first things we do is sit down at a roundtable with different
stakeholders within the company—operations, but also
sales and finance. We talk about where they are heading.
Are they looking for acquisitions or will there be a change
in the types of product in the next three to five years? We
want to make sure we are not missing things.”
That’s particularly important if operations are likely to
change substantially. To make the point, Giangrande cites
the experience of two clients. One, a sports cap distributor,
Both companies needed complex material handling
systems, but the designs were based on very different
business drivers.
DO LOOK BACK
While a detailed goal based on both tactical and strategic
plans should be at the heart of the planning process, knowing where you are going and how to get there starts with
understanding where you’ve been. Designing an appropri-
ate system requires a complete understanding of current
operations, and that demands careful analysis of detailed
data, preferably for a full year of operations.
“We’re big proponents of focusing on a data-driven
design,” Giangrande says. It is not just hard numbers—
SKUs, order profiles and such—but a feet-on-the-floor look at current processes, which
sometimes can yield surprises.
Giangrande says the data gathering should
include interviews with operations personnel—
view of current processes than managers.
“Managers may be out of touch with what is
actually happening on the floor,” he warns.
That process, while perhaps time consuming,
assures that the system plan is based on reality rather
than perception.
That does not necessarily mean that current
processes provide the best model for a new system, say both
Giangrande and Benefield. After all, the very fact that a new
or upgraded system is in the works implies that current
operations cannot meet current or expected business
requirements. Further, improvements in material handling
equipment, controls, and software may offer the potential
for gains well beyond what installed systems could provide.
“We used to collect data to try to understand order profiles,
and we still do that,” Benefield says. “But we take a hard
look at the processes from a lean standpoint. We look at the
potential for eliminating touches.”
Giangrande recommends looking at order profiles over
at least a 12-month period, which will show seasonal or
other cyclical trends or unusual spikes. He warns against
relying too heavily on averages in designing a system. In his
white paper, he writes, “If your business is seasonal and/or
experiences cyclical trends, planning to averages will most
likely yield a design that works very well except at the time
you need it to perform the most.”
Benefield also advocates looking at a full year’s order
data, but says there are exceptions. “Sometimes, [the client]
may say we’ve been growing drastically. Then we might use
six months.”
CRUNCH THE NUMBERS
All this can add up to a lot of information, as informed
decisions require looking at each of perhaps thousands of
SKUs. A typical SKU analysis breaks down inventory into
segments from fast movers to slow movers (Fortna ranks
them A through D, plus an E category for idle inventory).
“You can look at the number of SKUs, the number of
units, and even how much cube they are taking up,”
Giangrande says.
The analysis also includes what he calls cross profiling—
an examination that relates, say, fast-moving SKU categories with order profiles. Giangrande explains that such an
analysis might look at what percentage of orders could be
