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3 Key Lessons for New Year DC Throughput Efficiencies & Adaptability

Jason Tenorio | 19 January 2021

We’ve all heard some variation of the saying “Never Let a Crisis Go to Waste” but how good are we at recognizing the crisis and the best way to capitalize on it?

As we enter this new year, we must acknowledge 2020 was unlike any other year in many ways, the COVID-19 pandemic disrupted everything in our lives: personal, political, and professional.  The world learned to work from home, educate from home, and to the point of this article – shop from home. The lifestyle changes we all made this past year have resulted in an event referred to as the “Great Accelerator” because many forecasts based on historical trends were “accelerated” or pulled forward by as much as 2 to 3 years. The consensus is that many of these new trends are here to stay, and if your distribution center struggled through this accelerated migration to ecommerce, you’re not alone. The unprecedented shift from retail to online sales was beyond what anyone could have anticipated.

throughput_graph_jan_2021

What can be learned from this “Great Accelerator” event to ensure distribution centers are ready to adapt in the future and improve throughput efficiencies?

Below are three lessons from this past year, and a few recommendations for each to ensure the 2020 distribution center (DC) “crisis” doesn’t go to waste:

1. Migration from in-store to ecommerce retail is happening faster than expected.

  1. Throw your previous forecast out the window, assume some percentage of the 2020 ecommerce spike will become permanent and adjust forecast to reflect that, then determine if your DC can keep up with the new demand for online orders delivered to the customers home.
  2. Accelerate your plans to engage your customers online and enhance the experience.  If the preference is shifting to buying online, you need to make it easy for your customers to do business with you by providing a solid online store and checkout process to keep them coming back.
  3. Realize that with this migration comes a significant shift to discrete order picking, packing, labeling and shipping.  Each area needs to be redesigned to allow for efficient multi-line order processing from start to finish, consider engaging an external consultant to look at the operation with fresh eyes and introduce your team to the trends that are shaping the industry today that might fit your needs.

2. Labor intensive operations are being left behind.

  1. Reports from 2020 suggest that efficient companies with a relatively small number of employees returned double-digit growth for the year, in contrast companies with labor intensive operations have seen in many cases double-digit loss in 2020. Continued labor shortages and increasing cost at the same time as “lower for longer” interest rates make it a good time to invest in efficiency increasing equipment.  
  2. Consider not only ergonomics but health and illness prevention when designing your DC, incorporate systems that allow your employees to keep a safe distance from one another to prevent community spread of any future viruses. Goods to person systems like OPEX Perfect Pick to allow a small number of employees to stay a safe distance from one another while performing high quality and high volume order fulfillment.

3. Distribution centers need to be designed to be more adaptable to change.

  1. Systems that utilize fixed assets like conveyors and racking are not dynamic enough to change quickly with shifting market demands without adding significant labor, which can be difficult, consider a more flexible design which utilizes adaptable automation.
  2. Consider scalable technologies like AutoStore and Tompkins T-Sort which allow facilities to quickly add throughput capacity by simply introducing additional autonomous robots into a preconfigured system so your facility can react to unexpected demand without major capital projects or increased labor.

As we all prepare our businesses for the next year (and the next crisis) remember, “hope is not a strategy”. None of us want to see another year like 2020, but careful planning based on what we learned, business plans that include disruption scenarios, and the ability to adjust to changes in demand, will be the best strategy for ensuring the crisis doesn’t go to waste.

Author: Jason Tenorio

Jason Tenorio is the Director of Consulting at Bastian Solutions. In this roles, Jason leads client consulting engagements and develops new opportunities for consulting work with external customers. He has a Bachelors of Science in Mechanical Engineering as well as a Masters of Science in Industrial Engineering and has nearly 30 years of design, simulation, consulting, and technical sales experience.

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