Issue link: https://www.e-digitaleditions.com/i/825042
24 FEDA News & Views D uring and after a business slow- down, there are many opportuni- ties that the astute distributor can seize for a competitive advantage. An entrepreneur who prepares wisely and moves quickly can recover and grow through outperforming the competition. One method of doing this is to jump into markets where the slow-down has created a vacuum. Years ago, one of our clients did this and the lessons remain relevant for wholesale distributors. We have worked with this client for years and designed a new central distri- bution center for their corporate head- quarters. The facility, while handsome, is not lavish and serves the needs of the immediate market area during the day, with order picking for the branches at night. This provides 16-hour use of the building and effectively doubles the stage areas and available loading docks. Initially, the concept was to resup- ply the branches with materials on an as-needed basis. As the branch busi- ness grew and an information process became more immediate, this function evolved into providing the branches with materials according to strategic and well-defi ned rules, and picking all orders for next-day will call and deliv- ery—an operational strategy that signifi - cantly raised inventory turns, enhanced the service level, and provided some unexpected bonuses. By pulling orders under controlled conditions, without interruptions, productivity and quality more than doubled. The warehouse staff could focus on what they were doing, and a new warehouse management sys- tem directed them along an optimum path with multiple "batched" orders. This was diametrically opposed to picking at the branch level, where indi- viduals were pulling one line, on one order at a time, while waiting on the counter and trying to receive truckloads of materials. By Bob Footlik, Engineer & Materials Handling Consultant By Bob Footlik, A Case Study in Finding the Perfect Location Surprisingly, the new practices did not reduce labor at the branch level. What did change was the number of lines writ- ten on every order. There was a 30-per- cent-plus increase in order line count, and a similar improvement in the dol- lars per order. Gross profi t skyrocketed. With more business per order and the same labor at the branch level, but less labor overall, the cost per line went way down. Couple this with the improve- ments in quality and service from a planned, scheduled, reliable system, and customer satisfaction began to win more market share. By retraining all branch employees and redefi ning their roles, the company was able to spend more time on selling and waste less in ineffi cient operations. At one branch, this accelerated the need for more and better space. System Improvements Highlight Branch Ineffi ciencies With increased counter trade, parking at one of the branches became scarce to nonexistent. Even with the acquisi- tion of employee parking spaces a block away, there was too little parking avail- able for peak times at the counter. To make matters worse, double parking and using other people's parking lots, drew the attention of neighboring businesses and the local police. As a result, custom- ers who received parking tickets were reluctant to come back and market share dropped. To encourage more visits throughout the day, food and beverage certifi cates for a local restaurant were given to coun- ter customers from 10 a.m. to 1 p.m. This was expensive, but temporarily spread out the demand to a more man- ageable level and enhanced customer loyalty. A larger problem was the lack of a loading dock. As business increased and resupply turned into an every-night operation, the lack of decent loading facilities became more acute. Without a truck height dock and adequate stag- ing areas, dropping materials at night resulted in congestion and confusion the next morning. Shifting to direct customer delivery sidestepped some of the problems, but branch materials and will-call orders still remained a signifi cant problem. At this point, every defi ciency of the branch building was magnifi ed. Low ceiling heights, too little space for stock, an inef- fi cient layout (they used the wood shelv- ing and homemade racks left over from a previous tenant), inadequate lighting, and a tight counter area were too many headaches to overcome. Clearly, a move to a better facility was in order but they were reluctant to move very far and risk losing counter traffi c. Sometimes a Solution Falls into Your Lap A chance conversation with the owner of a newly-rented employee parking lot revealed that the landlord was being forced to downsize and needed to sell his property to prevent bankruptcy. This building was far less than perfect. The parking area and rear yard were environmentally contaminated, the ceil- ing height was only 10 feet, many load- bearing interior walls cut into the space, mediocre loading facilities could not accept modern trucks, poor roof main- tenance necessitated replacement and obsolete environmental systems were worthless. All these problems reduced the price. Balanced against this were the three A Must-Read for Anyone Searching for Space in the Warehouse