Cost Savings Roundtable with Canada’s Leading Supply Chain MM&D Magazine

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Scott Deutsch- Honeywell- Voice SolutionsI had the pleasure last week participating in a 90-minute roundtable discussion lead by Editor-in-Chief Emily Atkins, Materials Management & Distribution magazine (www.mmdonline.com) on the subject of  cost saving. Any time for a conversation around talking how to save costs in a warehouse is a good time for me, since it is a cornerstone to the Vocollect Voice value proposition.

MM&D did an excellent job at bringing together diverse perspectives on how businesses could save with various approaches. What I found to be unique about this discussion was that we had point of views ranging from real estate (Colliers International) to automation (Dematic) to floor design (3D Storage Solutions). We also had a leading Canadian 3PL (Direct Distribution Centres, a division of Canada Cartage System) at the roundtable representing the customer view. These various areas of expertise made for an excellent roundtable engagement with lots of opinions.

Emily Atkins- MM&D Magazine Editor at a PanelWhile different in our perspectives, a common set of themes seem to resonate with the group. The core themes we discussed  were about:

  1. Business flexibility- We discussed this subject in terms of real estate and facilities, as well as having flexibility within the four walls to support a changing future driven by the growth of omni-channel and ecommerce. The group also discussed the need for shorter (and less costly) investments that had paybacks greater than 24 months. It was especially noted that the lack of modern facility inventory with 36’ clearance was also forcing businesses to think about investment options.

Scalability– The warehouse of the future is driven by customer change and no one has 100% confidence in knowing what exactly the future holds. The growth in the “world of eaches” has forced businesses to think differently about how they organize their facilities. No longer could businesses view their ecommerce order fulfillment as a stepchild. So “hiding it” in the corner of the facility was no longer going to be viable option. Ecommerce is here to stay and will only grow as a percentage of overall business, for most. We discussed the need for a business to be able to scale up and down to meet changing customer needs as well being able to cost effectively support the demands of business seasonality.  You would be correct to the linkage of flexibility and scalability going hand and hand. As a group, we did agree that inflexible infrastructure investments would have fewer business opportunities.

Workflow process optimization– We spent the largest amount of time talking about how outdated processes are a barrier to lower operational costs. Changing the status quo is never easy, but necessary in order to challenge the business to perform operationally more efficient…. now. One of the points I raised was that sometimes it is a matter of perspective. If we could show how we could improve their “as-is” state from an audit of operational processes (often capturing video of their actual processes) and compared it to a possible “future state”, how can a business say no? The use of re-engineered and optimized processes with technology such as voice has gained wide market acceptance (and growing rapidly) because we are able to show a true and quantifiable ROI breakeven in less than a year. An interesting point was made that very few businesses in Canada have the business scale to justify large-scale projects with a multi-year payback. I do not think this perspective is limited to the Canadian market.

Measure for success– It was resoundingly agreed that measuring activities was vital in order to ensure that key KPI’s were achieved and the business was able to focus on key areas of success. The ability to properly measure with engineered labor standards was viewed as a good operating procedure to help a business reduce costs and ensure their worker output was maximized. One of the beauties of voice is that we measure and track very detailed task results. This data is extremely useful to help the business better understand their facility layout and organization.  One of the benefits of voice is that it helps provide great feedback to help annually reslotting activities to help reduce wasted travel time.

Safety and Worker Performance– While everyone was in favor of cost savings, it had to properly balanced against potential safety risks. This has always been a core strength of the Vocollect Voice solution (www.vocollectvoice.com) value proposition. The heads-up and hands-free nature of a voice solution helps keep a worker focused on their task and helps reduce their distractions. This also positively influences damaged inventory as well as worker safety.

As you can probably tell, I enjoyed myself. It was group of very knowledgeable industry professionals and I am glad to have had the opportunity to spend quality time to meet and discuss a subject that I am passionate about. Thank you to Materials Management & Distribution (MM&D) for having Honeywell at this industry thought leaders roundtable.

Lean and Six Sigma with Best Practice Workflow Processes

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7b7d1-deutsch_scott_07aI was reading an article by Martha Heller in CIO Magazine the other day, in which Carlos Cardoso, CEO of Kennametal, was talking about their successful implementation of an ERP system. What was interesting to me was his attitude toward his ERP project. Instead of making the project an IT effort, he first made sure that the team focused on better rationalizing their business and workflow processes.

Taking stock of how you currently operate is a major philosophical mindset when looking to implement and configure new technology solutions. At Kennametal, they found more than 6,000 active processes and after rationalizing them, came up with a core library of just 600 processes. This is a staggering difference and I think more common than many would expect.  So many processes were put in place years ago and today are followed because “that’s the way we do things”. Unfortunately, many of these processes are not optimized for today’s business and are robbing you of potential operating efficiencies.  

By using Lean and Six Sigma approaches, you will be able to streamline processes and reduce operating inefficiencies. When Vocollect engages with a new customer about the potential utilization of voice technology, we start with this approach. At Kennametal, they mapped their processes against the standard processes available from their ERP supplier and found that 92% of their processes could be supported by adapting the standard “best in class” processes.  Mr. Cardoso stated, ”With thousands of companies using the ERP product already, our processes should not be so unique that we can’t leverage standard software processes.” When prospects review the potential adoption of Vocollect Voice, they also find our best practice workflow processes map very closely to their desired future state.

Solutions today that support best practice workflow processes help to better streamline operating environments and enable the reduction of overall project support costs. It surprises me when I hear of a project that starts with a white boarding of ideas. If a solution has been successfully implemented with thousands of customers and more than a million users, why would anyone discuss a detailed workflow process without starting with best practices? I understand the question of “what would you like to do”, however, this question should be more around what business issues are you trying to address. But, I still hear stories where the review of workflow processes begins with a whiteboard. What could possibly be the business justification for using this approach today? What executive would justify the funding of this type of technology investment? This “custom” mindset sounds great to the line of business owner, but does not consider the future solution, nor does it consider the opportunities lost through the potential leveraging of new features and capabilities made available from their solution provider. As Kennametal learned, if you start with best practices and map your updated processes to them, you will be surprised how close your processes may actually align to industry best processes.

When you think about improving your operational processes, I recommend you take the opportunity to review what you do, how you do it and why you do it. Question whether individual steps in a process are really needed. Challenge the business value that certain steps in a process provide the business and your workers. Take the opportunity to map your processes in detail. When you undertake this effort, you will find that “emotional owners” will begin to “defend” processes. In order to remove as much emotion as possible, I’d recommend that you video tape certain processes. This will enable the team to talk through the reality vs. the emotion. Lean processes are emotionless. You do what’s best for the business and your workers. And it’s important that you quantify the value of various process enhancements, since so many of these processes are repeated thousands of times each year by many workers. Having gained a better understanding of your processes you will then be able to better map your processes against industry best practice workflows.

When you start with best practices, you focus the team on what enhancements are required to support the business. You will find the team will have a mindset that challenges the business to change vs. a mindset of “that’s the way we do it”. Supporting unique business processes is vital and important, however, as Mr. Cardoso observed, “The IT solution comes last”.

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