estee lauder - Productivity and Operational Capacity Improvement Plan
1. Productivity & Operational
Capacity Improvement Plan
FOR ESTEE LAUDER WAREHOUSING ACCOUNT
26 Nov 200826 Nov 2008
Tharanga JayalalTharanga Jayalal
1
2. Development Plan
Identify the exact problem /gaps in ELC
warehousing operation
Suggest & implement quick solution to
resolve major issues
Implement a continues Improvement
plan
2
3. Problem Statement
Agility Unable to deliver agreed /
required volume of 1500 pick lines a day.
As a result, client ELC is unhappy with
Agility operational performance and
possible threat to lose the client by end
of 2008 means within a month time.
3
4. PRESENT OPERATION LEVEL Vs REQUIRED LEVEL
11
eeee
CAPACITYCAPACITY
Present capacityPresent capacity
900 pick lines a day900 pick lines a day
Required CapacityRequired Capacity
1500 pick lines a day1500 pick lines a day
ImprovementImprovement
RequiredRequired
byby
By 600 lines a dayBy 600 lines a day
ImprovementImprovement
RequiredRequired
byby
66 %66 %
4
5. How the situation become critical
1. There were no improvements happened in
the operation against the demand that
significantly improved over a period.15,444
23,851
13,513
20,742
29,415
33,953
33,400
44,552
0
10,000
20,000
30,000
40,000
50,000
July August Sept Oct
Throughput in lines from July to Oct'08
Thp Order lines
Thp Picked lines
Info: from ELC picking analyzes reportInfo: from ELC picking analyzes report
5
6. 2. There were no additional manpower & / or
other resources added to meet the demand
that increased significantly.
Staff Utilization
0
5
10
15
20
25
30
35
40
Jan-08
Mar-08
May-08
Jul-08
Sep-08
Nov-08
Month
staff
15,444
23,851
13,513
20,742
29,415
33,953
33,400
44,552
0
10,000
20,000
30,000
40,000
50,000
July August Sept Oct
ThroughputinlinesfromJulytoOct'08
ThpOrderlines
ThpPickedlines
Workload IncreasedWorkload Increased Staff UtilizationStaff Utilization
6How the situation become critical
Vs
7. 3. No homework done to keep the operation
up to date.
No clear strategy defined for pick-face location &
replenishment process. Also does not integrated to
WMS as well.
No pick face locations assigned for 1475 SKUs that
arrived newly within last 5 months time.
More than 1200 SKUs that assigned pick-faces were
dead (Out of stock). Also 550 dead SKUs (SKUs not
moved in last 90 days) laying on PF locations.
Poor location accuracy due to lack of cycle-count
process in place.
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How the situation become critical
8. Best Possible Solution to OvercomeBest Possible Solution to Overcome
Implementing 3 shifts to ELC operation
Capability in 2 shiftsCapability in 2 shifts
450 pick lines a shift450 pick lines a shift
900 a day900 a day
Capability in 3 shiftsCapability in 3 shifts
450 pick lines a shift450 pick lines a shift
1350 a day1350 a day
OTBOUND / At PresentOTBOUND / At Present FutureFuture -- After ImplementingAfter Implementing
Capacity ImprovementCapacity Improvement
450 Pick Lines a day450 Pick Lines a day
Capacity ImprovementCapacity Improvement
50%50%
(Based on present average volume 0f - 30 pieces, 0.022 CBM per pick line)(Based on present average volume 0f - 30 pieces, 0.022 CBM per pick line)
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9. Additional Staff Requirement
At Present
WH Supervisor 02
Coordinator 01
Team Leader 02
Inventory Asst: 04
Pickers & QC 12
Inbounds 04
DGR 02
Total 27
Requirement
WH Supervisor 01
Snr. Stock Controller 01
Team Leader 03
Stock Controller 01
Inventory Asst: 03
Pickers & QC 18
Inbound Staff 06
Total 33
Total no of permanent Staff requiredTotal no of permanent Staff required
additionally - 06 (22% Increase)additionally - 06 (22% Increase)
((It is also important to properly allocate the existing personnel to this integrated structure, with clearlyIt is also important to properly allocate the existing personnel to this integrated structure, with clearly
defined and communicated job responsibilities to achieve the objectives of this proposal)defined and communicated job responsibilities to achieve the objectives of this proposal)
9
10. Additional Cost Involvement for 3
Shift Operation
MHE – NO
2 additional batteries for MHE = AED 39,000.00 – Fixed
(AED 19,500 Per Unit X 2)
Staff – 01 Team leader, = AED 4000.00 – Monthly
(Approximately: AED 4000.00 Per Head)
06 Pickers = AED 12,000.00 – Monthly
(Approximately: AED 2000.00 per head x 6)
Total Additional Cost = AED 16,000.00 – Monthly
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11. Proposed Organization Chart for ELC – WH
Annexure 01
Major Change in Operation &
Staff Allocation
Only 01 shift inbound ReceiptOnly 01 shift inbound Receipt
(3 staff)(3 staff)
Expecting 100% ImprovementExpecting 100% Improvement
byby
adding a full inbound receiptadding a full inbound receipt
team to the 2team to the 2ndnd
shiftshift
(3 staff)(3 staff)
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13. Increase efficiency in PICK-FACE picking
TargetedTargeted
EfficiencyEfficiency
of PF pickingof PF picking
70 %70 %
PresentPresent
Efficiency ofEfficiency of
PF pickingPF picking
52 %52 %
13Possible Solutions to Increase Productivity
14. Actions to Increase Pick Face Efficiency
To Operations
Assign pick face locations for 1475 of moving SKUs
566 SKU’s which was assigned to pick face but no
transactions for last 90 days, to be moved out
physically to non pick face locations.
550 dead SKUs (no inventory or movements for last 90
days) to be removed from Pick-Face.
14
15. 15
Actions to Increase Pick Face Efficiency
To WMS
Redefine the replenishment process in the WMS to pick
from PF, first.
Assign pick face locations for 1475 of moving SKUs
Adjust the minimum & maximum quantity in PF according to
pack-keys.
Implement full pack replenishment process instead of
present piece unit replenishment.
Work to avoid replenishing expired products in to pick face.
16. Cycle Count
Implement Cycle Count with immediate effect with a forecast plan to
complete a count cycle in every 78 days. (3 months)
Clean-up PF area according to the cycle count results.
Immediately Actions Taken
Up to now there are 864 PF locations checked & removed miss located
goods.
New cycle count plan has been created & will implement from 1st of
December 2008. (Annexure 2)
16Actions to Increase Location Accuracy
17. To WMS
1. Report of “SKUs did not assigned pick face location”
2. Pick face location with 0 quantity in any given time
3. Order commodity and / or quantity not allocated or
partially allocated
4. Outbound operations & performance monitoring report
with actual pick-lines (Currently monitors only order
lines)
17
New Reports to be generated
18. CONCLUSION
This will be Agility’s final chance to win this
client ELC.
By implementing the proposed action plan,
Agility will be able to deliver quick result.
It shows our dedication and interest on this
account.
Keeping it up to the level of client’s
expectation, possibly we can avoid
retendering and negotiate for contract
renewal to retain this prestigious client
account.
18
