When I speak with distribution executives nowadays, they all say the same thing: “We are struggling to keep our heads above water because of the economy.” However, before the economy took a turn for the worse, they talked about low profit margins, high inventory levels with low turns, and an erosion of their profitability because of their warehouses. I am often forced to ask, “Is the economy really that bad? Or, is your inability to deliver what your customers want, when they want it, and at a competitive price making it seem worse to your organization?”
Your organization is currently under a microscope. Every order you deliver to your customers is magnified 1,000 times. When there is a mistake, you wonder if they will order from you again. Your sales people are working harder than they have probably ever had to work for orders. But they are not competing against other sales people. Your warehouse is competing against other warehouses. So, if you really want to know how to survive in “any” economy, all you have to do is look in your warehouse.
Your warehouse, like every other warehouse, is comprised of two main elements: people and inventory! Most distribution organizations do a horrible job at managing both of these fundamentals.
To prove it, here’s an example. The value of your inventory ranges between 6 and 20 percent of your top-line sales. That means a company with 100 million dollars in sales will generally have between 6 and 20 million dollars of inventory on hand. Let me ask you this question: When was the last time your warehouse supervisor took a course on managing inventory?
Assuming you are generating a 4 percent return, that would mean for every $100 of lost inventory, your hard-working sales staff must generate $2,500 in new sales to make up for the $100 of inventory your warehouse lost. If your warehouse was to lose $100 a week (equating to $5,200 a year), your sales staff would have to generate $130,000 to make up for the $5,200 of inventory the warehouse lost. I guarantee your warehouse loses more than $5,200 of inventory a year—which means a good portion of your sales staff’s effort goes straight to purchasing to make up for your warehouse’s inability to accurately control your inventory! This is a simple example that proves most distributors do a horrible job at managing their inventory.
Scott Hess, a principal with Redhawk Advisors, a mergers and acquisitions firm, had this to say: “In the due diligence phase of an acquisition, the inventory is often overstated and usually reassessed at a much lower value, due to antiquated accounting statements on the balance sheets.”
Your customer service personnel spend a portion of their day performing warehouse tasks. They often place a customer on hold—walking by two warehouse personnel talking instead of working—so they can verify that the inventory in the bin matches the quantity displayed on the screen. Your outside sales personnel often have to pick their own orders because your counter is so busy. And the inventory in the trunks of their cars is probably more accurate than the inventory in your warehouse.
Your picking and put-away personnel spend a good portion of their day—55 to 60 percent of their time—traveling to and from your locations. And when the product is not there for the pickers or the location is full during put-away, which happens quite frequently, they spend approximately an hour a day searching for it in other locations. I have another question for you: When was the last time your warehouse supervisor took a course on how to slot and profile your product?
Because most companies are in “dumbsizing” mode, it appears the staff is more productive. We even see that national numbers are stating productivity is on the rise. However, you have product from vendors that does not get received for days. Therefore, your purchasing department spends its time reviewing proof of deliveries from your vendors. You have returns, which take a backseat to every other process in your warehouse; and for distributors between 3 to 8 percent of your orders are returned. And on average, a customer will call four times to inquire about a return. Again, because it takes so long to process, while the cost of handling a return can be two to three times that of an outbound shipment. When was the last time your warehouse supervisor took a course on improving productivity and reducing picking errors?
Right now you have someone controlling 20 percent of your revenue and hiring and firing key personnel, and they have probably never taken a course, attended a seminar, or read a book on inventory control, or how to efficiently lay out your warehouse or improve employee productivity. I have to ask, “Is the economy really that bad? Or, is your inability to deliver what your customers want, when they want it, and at a competitive price making it worse for your organization?”
Your warehouse was a problem prior to the economy’s taking a turn for the worse. Your warehouse was a problem prior to the housing slowdown. Your warehouse was a problem and you have known about the problems your warehouse creates for some time now—but you have chosen to ignore them. So I say, “Don’t blame the economy for the problems your organization is experiencing right now, blame your warehouse!” By addressing your warehouse problems, your organization will be able to survive in any economy. But if you continue to overlook them, this economy will consume your organization along with the many others it has already devoured.
