BY JAMES A. COOKE, EDITOR AT LARGE
NEW WAYS TO REDUCE WAREHOUSE COSTS
CUT DISTRIBUTION COSTS. THAT’S THE MANDATE
logistics managers keep hearing from their companies. But
that raises a question: Given that the cost-cutting pressure
has been there for so long, are there really any new ways out
there to cut costs?
Yes, according to the consultants contacted for this article. In some cases, getting the savings requires an upfront
investment in technology; in other cases, it merely involves
operational changes. Although some of these ideas are variations on old ones, they still deserve a close look by logistics
managers looking to rein in expenses. What follows are five
ways to improve efficiency and cut DC costs:
1Give “building information modeling” a try. Before breaking ground on a new or revamped warehouse operation, conduct a virtual test of the proposed layout. Today’s “building information modeling” (BIM) technology provides three-dimensional simulations of what
takes place inside a facility, allowing managers to identify
any work flow problems that could hinder efficiency and
raise labor costs. Although architects and engineers have
used this technology for the past couple of decades to help
design facilities ranging from schools to prisons, it has only
recently been applied to distribution center operations.
What makes modeling so valuable is that it can detect
“possible physical conflicts” in the warehouse design, says
John M. Hill, a director with the supply chain engineering
and logistics consulting firm St. Onge. An example of a
physical conflict might be a conveyor that extends into a
building column or a brace that blocks door access. Hill
reports that correcting building flaws in the design stage
has spared his clients some serious headaches, not to men-
tion money. “It saves a company costs before a spade is put
into the ground,” he says.
2Consider investing in shuttle technology. For distri- bution operations challenged by “each” picking, the solution might lie in shuttle technology, says Steve
Osburn, a director in the Kurt Salmon Supply Chain
Group. Shuttles allow DCs to use the goods-to-person
approach to order picking, where machines bring the
goods to the workers rather than having them roam the
warehouse to retrieve items. Although Kiva—now owned
by Amazon—popularized this technology, a number of
material handling equipment manufacturers, including
Dematic, Knapp, Schaefer, and TGW, offer these machines.
Because shuttle systems are expensive, often costing
upwards of $2 million, they’re not practical for small operations. However, for high-volume DCs engaged in e-commerce, these systems can yield both labor and space savings,
a consideration in high-rent areas of the country. “If you’re
picking discrete orders, it could increase productivity two
times over what you currently do,” says Osburn. “If you do
batch picking to a unit sorter or put walls, you can still get
a 40- to 60-percent boost in pick labor.”
3Conduct a do-it-yourself time-motion study. One sim- ple way to save money is to ensure that all workers are following best practices. That was the premise behind
the traditional time-motion studies, in which an industrial
specialreport
ways to cut
DC costs
Under pressure to slash expenses?
Consider these five recommendations from top consultants.
