Bill Stankiewicz Scope 2010 Copy Pepsi Bottling

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Scope conference 2010 in Florida, Bill Stankiewicz attended.
www.shipperswarehouse.com

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Bill Stankiewicz Scope 2010 Copy Pepsi Bottling

  1. 1. Leveraging Metrics for World Class Performance SCOPE East, April 2010 Leveraging Metrics for World Class Performance John M. Hill © 2010 TranSystems. All rights reserved. © 2010 Pepsi Beverages Company. All rights reserved. BEFORE WE BEGIN - - - People need to be reminded more often than Samuel Johnson they need to be instructed. 1709 – 1784 © 2010 TranSystems, All Rights Reserved 1
  2. 2. Leveraging Metrics for World Class Performance SCOPE East, April 2010 OUR PREMISE TODAY - - - Achieving warehousing excellence is not so much technology constrained as it is stymied by the inability of many organizations to logically select and cost-effectively integrate the technology available. HOW DO YOU GET THERE? "Would you tell me please, which way I ought to go from here?" "That depends a good deal on where you want to get to," said the cat. "I don't much care where," said Alice. "Then it doesn't matter which way Lewis Carroll you go," said the cat. © 2010 TranSystems, All Rights Reserved 2
  3. 3. Leveraging Metrics for World Class Performance SCOPE East, April 2010 ROADMAP TO EXCELLENCE !   Profile & Measure Current Performance !   Establish Target Performance Metrics !   Define Trading Partner Needs !   Map Processes, Material & Data Flows !   Identify Gaps & Opportunities !   Define Structural & Functional Needs !   Examine Alternatives to Close the Gaps !   Put a Value on Potential Incremental Gains !   Match Likely Costs & Benefits !   Prepare Roadmap & Action Plan !   Launch Initiative PROFILING © 2010 TranSystems, All Rights Reserved 3
  4. 4. Leveraging Metrics for World Class Performance SCOPE East, April 2010 PROFILING ACTIVITIES RESOURCES RECEIPTS / HOUR / DAY !   Supervisory !   Trucks/Railcar/Other !   Receiving Operators !   Orders/Lines/Items !   Order Pickers / Packers / !   Pallets/Cartons/Rolls/Other Checkers !   Replenishment Operators PICKS / HOUR / DAY !   Orders/Lines/Items !   Shipping Personnel !   Cartons/Pallets/Other !   Inventory Control SHIPMENTS !   Expeditors !   Data Entry / Indirect !   Trucks/Rail/Courier/Other !   Other SKU ACTIVITY ANALYSIS © 2010 TranSystems, All Rights Reserved 4
  5. 5. Leveraging Metrics for World Class Performance SCOPE East, April 2010 ABC Analysis Summary, based on Total Pieces May 2009 - April 2010 % of % % Pieces # of Total Cat. Cat. SKU's Pieces Shipped SKU's Pieces A+ 0.9% 10.1% 10.1% A+ 36 58,665 A 20.7% 68.8% 68.8% A 822 397,758 B 21.8% 13.9% 13.9% B 867 80,594 C 21.9% 5.5% 5.5% C 869 31,973 D 34.7% 1.6% 1.6% D 1,381 9,021 Total 100.0% 100.0% 100.0% Total 3,975 578,011 SKU's (%) Pieces (%) B A 22% C 68% 22% A A+ 21% 10% A+ D D 2% C B 1% 34% 6% 14% Velocity Curve - Total Pieces 100% – Cum % Pieces 90% 90% of Picking / 37% of SKUs 80% 80% of Picking Activity / 22% of SKUs 70% % of Pieces 60% 50% 40% 30% 20% 10% 0% 0% 5% 11% 16%21%27%32%37%43%48%53%59%64%69%75%80%85%91%96% % of SKU's © 2010 TranSystems, All Rights Reserved 5
  6. 6. Leveraging Metrics for World Class Performance SCOPE East, April 2010 ACTIVITY PROFILING Order Picking Productivity 8,000 60 7,000 50 6,000 40 5,000 30 4,000 3,000 20 Labor 2,000 Orders 10 1,000 Lines/Person Lines January Through November WHO PLAYS GOLF WITHOUT A SCORECARD? © 2010 TranSystems, All Rights Reserved 6