*****
Rene’ Jones is widely known in the supply chain and logistics industry as the founder of Total Logistics Solutions, Inc. (www.logisticsociety.com). TLS is a warehouse efficiency company which was recently named “One of the top 100 Supply Chain and Logistics Providers in the world.” Rene’ is a sought-after keynote speaker who has been published, referenced, and quoted in industry magazines throughout the United States, Central America, Canada, Australia, and Europe. He is the author of several books, including the critically acclaimed “This Place Sucks (What your warehouse employees think about your company and how to change their perceptions!).” Rene’ has more than 18 years of experience in consulting, training, warehousing, and logistics. He has used his industry knowledge to assist small and large multinational organizations alike, making them more efficient, more profitable, and more prepared.
Want to know how to survive in a down economy? Look in the Warehouse!
FREE Webinar…….Wednesday, June 17
1pm CT / 11am PT
In this “FREE” webinar, Rene’ Jones can show you the financial impact of your warehouse on your organization. No matter what the current economic situation! The ultimate success or failure of your organization is dependent on your warehouse. Your warehouse must be able to deliver what your customers want, when they want it and at a competitive price. Your warehouses ability or inability to do that, wins and losses more business than your sales people could ever imagine.
However, it is management’s failure to understand the financial impact of the warehouse, on the organization as a whole, which causes the sales staff to overpromise and the warehouse to underperform. And because of this lack of appreciation your warehouse is eating your customers, while your profit and market share are being eroded. Specifically, Jones can show your company how to:
- Identify inefficiencies in your picking process,
- Successfully challenge your outdated stocking methodologies that limit warehousing success,
- Uncover the “Real” reasons product is lost hours after it is received,
- Understand the “True” capabilities of your warehouse.
Join us NOW! The insights from this seminar can have a dramatic impact on your future performance.The first 50 people to register will receive a “Free” copy of the popular book…. “This Place Sucks! What your warehouse employees think about your company and how to change their perceptions!”
Register by clicking the following link….
https://www311.livemeeting.com/lrs/0000012644/Registration.aspx?pageName=x0v1ddh7d8575btn
At a time when many wholesale distributors are cutting costs, instituting layoffs, freezing wages and just not spending any money, Bardon Supplies Ltd. decided that if it is to survive the current economic downturn it must focus on two key areas in its supply chain: its customers and its warehouse.
To talk about investing in your warehouse during times like these, many distributors will tell you that’s crazy. But in 2005 after being purchased by Group Deschenes, Barry Raycroft the vice president and general manager of Bardon Supplies picked up where his now retired father, Don Raycroft, left off. Don founded Bardon in 1969 in Belleville, Ontario, with a small building and a desire to provide the industry what it desperately needed, “Unmatched Customer Service.” Forty years later with his son Barry Raycroft at the helm, his motto and vision are similar to that of his father. Therefore, it was not out of character to address the one area that has such a dramatic impact on service levels and customer satisfaction, “The Warehouse!”
In 2007, Bardon commissioned Total Logistics Solutions Inc. (TLS) to assist with the implementation of an industry leading Warehouse Management System (WMS) in their Barrie location. Rene’ Jones, founder of TLS, was already familiar with Bardon. He was the project manager during two previous WMS implementations at the company’s Belleville and Kingston locations.
The Barrie branch which is approximately 30,000 square feet has 13 warehouse employees and five delivery drivers. According to Wayne Buck, the branch manager in Barrie, “It was not a question of whether we were meeting our customers’ needs, it was a question of could we meet them more efficiently while simultaneously reducing our warehouse operating costs?” The implementation of the system was completed in February 2009 with a wall-to-wall Physical Inventory. “We have always taken our annual physical inventory seriously, but this was one of the most in-depth inventories I have ever been involved with.” said, Mike Brymer, the warehouse’s inventory control specialist.
The day after the Saturday inventory was completed, the warehouse began receiving, picking, packing and loading orders with the new system. There were the usual reservations from customers and employees, but the implementation went flawlessly. Customers at the Will Call counter immediately began asking, “How would their order get picked without a Pick Ticket?” The warehouse now uses RF (Radio Frequency) devices to process all transactions.
