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.

I love quality research, but I hate faulty research conclusions

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I love to read about our industry. It’s really an exciting place to be as more people place greater value upon their warehouse logistics. The one thing I hate though is faulty research all in the name of marketing. I see too many organizations who have their marketing or PR team make unfounded claims that they think that by cloaking the claims under the premise of “research” that the industry will believe their findings are credible. 

 So what set me off today, enough to write this … I read some “industry” research today that I consider dead wrong in its conclusion. The headline for the research in question stated “…Research Indicates That Most Online Purchases are Returned Due to Retailer Error”.  They go onto state “The research results prove that the clear majority – 65% – of respondents answered that most often the reason they return items bought online or by phone is because the item received is incorrect”.  Their second finding was that “84% of respondents stated that the return process is extremely or very important to their future intentions to shop with a retailer”. With this being the week of NRF in New York, it’s amazing that any retailer would find any credibility in these “research” assertions.

I started to think about my own life to quickly invalidate what I believe to be wrong research conclusions.  The headline states that returns are “due to retailer error”. Wrong! Most retailers have quite accurate order fulfillment systems in place. Many retailers are now achieving order accuracy over 99%. The top reasons why people return items bought online is because the item does not fit or it is not the color that thought or it’s just not a flattering fashion fit. The consumer returns the item not due to an error by the retailer, but because the item is “not right for them”… but, no error was committed by the retailer in their order fulfillment process which is the main faulty assertion in the research findings.  As an example from my own life, my lovely wife buys shoes from Zappo’s and clothes from J.Crew more than you might think. I’m treading carefully here…  The items she orders show up on time and are correct virtually every time.  Remember, retailers are now achieving order accuracy over 99% and our household can confirm these accuracy levels. But, once the shoes or clothes are tried on…it turns out that they are not what she expected and hoped for… and probably 35% of her orders are returned smoothly without effort.  Over the years, she has become educated to know what designers are not a good for her. She knows for example that with a narrow foot, only certain manufacturers offer “narrow” sizes that properly fit her foot. None of the “incorrect” orders is the fault of the retailer.

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