Abstraction
Given the low marginal nature of most distribution companies, it is imperative to maintain the lowest labor costs. This article will show you how to use the Lean and Six Sigma tools to minimize the effort required to select, package, and send orders from the warehouse.
Background
This distribution company adopted Lean as part of its company's strategy to consistently reduce costs and improve customer service. They began their journey using Lean and Six Sigma tools for their primary use, storage, collection, packaging, and delivery of packaged goods to customers.
This project used 3 Lean Six Sigma Tools:
- Spaghetti Cards
- Pareto analysis
- 5S Visual Management
Visualization problems with spaghetti maps The spaghetti card is a simple Lean tool that helps visualize the extra movements of people in the process. It sets the base performance, shows the need for improvement and gives an idea of how to redesign the workspace layout. They can sometimes be combined with time studies to break up each step and its duration.
The Lean team at this distributor started the project by creating a spaghetti map of the current state. For 3 orders, a total of 7 items, warehouse personnel traveled throughout the warehouse, covering from one end to the other and almost all 4 corners. This is a lot of movements for 7 items.
In the Pack & Ship area, there was repetitive and unnecessary traffic. One table is for packaging, another table has a UPS, another table has an internal computer of the ERP system (which closes the order and moves it to the account queue), and another table has a ticket printer. Finally, they kept the boxes about 25 feet from the packaging area. Each order requires a separate trip to the drawer storage.
Spaghetti cards make the case that this warehouse could improve; reducing the labor required for selecting, packing and sending orders.
Using Pareto analysis to improve They then switched to using Six Sigma, Pareto Analysis, to analyze how to reduce the transfer time required for selecting, packing, and sending an order. Pareto graphics were developed in the late 1800s by Italian economist Wilfredo Pareto. He used this analysis to determine that wealth was distorted to a small part of the population. At one time, 80% of the land in Italy belonged to 20% of families in Italy. From Wilfredo we got the Pareto Principle or the 80/20 rule. It is commonly used in sales, with 80% of sales generated by only 20% of customers.
They created the Pareto table for the number of times the item was on the order (or “was selected”). The amount or sale of $ was not important for this project, as we were concerned about the reduction in travel time. Therefore, how many times the warehouse staff had to go to this item to select it was a critical metric.
Product Code, Orders,% Total, Console%
CW-932-42, 476, 1.08%, 1.08%
CW-035-44, 433, 0.98%, 2.06%
AW-255-19, 432, 0.98%, 3.04%
WE-823-09, 330, 0.75%, 3.79%
TW-114-02, 297, 0.67%, 4.46%
AW-255-31, 263, 0.60%, 5.06%
NW-115-45, 258, 0.58%, 5.64%
HW-040-27, 255, 0.58%, 6.22%
TW-332-72, 251, 0.57%, 6.79%
SW-008-32, 248, 0.56%, 7.35%
TW-134-11, 227, 0.51%, 7.87%
TW-124-12, 222, 0.50%, 8.37%
MW-000-68, 215, 0.49%, 8.86%
AW-744-54, 207, 0.47%, 9.33%
VW-330-06, 200, 0.45%, 9.78%
SW-201-60, 197, 0.45%, 10.2%
This table shows the elements that make up 10% of the best "choices." About 6,000 items were stored in this warehouse. Sixteen items accounted for 10% of all choices! The concentration of the upper objects was much higher than 80/20. This was actually 80/10, with 10% of the subjects making up 80% of the sample.
Warehouse reconstruction The team then compared the location of these 500 top positions. The best sellers, in terms of "peaks", were located throughout the warehouse.
To view the Spaghetti Maps and this location map, go to http://supplyvelocity.com/whitepapers.asp.
To reduce travel time, these 500 best items were moved as close as possible to the Pack & Ship area. Many of the small items were moved directly to the Pak and Ship area on the shelves next to the packing table.
Then the Pack & Ship area was regrouped. The boxes were moved near the packing table. ERP and UPS computers were placed on the same table. Everything was as close as possible.
The result was minimal movement for packaging and delivery of products to customers.
Test Plan Every 6 months, the vice president of operations re-starts the speed report and displays the location of 500 items. As items drop out of the list, they are moved further into the warehouse. When items are moved to the top list of 500, they move as close as possible to the Pack & Ship area.
