C ut 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:
1 Give “building information modeling” a try. Before breaking ground on a new or revamped ware-
house operation, conduct a virtual test of the pro-
posed layout. Today’s “building information mod-
eling” (BIM) technology provides three-dimensional
simulations of what takes place inside a facility,
allowing managers to identify any work flow prob-
lems 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 mention
money. “It saves a company costs before a spade is
put into the ground,” he says.
2Consider investing in shuttle technology. For dis- tribution 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
Under pressure to slash expenses?
Consider these five recommendations
from top consultants.
Five ways
to cut DC costs
