DC Velocity - January 2013

the Lennox DCs several times a day. “It’s real time enough,” Nash says. Most orders can go directly to an outbound door, but there are some exceptions. For instance, Lennox knows enough about its customers to anticipate when a particular customer may order several times during the day. “We know the probability that there will be other orders, so we don’t pick early in the morning,” Nash says. Instead, all of the orders from the customer are consolidated into a single shipment later in the day but early enough to meet next-day delivery commitments.

The system also splits direct-to-cus-tomer deliveries from shipments to the Lennox stores. Lennox can comingle those shipments on its trucks, a dedicated fleet operated by third parties. Some outbound shipments also move via less-than-truckload and truckload carriers.

“There is a lot of complexity in the background,” Nash says. For instance, cutoff times vary based on the type of business, and routing can vary based on the day’s orders. The system also gives Lennox the flexibility to bump emergency orders to the top of the list.

The DCs themselves use little in the way of automation and are lightly staffed, with 20 to 30 employees each. Lennox’s products are heavy and bulky, and 70 percent are stored on the floor. Most goods are handled by lift trucks with a specialized attachment—a flat blade that slides under the boxed products. Parts and supplies are stored in bins or broken-case storage. (Slow-moving service parts for older equipment are handled out of a separate warehouse near Chicago.)

SWIFT ORDER TURNAROUND

As for the results, Nash says the DCs have seen marked improvements in productivity since installing the new systems and adopting what he calls “good lean distribution practices.” “We are literally able to drop an order and pick, pack, and ship in less than half an hour,” he says.

Where hard measures are available, the numbers are impressive. For example, inventory accuracy now stands at 99.985 percent. “This company has never seen that before,” Nash says. He adds that outbound accuracy is also very high, which,

in turn, reduces the total cost to serve. Productivity measured in cartons per person handled has improved 10 to 15 percent each year during the transition.

The transportation-related bene-
fits are harder to quantify because of
the wide variations in transportation
costs over the past three years, Nash
says. “It is hard to get an apples-to-
apples comparison, but there is less
total cost,” he says. “Next year, we’ll
see more because we are finally fin-
ishing the network change. We will
have a lower total cost of distribu-
tion then.” ;

We could do a lot more

...but we could use a little help

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