As product arrives on the dock, an ASN (Advance Shipment Notification) is generated, which selects the most appropriate locations for the product prior to it being touched by the receiving department. “It is great!” said Warren Symes, the lead receiver. He went on to say, “I am amazed at the accuracy, it has virtually eliminated receiving errors especially with serial numbered product. Before we had to read the tiny numbers on the packing slip and then verify those numbers to the number on the box. Now we just scan the product and the system knows if that is the serial number it was expecting. If it is not, we cannot proceed.”
The picking process has been streamlined as well. The order pickers no longer pick an order from start to finish. The orders are now broken down into smaller more efficient chunks based on the type of product to be picked. In other words, an order with fittings, a heating coil and pipe can be picked by three different people simultaneously and merged during the loading process.
You no longer see pickers walking up and down aisles looking for lost product either. The system now directs the pickers where to pick an item from, based on a predetermined picking sequence. Should they choose not to pick the item from the system suggested location, because say the product was damaged, it forces the picker to enter a traceable “Reason Code” why they are not following the directive? Upon the completion of entering a “Reason Code” it then displays additional locations where the product is stored.
But the best part of the system is the Command Center functionality. Before if a customer wanted to make a change to an order that was already printed, the warehouse supervisor would have to find every picker to see who had that customer’s order. “It was a nightmare with order changes,” said James Walsh, the new command center specialist. “Now Gary, our supervisor, simply comes to me and I can tell him who is picking the order, which line of the order they are on, and we can even delete items off of the order without the picker ever knowing the deleted item was there. It is much more efficient!” The Command Center also has the ability to monitor orders, review the receiving process and keep track of the daily workload to change resources depending on the time of day and the amount of transactions to be processed.
The overall goal was to be more efficient, reduce the branches operating costs and provide an unmatched level of service to Bardon’s customers. With the implementation of the system and warehouse layout changes instituted by Total Logistics Solutions, the Barrie branch has achieved the following:
- Less than two errors per 450 orders shipped.
- Inventory Accuracy, which is normally in the mid 80s with most distributors, is now in the high 90s with Bardon Supplies and improving.
- Receiving errors have dropped by 80% and continuing to fall as the receivers become more comfortable with the system.
- The same amount of work is being processed with two less people. They were not laid off, but merely transitioned into other areas of the business.
- Returns, because of shipment errors, have decreased by over 90%. Which is a major improvement considering most distributors have between 3% to 8% of their outbound orders returned.
“Most distribution organizations have forgotten how vital their warehouse operation is to their overall success or failure in good and bad times. Less than 30% of warehouses are efficient, 65% of the cost associated with distribution is directly related to labor and inventory values range between 6% to 20% of the organization’s annual revenue,” said Rene’ Jones. He went on to say, “Many distributors find themselves in a crunch, not because of the economy. But because they often fall short of their customers’ expectations and are not able to deliver (1) What the customer wants, (2) When they want it and (3) At a competitive price.”
Total Logistics Solutions, Inc. is a privately held Supply Chain and Logistics consulting organization. TLS was established in 1997 in Burbank, CA. TLS is focuses on improving the warehouse operations of manufacturers and distributors. Their customers include: Home Depot, Ryan Herco Products, Builders Plumbing Supplies, Kitchen Distributors of America, Westburne and many others. Visit the company’s Web site at www.logisticsociety.com or send an email to info@logisticsociety.com.
Bardon Supplies Limited is a division of Groupe Deschenes Inc., a privately held, family managed corporation. Bardon Supplies was established in Belleville in 1969. Groupe Deschenes acquired the Company in June of 2005, bringing the total number of branch locations in the network to sixty-nine in Ontario and Quebec. Visit the company’s Web site at www.bardonsupplies.com. Source: Total Logistics Solutions Inc.
There once was a company who made a lot of shipping errors. Customers were beginning to get really upset and started threatening to take their business elsewhere. After thinking long and hard about what to do, the owner decided to give each department a bag of nails and he told the supervisor of each respective department, “Every time an order was shipped wrong, the person who made the error must hammer a nail into the back fence”. The first day, the warehouse had driven 16 nails into the fence, customer service had driven 20 nails into the fence and purchasing only had to drive 7 nails into the fence. Totaling 43 nails the first day alone, and after only a week they could not believe how many nails had been driven into the fence.