  7. 7. Leveraging Metrics for World Class Performance SCOPE East, April 2010 ESTABLISH KPI'S! !   Order Fill Rates !   Order Cycle Times !   Lines & Orders/Person/Hour !   Errors !   Damage !   Inventory Accuracy !   Days on Hand !   Cost / Order !   Cost as % of Sales ESTABLISH KPI'S! INTERNAL KPI's SUPPLIER KPI's CUSTOMER KPI's •  Perfect Orders •  Inbound Cost/Order Value •  Profitability •  On-Time Deliveries •  Proximity •  Sales Volume •  Inventory Accuracy •  On-Time Deliveries •  Growth Potential •  Inventory Carrying Cost •  Lead Time •  Credit / Payment History •  Inventory Turns •  Fill Rate •  Shared Strategic Vision •  Order Cycle Time •  IT / Technology Resources •  Return Rate •  Order Entry Accuracy •  Service Flexibility •  Customer Viability •  Workforce Utilization •  Attitude •  Order Frequency •  Shipping Accuracy •  Returns Policy •  Loyalty •  Order Fill Rate •  Value Added Services •  Cost to Serve •  Customer Satisfaction •  VMI Capabilities •  Competitive Pressure •  Ease of Doing Business •  Hassle to Serve •  Ethics / Compliance © 2010 TranSystems, All Rights Reserved 7
  8. 8. Leveraging Metrics for World Class Performance SCOPE East, April 2010 THE HOLY GRAIL The Perfect Order: On-time, complete, damage free & correctly documented. THE PERFECT ORDER INDEX (POI) Damage Correct On Time X Complete X X = POI Free Docs 95 95 95 95 81.4% 2008 Vendor Compliance Federation Report* on retail supplier performance improvement from 2005 through 2007 On Time Complete Damage Free Correct Docs POI 51.1% 59.9% NA 88.8% 27.2% 9.0%+ 17.8%+ NA 9.3%+ 40.0%+ * c. 5000 companies surveyed IMPERFECT ORDERS PROBLEM FOOD/BEV CPG Stock Out 23.3 6.5 Late Shipment 2.6 1.7 In-Transit Delay 4.5 4.3 Late Delivery 24.0 20.0 Shipping Errors 0.1 1.4 Damage 0.9 0.5 PERFECT ORDERS 73.0% 77.4% Time to start focusing on root causes! © 2010 TranSystems, All Rights Reserved 8
  9. 9. Leveraging Metrics for World Class Performance SCOPE East, April 2010 BENCHMARKING RESOURCES www.aberdeen.com The Extended Warehouse Benchmark Report www.apqc.org/OSBCdatabase Process Classification FrameworkSM & Open Standards Benchmarking CollaborativeSM www.cscmp.org Multiple Process Standards & Metrics Reports, Annual State of Logistics Report www.establishinc.com Cost, Service, Transportation Rate & 3PL Benchmarks www2.isye.gatech.edu/ideas/ System-Based Self-Assessment of Warehouse Operations BENCHMARKING RESOURCES www.mhia.org/search/Holistic+Metrics Improving Order Execution Performance: A Holistic View of Metrics Across Plant & Warehouse www.supplychainmetric.com Supply Chain Metric A Comprehensive Look at Performance Metrics, Definitions & Calculations www.supplychainconsortium.com Benchmarking Services for Manufacturers, Distributors & Retailers www.supply-chain.org Supply-Chain Benchmarking with SCOR and SCORmark www.werc.org Multiple Reports, Publications & Tools including Warehouse Manager’s Guide to Benchmarking © 2010 TranSystems, All Rights Reserved 9
