picking, replenishment and putaway
- Throughput capacity in conventional, mechanized and automated facilities
- Error rates – LIDD’s analyses have shown that improper slotting can measurably increase the error rates in the warehouse
- Damage and product stability in outbound transportation
- Customer service and labor at the customer site
Few distributors do a good job of maintaining their slotting and the proliferation of new SKUs puts additional pressure on the pick line. In a typical distribution center, 50% of all items are in the wrong slot type and the labor penalty can be 20% or higher.
Re-engineering the pick line is not an annual undertaking: it needs to be set with flexibility in mind and then maintained regularly.
The Results – We re-engineered the pick line, introducing a new handling system for slow-moving SKUs that created sufficient capacity to provide fast-moving SKUs with larger slot types. This eliminated 20% of replenishment tasks in the process. We also re-sequenced the pick line to eliminate the need to “re-stack” outbound pallets due to poor product sequencing. We developed an implementation plan that saw the entire facility re-slotted over a period of six months without affecting on-going operations. Post-implementation, direct labor productivity increased 15%. After spending years scoring in the middle of a benchmark of its peers, this distribution centre became the most productive facility in the group.
With a scope and mandate larger than the traditional role of a general contractor, we serve as a Project Commissioner to manage the construction & delivery of a fully operational building.
The Situation – A large, government-run liquor distributor required a new physical distribution center and improved supply chain technology and systems to accommodate growing demands and adapt to significant changes in the retail landscape. LIDD was selected to manage every aspect of the 3.5 year project to design and build the agency’s new distribution facility.
Issues & Decisions – If not expertly managed, any last minute decision in the building process could have introduced serious operational limitations and cost overruns. At a minimum, poor choices can result in delays and frustration. It was critical that they invested their capital wisely if they hoped to meet budget and timeline objectives. That meant doing it right the first time.
The Results – We managed the construction phase to ensure that objectives, standards and milestones were met before equipping the facility, training employees and overseeing a smooth transition into the new facility. Part of the project commissioner’s job is to coordinate all the players, representing the owner’s interests at all times.
“It was a long journey but the rewards are worth it,” said the client’s project manager. “We completed the project on time and within budget. It is a state-of-the-art operation running at full capacity as well as a very pleasant work environment for our employees. One of LIDD’s intangible assets is that they excel at communicating, interacting and engaging across all levels of an organization from upper management to the warehouse floor.”
Demand Chain Strategy
Rapidly evolving consumer values and technology are transforming the retail landscape. For many companies, the market is moving faster than their ability to adapt. LIDD helps our clients accelerate innovation without jeopardizing the supply chain.
The ultimate goal in optimizing your distribution network is to find the least-cost solution that also meets your company’s service level goals.
- LIDD conducts primary research and uses sophisticated data mining techniques to reveal insights into consumer and competitor behavior
- Unlike typical research companies, LIDD’s supply chain expertise informs our research by quickly transforming “a consumer want” into a product and channel that can be profitably realized
- How can I respond to the threat of new entrants into my category?
- I have excess production capacity, what should I do with it?
- LIDD leads product commercialization projects to accelerate a company’s ability to capitalize on a “consumer want” so that our clients can move as quickly as the market under the guidance of experienced, proven leadership
- Consumers want my foodservice offering in retail, how do I make that happen?
- I need to create an e-commerce version of my product
- Digitally-native consumers expect access to a range of channels to meet their needs
- LIDD helps clients build supply chains that provide consumers with that range of channels
- I need to create a direct-to-consumer platform
- I’d like to create an on-demand option alongside a subscription model
Information Technology Services
Information technology is the foundation of supply chain planning, execution and reporting functions.
Application Park Strategy
An application park is the portfolio of business software used to run your business. You should have a very clear idea of which software applications support which business functions to ensure a clean, manageable application park.
The Situation – A fast-growing grocery retailer had reached the point where it had to make IT investments to automate business processes, get better control of inventory and enhance their reporting. Convinced it needed a WMS to improve its warehousing and distribution functions, it turned to LIDD for guidance.
Issues & Decisions – This client had many common challenges that arise from a confused application park. An application park is the portfolio of business software used to run the business. Ideally, you should have a very clear idea of what software applications should support what business functions – resulting in a clean, manageable application park. However, most application parks are a mess of software with overlapping functionality and canyon-sized gaps. This problem occurs when you do not fully understand what problems different kinds of software solve.
The Results – We mapped out this grocery-chain’s application park and identified their functional deficiencies. It became apparent to the executive team that while there were glaring weaknesses in their warehouse operations, eliminating those weaknesses would not fundamentally address their most pressing business challenges. Those challenges required a new ERP system, which no longer addressed the complexity that sustained growth had created.
Selection & Implementation of WMS, MES, TMS & ERP
The software you choose needs to have the right functionality, but the solution provider and the quality of the implementation team are equally important to the success of a new system. LIDD implements WMS and ERP systems in light manufacturing and distribution environments with a particular focus on two best-of-breed solutions, Microsoft’s Dynamics NAV (ERP) and Generix’s Supply Chain Hub (WMS-MES).
The Situation – One of the largest convenience store chains in the United States was building a central commissary to prepare various on-the-go meal solutions for their stores. They needed software to plan and execute their food production operations. They turned to us for help in defining their needs and selecting a solution in the marketplace.
Issues & Decisions – Food production is a complex endeavour that requires highly disciplined planning and execution in order to deliver fresh, safe food to customers. Some of the key business issues to resolve include:
- Production planning and raw materials procurement
- Traceability & lot tracking
- Recipe management (assembly, such as making pizzas, and disassembly, such as butchering meat)
- Yield management & product costing
- Work order execution, raw materials consumption and finished goods creation
- HACCP and other food safety compliance programs
There is a wide variety of software solutions for food processors – from behemoths like SAP to one-man software companies serving a miniscule niche. The solution you choose needs to have the right functionality but the solution provider itself is equally important. The implementation of the software will be as critical to your success as the software itself so the strength and quality of the implementation team matters. Choosing a software provider is about picking a long-term partner for your business. This partnership matters.
The Results – Our client selected a solution that was unknown to them when the process began. Under our guidance, they followed a rigorous selection process that helped them land on not only a solution that would do the job but a partner that would be there for the long-haul. The implementation team met their deadlines – not without a few late nights – and the launch was a success.
Optimization & Ongoing Support
After a successful implementation, we are ready to provide tech support and assist you with any additional infrastructure projects related to your supply chain. Our team is highly trained in the technologies we support and is committed to helping you adapt to new demands as your business grows.
Industrial Real Estate
Our LIDD Real Estate practice is dedicated exclusively to the needs of tenants. We align your leasing and facility needs with warehouse performance & IT optimization.
Lease Renewal & Restructuring
- Lease review
- Market scan
- Evaluation of alternatives
- Strategic negotiations
Site Selection & Acquisition
- Needs analysis
- Lease vs. purchase
- Transaction management
- Building design and implementation
- Portfolio management and review
- Facility disposition
- Sale and leaseback