Over the next few months, as the company began to improve things got a lot better and the number of nails hammered daily gradually dwindled down. People began to discover it was easier to pay closer attention to the customer’s order than to make the dreaded walk to the back of the building and drive those nails into the fence.
Finally, the day came when there weren’t any mistakes at all. The respective managers told the owner and he suggested, “Wait a week and see how each of your departments continue to do.” By the end of the second week without a mistake, the owner suggested each department now pull out one nail for each mistake free day.
The days passed and managers were finally able to tell the owner that all the nails were gone. The owner then called an emergency meeting with the entire company in the back by the fence. He said, “You have done well, but look at the holes in the fence. The fence will never be the same. When we ship an order wrong, can’t find the inventory promised to a customer or don’t deliver their order when promised, it leaves a scar just like this one. And he pointed to the holes in the fence. You can put a knife in a man and draw it out. It eventually won’t matter how many times you say ‘I’m sorry,’ the wound will still be there. Our customers spend their hard earned money with us, because we have promised two simple things. That we will deliver what they want, when they need it. If we don’t do that it is like driving a nail into their account. And a customer will only take being hurt so many times until they begin giving their business to our competitors. And it is virtually impossible to get a customer back once they are gone.”
How many nails would your fence have?
Rene’ Jones is the founder of Total Logistics Solutions, Inc. (www.logisticsociety.com <http://www.logisticsociety.com/> ). Rene’ is a published author and industry speaker, his recent articles and workshops have focused on improving warehouse distribution operations. You may contact Mr. Jones at (888) 807-0958 ext. 709 or via email at rene.jones@logisticsociety.com.
These basic truths of career advancement will help you land your next job.
Whether you’re an operations employee at a large regional electrical distributor or a small one-or-two branch family-owned distributor, from a warehouse standpoint, the orders must be received, put away, picked, packed and shipped. It seems pretty simple, but less than 30 percent of all warehouses are efficient, and they average somewhere between 45 percent to 60 percent annual turnover rates. Labor accounts for 65 percent of the costs associated with distribution.
What does that mean to a warehouse operations employee? It means you are a pretty important part of the process. Keeping that in mind, have you given recent thought to your long-term career goals? Maybe a better question might be, do you have long-term career goals?
Most individuals don’t know what they want; therefore, they don’t know when they find it. Although most employees want to do a good job, they sometimes must be reminded what a good job is. The following steps will help you along your way toward doing a good job and achieving career goals.
Write down your goals. Ever wonder why the organization you work for puts the sales goals up ever month? They do it so the entire organization will focus on the outcome and not the obstacles. As an individual you are in control of your own organization and you have to post your goals as well. Saying you want a better job is not a goal. Saying you want a lot of money is not a goal. Saying you want to live in a better house is not a goal.
A goal is saying what type of job you want and when. A goal is saying how much money you want to earn and by when. A goal is saying how much you want to put down on your next house and when you will purchase it. You need to know where you are going before you begin the trip.
Goals allow you to see past the orders you are picking, the product you are receiving and the packages you are shipping.
Make a written list of your strengths and weaknesses. You need to know what you do well and what you don’t. This way, when a position within the company becomes available, you know whether you are truly qualified for that job and capable of succeeding at it. These are the things that will help you achieve your goals or keep you from them.
Ask yourself this question, “Can I see myself doing this job in 20 years?” I remember watching a news story about a company where several people had been laid off. When the news reporter asked one man what he was going to do, he replied, “I don’t know. I’ve worked here for 20 years, and this is all I know!”
That was the one of the saddest things I’ve ever heard. If you calculate the time off this person had during the 20 years he worked for the company, it equates to more than 55,000 hours — which is more than six years of straight free time, not including sleep. My mother told me when I was very young, “You earn a living from nine to five, but you earn a fortune from five to nine.” That person who lost his job could have done and learned whatever he wanted.
If you can’t see yourself doing your current job 20 years from now, that’s OK. The question to ask yourself is, “What am I currently doing with my free time?” You’re probably spending some time with your kids, your significant other, driving to and from work everyday and watching that game on the weekend, but what are you doing to get closer to your goals? I’ll bet you can carve out some time on the weekends or evenings to acquire the knowledge, know-how and resources needed to help achieve your goals.
