Distribution Centre Management Planning and Design. Distribution Centre The Epicentre of Customer Value
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1 Distribution Centre Management Planning and Design Distribution Centre The Epicentre of Customer Value Katia Leonaite Principal Consultant L5 Consulting
2 DC facility from which wholesale and retail orders are filled. The term is used to describe a high-velocity operation as opposed to a static storage warehouse - K. B. Ackerman Words of Warehousing Epicentre the focal point of the activity, the point where the event took place, source of origin Customer Value The difference between what a customer gets from a product or service, and what he or she has to give in order to get it Businessdictionary.com
3 Primary Functions of a DC: A distribution center offers value-added services: eg. transportation, cross-docking, order-fulfillment, labeling and packaging A distribution center is customer focused: While a warehouse is focused on the most efficient cost effective methods of storing products within its walls, a distribution center's sole mission is to provide outstanding service to its customers. A distribution center is technology-driven: eg. order processing, transportation management and warehouse management A distribution center is relationship-centric: A distribution center is the principal link between suppliers and customers.
4 It is imperative that management is conversant not only with the customers' needs but also with the most efficient and cost-effective methods of meeting those needs.
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7 Stewardship Support Service 3 Pillars of DC Excellence
8 DC - Delight the Customer Service DC - Define the Customer DC - Distinguish the Customer
9 Get to Know Your Customers Who are your customers? Businesses? Consumers? What characteristics do they share? What are their needs? Consistency? Timeliness? Low cost? Variety of choices? In what order?
10 Case Study Bagsome is a manufacturer or branded shoes, bags and accessories. The products are sold through major retailers, a dozen company stores scattered across Australia and the website store. All sales are not created equal
11 Case Study For these 3 channels consider Order capturing process Order profile Service level expectations speed, availability, accuracy, fulfillment rates Reverse logistics expectations/ process Implications of service failure Further considerations incude: Delivery model, volume discounts, rebates & promotions
12 Stock Related Problems Too much - Does not it fit in the space available Too little Service Level Failure Wrong Stock not what our customers need/ Picking errors Insufficient timeslots for scheduling inbound deliveries Lack of information about incoming shipments
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14 Indicators of Problems Out of Stocks Late Deliveries Credits on the rise Unpredictable order volumes Lack of knowledge about demand Frequency, Level, Demand, Lifecycle stage
15 Consequences of Getting it Wrong Profit Erosion Cash Drain Service Level failure Product Damage
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17 What is the basis of our plans? Sample of monthly retail sales
18 What is the basis of our plans? Monthly sales peak? Trough? Average? Pareto Rule? Average is just that - average Customer service contracted rate? How is it measured? What should be the target? DIFOT vs DOT Orders filled vs lines filled What is the target Asset Utilisation rate?
19 Product- Warehousing Design Fit Density Stackability Velocity of inventory Order Profile Process design (receiving, put away, order pick) Layout and Technology deployed
20 Key Considerations Customer service needs Customer clusters, order profile (pallets, eaches, kitting), response times, emergency needs, risk factors, future requirements Supply Constraints Delivery reliability, quality issues, Demand Forecasting, S&OP, Into Store vs via warehouse network Storage and handling needs Expected Demand, regular vs strategic stock, processes and methodologies, off site storage options Control and management Outsourcing possibilities, Business risks, flexible capacity, cost control prioritise capital and running costs Site Specifics In/out bound access, environmental, growth potential Facility Design Process design, equipment, layout How does all of this look in the future?
21 7 Fundamentals of Design What is the PURPOSE of the building? Forecast VOLUME and FUNCTION Match TECHNOLOGY with the requirements Streamlined one way FLOW Minimise Manual HANDLING Consider OPTIONS LEVERAGE your professional network seek advice
22 Warehouse Analytics- Assessing Performance Order Processing Rates Picking Rate Pallets or Tonnes in Stock Order Volumes Order Cost
23 Stewardship Support Service 3 Pillars of DC Excellence
24 DC - Delight the Customer Service DC - Define the Customer DC - Distinguish the Customer
25 No DC No DC!
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