  10. 10. Leveraging Metrics for World Class Performance SCOPE East, April 2010 ORDER FULFILLMENT MEASURE CALCULATION TODAY FUTURE VALUE Orders On-Time On-Time Delivery Total Orders Shipped % % $ Orders Filled Complete Order Fill Rate Total Orders Shipped % % $ Error-Free Orders Order Accuracy Total Orders Shipped % % $ Error-Free Lines Line Accuracy Total Lines Shipped % % $ Actual Ship Date Minus Order Cycle Time Customer Order Date Hrs Hrs $ Perfect Order Perfect Deliveries % % $ Completion Total Orders Shipped INVENTORY MANAGEMENT MEASURE CALCULATION TODAY FUTURE VALUE Actual Qty per SKU Inventory Accuracy System Reported Qty % % $ Total Damage $$$ Damaged Inventory Inventory Value (Cost) % % $ Avg. Month Inventory $ Days On Hand Avg. Daily Sales/Month Days Days $ Avg. Occupied Sq. Ft. Storage Utilization Total Storage Capacity % % $ Total Dock to Stock Hrs Dock to Stock Time Total Receipts Hrs Hrs $ Receipt Entry Time - Inventory Visibility Physical Receipt Time Hrs Hrs $ © 2010 TranSystems, All Rights Reserved 10
  11. 11. Leveraging Metrics for World Class Performance SCOPE East, April 2010 WAREHOUSE PERFORMANCE MEASURE CALCULATION TODAY FUTURE VALUE Orders Picked/Packed Orders per Hour Total Whse Labor Hrs Ord/Hr Ord/Hr $ Lines Picked/Packed Lines per Hour Total Whse Labor Hrs Lines/Hr Lines/Hr $ Items Picked/Packed Items per Hour Total Whse Labor Hrs Items/Hr Items/Hr $ Total Warehouse Cost Cost per Order Total Orders Shipped $/Order $/Order $ Total Warehouse Cost Cost as % of Sales Total Orders Shipped % % $ KEEPING METRICS IN PERSPECTIVE Order METRIC / Orders / On Time Order Cycle Damage IMPACT Hour Delivery Accuracy Time Orders / Hour On Time Delivery Order Cycle Time Order Accuracy Damage © 2010 TranSystems, All Rights Reserved 11
  12. 12. Leveraging Metrics for World Class Performance SCOPE East, April 2010 THE BEST SUPPLY CHAIN TECHNOLOGY INSTALLED IN OPERATIONS WITH ILL- CONCEIVED MATERIAL FLOWS & PROCESSES WILL ONLY ENABLE USERS TO DO THINGS BADLY - - - FASTER! MAP WAREHOUSE OPERATIONS © 2010 TranSystems, All Rights Reserved 12
  13. 13. Leveraging Metrics for World Class Performance SCOPE East, April 2010 MAP DATA FLOW MATERIAL DATA © 2010 TranSystems, All Rights Reserved 13
  14. 14. Leveraging Metrics for World Class Performance SCOPE East, April 2010 Receiving Flow Cycle Counting Flow © 2010 TranSystems, All Rights Reserved 14
  15. 15. Leveraging Metrics for World Class Performance SCOPE East, April 2010 REFINE INFRASTRUCTURE !   Storage zoning, space & equipment needs !   Dock, QC, quarantine, returns, value-added processing, packing & staging space needs !   Pick area zoning & space requirements !   Material placement / slotting   Product storage mode assignments; e.g. reserve vs. forward pick   Pick face sizing, sequencing & replenishment impact !   Transport options: lift trucks, conveyors, etc. REFINE INFRASTRUCTURE Use order & SKU activity profiles to deploy or ‘slot’ inventory based upon historical & anticipated volume. !   Improve Space Utilization !   Reduce Travel Times Golden Zone { !   Increase Pick Rates & Throughput !   Optimize Replenishment Activity !   Reduce Damage !   Improve Safety !   Simplify Retail Restocking 01 02 03 04 © 2010 TranSystems, All Rights Reserved 15
  16. 16. Leveraging Metrics for World Class Performance SCOPE East, April 2010 BEST PRACTICES ISSUE SOLUTIONS !   Travel between locations ~ Bring location to operator !   Location searching ~ Use WMS, lights, RFID or voice !   Pick tour set-up ~ Sequence via WMS !   Case & item picking ~ Assess alternate storage modes !   Checking & verifying ~ Bar code, voice or RFID !   Counting ~ Prepackage or weigh !   Replenishment ~ Dynamic via WMS !   Congestion ~ Spread fast movers !   Operator idle time ~ WMS task management NEW FACILITY LAYOUT Private Label Products Picking Area Bin Picking Pallet Picking Flowrack Picking Packing & Shipping Labeling Area Office Area Pallet Picking Flowrack Picking ABC Products Picking Area © 2010 TranSystems, All Rights Reserved 16
