Global Material Handling System Integrators

Distribution and Change Management


Change Management and the Distribution and Manufacturing IndustriesI was involved in a project not too long ago in which it became apparent that the client’s change management process was severely under-addressed.  Historically, it seems that change management in the distribution industry has generally been one of those processes which happens in an ad-hoc, contemporaneous fashion rather than being a proactive tool or set of principles to systematically smooth over what can be a step-wise function in the adoption of technology. In this particular project, the client was moving from a completely paper-based, manual process to one which involved a high degree of automation.  The new system contained a conveyor system, carousels, a pick-to-light system integrated with full and split case rack systems, a warehouse control system (WCS), and to tie it all together in a cohesive operation, a warehouse management system (WMS).  Even when done by experienced professionals, the integration of any one of these items can prove a challenge.  In this instance, the existing operations were loosely controlled – operators would take personal breaks at their convenience, the internal processes were poorly documented, and the client’s customers--having grown accustomed to the inefficiencies of the distribution system--would place multiple orders or orders with exaggerated quantities in anticipation of short-ships and delayed deliveries. To further complicate the transition, the new system was being installed in a building that itself was under construction and incomplete at the time of start-up.  Cost and schedule overruns demanded the full attention of the project’s stakeholders and gradually consumed the time set aside for initial stocking, system start-up, and operational ramping.  Because the deadline for system transition could not be extended, the transition from the old system to the new automated systems had to be done literally overnight.  With all these complications, it was the principles of change management that got short shrift. Many change management principles focus on the cultural and communicative aspects of organizational change.  With the stakeholders’ attention focused on the day-to-day project emergencies, the necessary change management strategies were simply left unaddressed.  For instance, change management is usually considered a top-down process.  Operators were trained in the new automation, but without the oversight and heavy involvement of the operators’ superiors, training was not as effectual as it could have been, and the operators never gained a sense of ownership in the new system. Moveover, as is common with the implementation of new automated systems, work methods must change to support the automation.  The very nature of automated systems – the just in time and real-time dependencies to drive efficiencies - usually do not allow for a large degree of autonomous operator decision making.  The client did not appreciate this operational impact, and associates took their normally and not so normally scheduled breaks irrespective of the state of individual orders and the condition of the system in general. The client’s customers too were left out of the change management process.  They had become accustomed to the spotty service level and had learned to compensate with multiple orders and exaggerated quantities.  The partial goal of the new automation was to eliminate these unnecessary orders and reduce the number of product touches caused by these excesses.  Upon the startup of the new system, however, no one took the time to adequately explain to the customers that those practices were no longer necessary.  Duplicate and over-orders continued, and outgoing and return operations in the system became choked with an order volume for which it was never designed.  The resulting chaos affected other processes, and though the correct operational changes were swiftly instituted, the damage had been done.  Full recovery took months. In summary, change management is an important aspect of any distribution center or warehouse project.  The intensity of change management practice will of course vary from project to project.  Special attention should be given to those projects were the level of automation increases significantly from existing operations.  Communication among all stakeholders and associates should start early in the project process, be driven in a top-down manner for greatest effectiveness, and address the culture of the work environment.  And finally, because projects are often beset with uncertainties, unknowns, and complications, implement change management principles early in the project or risk that they will be ignored altogether.  A normally stressful transition period will become much more painful.

Author: Doug Elliott


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