Don’t associate with negative individuals — at work or at home! This is hard to do because most of us have been conditioned to be negative. “Don’t work too hard. Take it easy. I am doing OK.” Those are all canned responses. When you ask a person how they are doing, why don’t they reply, “Fantastic!”? Because they have been conditioned to think they are just OK. Television, magazines and the media in general tells us: You need a better job, a better car, a better spouse, and to earn more money. But what we need is to rid ourselves of this nonsense and the people who bring us down. They are pushing you further from your goals.
Think, think and think again. Many folks look for answers from others instead of trying to solve problems themselves. When there is a problem, they ask friends, relatives and co-workers what they should do instead of thinking about the problem and coming up with a solution. Although seeking counsel is often a wise step in the decision-making process, people need to think through problems on their own, too.
Ask your supervisor where he or she sees you in five years. That is a question normally asked of prospective job candidates, but it will tell you what your boss thinks of you and your abilities. If he or she does not see you moving up, what does that mean to you?
Is your current position going to get you closer to achieving your goals? Or is it time to move on? Don’t take your boss’s response personally. You cannot ask such poignant questions and then be upset with the answers. You are merely on a fact-finding mission. Now that you have the facts, you have to think them through and make some decisions.
You are doing the company and yourself a disservice if you are unhappy and stay only because of the paycheck. Regardless of what your decision may be regarding whether to stay with the organization or move on, you must do the following things to be a good employee wherever you’re employed.
Work while you are at work. This is a strange concept for some people, but you are at a job — not a social club. There is nothing wrong with chit-chat — unless it interferes with the job you are being paid to do. It puts more pressure on the 20 percent of the individuals processing 80 percent of the work.
“CNN Money” did a survey and found most workers waste an average of 2.9 hours per day. That means if you are average, including lunch and breaks, you only work for 4.5 hours a day. Remember that when your company has its next layoff. Because that means half of you are not needed anyway.
Determine what average is and beat it by 10 percent. If you are a picker and the average picker picks 100 orders a day, then pick 110 orders. This separates you from the pack and shows that you can do more. If you want to get paid more, you must first prove that you are worth more. If every two weeks your productivity improves 10 percent, imagine what will happen at raise time.
If you are a complainer, shut up! No one wants to be miserable at work. If you feel you have been slighted by the organization, that is your problem. Either do something about it, talk to your supervisor, or leave.
No one wants to know about what happened or did not happen to you. They have their own problems to deal with. Stop complaining and do your job. If you must complain to someone, make it your supervisor.
Keep your work area clean. There’s no excuse for a dirty warehouse. If you are a picker or a put-away person, the aisles should be spotless. There shouldn’t be shrink-wrap in the aisles; there shouldn’t be empty boxes on the floor; and there shouldn’t be pop cans or other trash on the shelves.
If you are a packer, it’s difficult to be spotless, but at least be clean. A disorganized packing area screams, “Shipping errors occur here!”
If you are a supervisor, clean your desk. There is no excuse for unread magazines, freight bills, paperwork, pick tickets, etc., to be all over your desk. Every time there is a shipping error and your boss comes to talk to you about it, is that what you want him or her to see? Is that the image (confusion) you want them to take back to their office about you and the warehouse? Of course not! Your environment is a reflection of you.
Do something that is not your responsibility everyday. Most people are quick to say, “That’s not my responsibility.” Even if they don’t vocalize it, many still think it.
Many warehouse employees will walk by a piece of trash on the floor several times a day without picking it up — mainly because it’s not their job. You will get noticed for taking responsibility for things both big and little.
Stop being concerned with your pay. This may be easier said than done, but you negotiated your salary; now you’re stuck with it. If you did not negotiate it, you did agree to it. If you want more, you must contribute more.
Think of an apothecary scale. In theory, the more you put on the contributions side, the more the compensation side will rise — if not from your current employer, then from another. But you have to stop being concerned with what others are making in order for this to take effect. If you are concerned with the person who makes more than you, then you will do less and always make less.