  17. 17. Leveraging Metrics for World Class Performance SCOPE East, April 2010 Fine-tune layout, zoning, material flow Inadequate & operating disciplines. Implement location management & define inventory receiving, storage, consolidation, management replenishment & picking procedures. Evaluate AIDC/WMS alternatives. Drive inventory deployment by transaction volume & handling Lost stock, Short warehouse requirements. Profile SKU activity to determine types, number & sizing of Shipments location storage locations. Define locations by capacity, constraints, etc. Size management storage & forward pick slots to facilitate picking. Given a solid layout and the proper equipment, error reduction is a Picking, packing function of operator training and & staging errors discipline. Using AIDC & a WMS to assign tasks & monitor execution can play a major role. Errors can be minimized or eliminated with the discipline provided by AIDC & a WMS. Loading and Carrier errors should be Shipping carrier errors recorded & archived by the WMS as they occur to be used Errors for performance reporting & contract negotiations. Outbound shipments should be Product/package bar coded or RFID-tagged to identification facilitate internal and external tracking. Flawed layouts, Operator flows, processes, All of the above. Productivity systems & training © 2010 TranSystems, All Rights Reserved 17
  18. 18. Leveraging Metrics for World Class Performance SCOPE East, April 2010 Parcel shipping systems facilitate Weak scheduling, shipment preparation, rating & Late tracking. For LTL & full truck carrier selection shipments, a TMS simplifies mode Deliveries & discipline & carrier selection, appointment scheduling & in-transit tracking. Disconnect AIDC technology for shipment Tracking between shipper tagging & tightly integrated Data & carrier TMS & carrier systems will information enable tracking from source to Integrity destination. systems Customer Link between call The integration of fulfillment center & systems and customer service Service fulfillment systems can enhance Performance system performance. Facility design & equipment selection should focus upon functionality, flexibility & Facility & scalability. The objective: an Equipment engine that meets throughput requirements at a cost that can be justified. Assess trade-offs between Labor layout, equipment, systems & Costs labor. Strategically located facilities & solid TMS can reduce costs. Conversely, a given location may offer lower building, operating Shipping and labor costs. Use Network Optimization Tools to analyze these variables before developing recommendations. © 2010 TranSystems, All Rights Reserved 18
  19. 19. Leveraging Metrics for World Class Performance SCOPE East, April 2010 REFINE INFRASTRUCTURE INFORMATION SYSTEMS SYNCHRONIZE MATERIAL & DATA FLOW WE’VE GOT THE TOOLS! Bar Code RFID Voice Data Entry Pick & Put-To-Light SC Execution Systems © 2010 TranSystems, All Rights Reserved 19
  20. 20. Leveraging Metrics for World Class Performance SCOPE East, April 2010 REFINE INFRASTRUCTURE INFORMATION SYSTEMS !   Material & Data Flow Comparison !   Disparity Analysis !   Product Identification Needs !   Data Collection Alternatives !   SCES Functional Requirements !   Interfaces to Other Systems BUILDING YOUR ROI “RANDOM INFUSIONS OF TECHNOLOGY WILL MERELY LEAVE THE ENTERPRISE IN GREATER DISARRAY.” James Borck, InfoWorld, July, 2001 © 2010 TranSystems, All Rights Reserved 20
