Interim Supply Chain Managers Example Assignment
I’ve received a phone call from an Interim CEO who I have worked with on a number of occasions:
“Mike, I need you to have a look at the Supply Chain operation for me! I’m in the warehouse and nothing is moving, no working space, inbound delays and delays to outbound shipments”
Next morning I met with the CEO and the Supply Chain Director at the warehouse. After the usual introductions and walk around it is down to business……..
“Can I see the last 4 weeks KPI’s please” …………….
……….. “We don’t have time to collect the data” …………
“What are the pick rates per operative” ………………..
……….. “Which rate do you want? The one with the base staff levels or the one with the additional 84 agency staff at present” ………….
“What is the missed pick rate?” …………….
…………..” Well that is a big issue for us as the first 3 months receipts into the warehouse were corrupted when SAP went live and we are still trying to find out where they were located. Therefore we do have a high number of miss picks / not founds” …………
The warehouse was 850,000 sq ft of working space in two adjoining units. One was VNA racked with 12,000 pallet locations the second was a ground floor with 3 additional floors containing in total 100,000 bin locations, a small manufacturing / assembly operation and the packing and despatch area. The business managed 75,000 SKU’s plus ring fenced stock for specific companies.
I spent the next week identifying the key issues, some of which are summed up as follows:-
1. Material Masters within SAP had not been generated correctly and the information was both inaccurate and more often just missing.
2. Due to the corruption of data at warehouse start up, 3 months receipts had been put away into pick and bulk locations but the system, SAP, was not aware of where they were.
3. There were 1,500 pallets of returns and scrap materials in the bulk storage area.
4. There was no working space within the facility.
5. “Goods In” was constrained through lack of space to put away
6. The booking in system at “Goods In” had failed
7. The Logistics Director was struggling to manage the situation as his skill set was in HR.
8. The culture of “Silo” management was rife in the business with all of the associated problems.
9. Pick Notes were generated by SAP and printed at the warehouse. Unfortunately each line of each order was printed on a separate piece of paper requiring a manual process to collate orders before issuing to the warehouse operatives. Typical order processing time was 5 working days.
10. Links between Purchasing and the warehouse were nonexistent. Purchasing ran the “booking in” diary with no regard to the capability of the operation.
I could go on and on but suffice to say that it was a shambles and costing the company a fortune in operating costs and lost orders through inefficiency.
Drastic measures were called for to make the changes quickly. The following is a summary of some of the changes and processes that took place in this specific environment:-
Make Working Space:
Working space within the warehouse was the major issue. New product was stacked up outside under the canopy. Key actions taken included:-
· Move 1,500 pallets of returned goods out of the warehouse to a remote location. Bring in Head Office staff to process these specific returns
· Relocate the returns area to a smaller and more secluded location within the warehouse. Set up a procedure to action and clear the returns within a maximum of 5 working days.
· Working with Head Office, identify the old non moving products and implement a disposal programme.
· Identify SKU’s with stock levels that are too high. Work with Purchasing to block orders until more acceptable levels of stock are reached.
· Consolidation of stock in multiple locations
Identify “What is Where” in the Warehouse:
The first 3 months receipts into the new warehouse were not entered correctly into SAP. Therefore the locations for those SKU’s were incorrect and causing multiple issues with missed picks and stock volumes. Key Actions taken included:-
· Implement a data team of 8 heads to work a night shift with clearly defined tasks:-
o Visit every stock location within the warehouse
o Verify the stock SKU and Quantity against SAP. Correct SAP if required.
o Verify the Material Master details and correct as required. Make sure Weight and Dims of SKU item are correct
· Run on the basis of Perpetual Inventory Stock Check
· Agree with Risk Management and Auditors the process to enable removal of year end stock check.
New Procedure for Populating the Material Master for New Products:
Set up a new procedure at Head Office for initial creation of New Product Material Masters. Set up procedures at “Goods In” to identify new products on first receipt and then Weight and Measure each SKU. This information to be added to the Material Master in SAP.
Identify Old Product in the Warehouse and arrange for Disposal:
· Working with Head Office, identify the old non moving products and implement a disposal programme.
Change the Warehouse Management Structure:
It was apparent that there was no leadership from the top within the logistics area. Key therefore was to find the right person internally with the product knowledge and skills to lead the team. In this case it was the Warehouse Manager. Key Actions taken included:-
· Removal of the Logistics Director who was not experienced and not a leader.
· Promote the Warehouse Manager
· Set new structure for the Shift Managers and Team Leaders
· Identify training needs and set up training programme
· Set up Team Briefing Sessions
· Set up feedback mechanism for staff where they could benefit from identifying issues and helping to solve them.
· Announce changes to the business
SAP Process Workshops:
SAP was an issue and needed some work on the output documentation. SAP is an excellent product but the data input has to be absolutely correct to get decent information out. In our case SAP R3 had not been configured correctly and a volume of work was needed to reduce work levels within the warehouse. Key Actions taken included:-
· Pick Note generation and printing to be corrected to enable a one Pick Note per Client / Order.
· Back Orders, now available to ship, to be incorporated into the Pick Notes on a daily basis
· Create greater visibility to the remote warehouse
· Create reports required for warehouse operation
· Monitor Material Masters for accuracy
· Generate KPI’s directly from SAP to remove manual procedures.
· Transfer the “Booking In” system from Purchasing to the Warehouse. Move two Purchasing staff to remote warehouse to act as link with Purchasing and to maintain the “Booking In” log.
Cross Functional Co-operation:
Being remote the warehouse was an unknown to the Head Office staff and this had resulted in an “Us and Them” situation. Key Actions taken included:-
· Creating a meeting room at the warehouse for all locations to use.
· Requesting all Directors to utilise the meeting room at the warehouse.
· Set up tours of the warehouse for all visiting staff
· Create a visual set of boards in the reception area to show staff what actions were being taken and where we were with the implementation of them.
· Create a monthly news letter to staff explaining what changes were being made and how they would improve service and co-operation across the business.
The overall project took 12 months to complete and at the end of the project we had returned the logistics operation to a healthy situation, implementing a new local processing system linked to SAP to enable a paperless system based on use of Bar Codes and Hand Held Scanners. We were able to reduce the headcount by 100 and produce a Return on Investment of 1,303.7% (ROI).
About the Author:
Mike Forryan FCILT is the owner of MF Logistics & Associates and has worked within the Global supply chain arena for over 30 years. He has worked in both the Public and Private sectors across multiple markets in Europe and Globally. For the past 12 years Mike has managed his own Consultancy, operated as a Project Manager and an Interim Director / Manager. www.logistics-consultants.co.uk
Monday, 18 May 2009
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