Always take the job (promotion) that pays more money. The more money you make, the more visual you become, and your next raise will be based on your current salary. If the company gives you a 4 percent increase and you make $12 per hour, that is much better than a 4 percent increase if you were making $8 per hour.
A picker making $15 dollars an hour is much harder to swallow than an inventory control person making $15 an hour.
Go to lunch with your boss once a month. This is not “apple polishing” — it’s to find out how you are doing. Most mid-level managers do not make time to adequately evaluate their employees. Therefore, when review and raise time comes around, employees are often surprised that their increase was so low. You need to know on a monthly basis how well you are doing. You need to know what areas need improvement. This way, when raise time comes around, there shouldn’t be surprises.
Ask your supervisor every quarter for a list of his or her initiatives. You need to know what is important to your supervisor. Those are the things you need to work on to help your supervisor out. Your boss has too many things to handle and would appreciate all the help he or she can get.
If you know what is on his or her plate, then you know what areas you need to volunteer in. Think about it this way: if the company plans to implement a new warehouse management system (WMS) at the end of the year, would it be best to volunteer to stay after and clean or to recommend to the supervisor that you stay after and measure locations? The only way to distinguish between the two is to know current and upcoming initiatives.
Read. Then read some more. Would you go to a doctor who has not read a medical book since graduating from medical school? Think of the value you provide by being educated about your industry, your job and the position you aspire to have.
It’s as simple as reading an industry magazine article twice a week. WMSs, RFID, and voice-directed picking are all coming to warehouses. The more you know about them before they get to you, the more valuable you are once they arrive.
Many warehouse personnel and supervisors are left out of meetings because management feels they cannot add any value to the meeting.
Research the job progression within the warehouse. If you are a picker, what is the next position above that? Document what position you want next. If the next position from picking is receiving, then when a position for inventory control becomes available, and you are a picker, you will know why you may not be considered. Find out what it takes to move to the next position and begin working on it.
Learn the names of the company’s top 25 customers. You have to know who patronizes your organization. But you really have to know who spends the most with your organization. I know every small customer has the potential to become a big customer, but as the legendary University of Alabama football coach, Bear Bryant, said, “Potential means you ain’t done it yet!”
Finish what you start. When assigned a task, complete it. Then tell your supervisor, who assigned it to you, that it was completed and that they can scratch it off of their list. After they scratch it off, ask, “What’s next?”
Keep a note pad and take notes. A lot of warehouse supervisors do not keep accurate notes. They think they can remember everything. Therefore, make it your responsibility to take notes of the tasks you are assigned. This shows your supervisor you are a conscientious employee.
Rene Jones is the founder of Total Logistics Solutions Inc., a warehouse efficiency consulting company headquartered in Burbank, Calif., and the author of “This Place Sucks! What your warehouse employees think about your company and how to change their perceptions.” Jones can be reached at (818) 353-2962 or by e-mail at Rene.jones@logisticsociety.com. Visit the firm’s Web site at www.logisticsociety.com.Managing Today’s Work Force: One Size Does Not Fit All!Every branch of the military teaches its service people how to be good leaders by first being excellent followers. One learns how to take orders, ask the correct questions (when needed), and how to execute. Those in the military learn the importance of execution as a follower. What a weird concept.But in the private sector, “leaders,” also known as “management, department heads and supervisors,” often forget that the people they are leading sometimes do not want to go where they are taking them.
Many have said a good leader should have the ability to take people where they ought to be instead of where they want to be, but today’s work force tends to want to know several things before following:
- Where you are taking us?
- Why should we be there?
- What will happen when we get there?
- How long will it take to get there?
Today’s employee pool wants to know the problem and not just the solution. Some would say these are generational differences. Today’s leaders need to realize that a key to good leadership is adaptability. Most executives want employees to adapt to their leadership style instead of their leadership style adapting to the individuals following them.
On the flip side, a key to being a good employee is also adaptability. In the military, one has to adapt to surroundings immediately.
Employees must realize that no boss is going to be perfect. Supervisors are not always going to make decisions in the best interest of their direct reports. Every manager is going to be different. If you don’t realize these three fundamental things, you will go from job to job looking for opportunities that may never come.
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