  21. 21. Leveraging Metrics for World Class Performance SCOPE East, April 2010 BUILDING YOUR ROI ASSESS THE POTENTIAL CONTRIBUTION OF TECHNOLOGY & SYSTEM ENABLERS TO KPI TARGET ACHIEVEMENT Enabling Technology & Systems F/C & Plan AOM AIDC MH W/LMS TMS SCV ON-TIME DELIVERY        ORDER FILL RATE     ORDER ACCURACY    LINE ACCURACY    ORD. CYCLE TIME        DAMAGE RFID?    DAYS ON HAND   STORAGE USAGE   DOCK-TO-STOCK    VISIBILITY     ORDERS / HOUR    LINES PER HOUR    COST PER ORDER        COST % OF SALES        © 2010 TranSystems, All Rights Reserved 21
  22. 22. Leveraging Metrics for World Class Performance SCOPE East, April 2010 USE KPI’S TO DEVELOP YOUR ROI Total Orders On Time / On-Time Delivery Total Orders Shipped 87% 95% $250,000 Errorless Orders / Order Accuracy Total Orders Shipped 92% 98% See above Actual Ship Date - Order Cycle Time Customer Order Date 12 Hrs 8 Hrs $100,000 Actual Qty. by SKU / Inventory Accuracy Reported Qty. by SKU 96% 99% See above Total Damage $$$ / Damaged Inventory Total Inventory Value .75% .50% $100,000 Avg. Inventory Value ($) / Days on Hand Average Daily Sales $ 50 Days 42 Days $1 Million Avg. Inventory Sq. Ft. / Storage Utilization Storage Capacity Sq. Ft. 78% 85% $100,000 Orders Picked & Packed / Orders per Hour Total Whse. Labor Hrs 15/Hr 20/Hr $864,000 Total Lines Picked / Lines per Hour Total Whse. Labor Hrs 40/Hr 54/Hr See above Total Warehouse Costs / Cost per Order Total Orders 4.26 $3.62 See above Total Warehouse Costs / Cost % of Sales Total Revenue 3.1% 2.7% See above ‘RETURN ON ASSETS’ IMPACT Improved fill, increased sales Sales 10% cut in transportation & outside warehousing costs Gross Margin COGS Net Profit / Net Profit +45% Variable Expense Margin Expenses Sales Return on Fixed Expense X! Assets Taxes Sales / Inventory Asset Current Assets Turnover Receivables Total Assets Other Fixed Assets 7% Inventory reduction © 2010 TranSystems, All Rights Reserved 22
  23. 23. Leveraging Metrics for World Class Performance SCOPE East, April 2010 !  Evaluate current performance !  Establish KPI targets !  Compare material & data flow !  Fix flawed processes !  Clean up infrastructure !  Engage your employees !  Identify opportunities !  Find the right solutions !  Build the business case & ROI !  Procure & deploy solutions !  Continually audit results KEEP METRICS IN PERSPECTIVE Metrics must be “in harmony with a company's overall business strategy. Timely delivery & order status (updates) are part & parcel of Amazon's brand identity. If Amazon drove its logistics activities with measures focused solely on reducing delivery costs, it would cripple its ability to serve customers. (Smart managers) are fusing their logistics plan(s) with their business strategies, ensuring that what is measured in the field is valued at the top of the organization”. From Keeping Score: Measuring the Business Value of Logistics in the Supply Chain, CSCMP © 2010 TranSystems, All Rights Reserved 23
  24. 24. Leveraging Metrics for World Class Performance SCOPE East, April 2010 Warehousing is like riding a bicycle – keep moving forward or you’ll fall down! For More Information: jmhill@transystems.com www.transystems.com © 2010 TranSystems. All rights reserved. © 2010 TranSystems, All Rights Reserved 24

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