Client: Distribution Company Philadelphia, PA Network Distribution Center
The facility we were requested to assist, was looking to reduce cost and increase efficiency in processing products through the facility. The equipment that was used to process the products was not capable of sorting products that were flat in nature. This particular piece of equipment was originally built to sort products with large dimensions. The organization had gone through a network consolidation process, that changed the mission of this distribution center, and changed the nature of the products the facility had to process. In order to accommodate this new product, a manual operation was put in place. This manual operation was costly and inefficient. Our objective was to improve and/or eliminate this operation.
Update or modify current equipment to accommodate the new product entering the facility
Improve or eliminate manual process based on the premise of decreased volume of product rejecting from the sortation process
At a Glance
The parent distribution company had just completed a network consolidation. As a result, this facility received an increase in volume. This new volume included a type of product that was flat in nature, and incompatible with the facility’s processing equipment. This equipment was built to accommodate product pieces that had larger dimensions. The facility created a manual operation to process these non-compatible pieces. This was an expensive and inefficient process.
Our approach was to integrate with management and key personnel within the facility in order to understand operational processes. Then we worked closely with the facility maintenance subject matter experts, in order to better understand the equipment sorting these products. Once we understood the machine characteristics, we were able to solicit several manufacturing vendors to propose a solution.
We received three bids from three different vendors. Each bid included, timetable for installation, maintenance plan, and overall costs. The vendor that was chosen had a very aggressive, but very achievable plan. Installation and testing of the system would take 12 weeks.
Before management would make a decision to move forward, we had to work with operations to develop an interim plan for processing during the 12 week installation period. During this timeframe the machine would only operate at half capacity, since a section of the machine would be shut down for the project. Using capacity planning, we created a contingency plan which included another manual operation, and an offload plan to another local facility in order to maintain timely processing during the installation period. Finally, it was decided that installation would take place from mid-May to mid-August so that the facility could take advantage of the low volume period.
Management moved forward with the equipment upgrade. Overall performance was maintained, due to a very good contingency plan. Upon completion, the equipment allowed the facility to increase performance, become more efficient, and eliminate 9 out of 10 employees that were apart of the manual operation. Overall a successful project.
ROI – Recoup cost in just under 3 years
Cost Savings – 738K/yr Employee Salaries
Volume – 182K/week Additional pieces processed (15% increase)