Chain of Thought

Competitive Advantage Can Come in a Box

As a dealer in industrial products, D&H Distributing is responsible for making the stuff of high-tech giants like Microsoft look good in the eyes of small and medium size businesses. But to Lisa Paul, D&H’s director of distribution, before the boxes that comprise computer networks can impress, it’s the people who pack D&H’s shipping boxes who represent not only D&H’s competitive advantage, but that of its customers. So for anybody who thinks warehousing is a dead-end job, Ms. Paul is here to set you straight.

“Order packing is our last line of defense,” she told attendees of Dematic’s annual customer conference held in Park City, Utah, last week. During her session on “Diminutive Solutions for the Rest of Us,” Paul was one of three presenters who outlined projects done by “mid-sized organizations with mid-sized budgets and big challenges.”  It’s in shipping where companies have their last chance to make a good impression on their customers, she said.

“This isn’t a lame job—somebody putting paper in a box,” she added. “These are the last people to look in the box and see if it looks right. Presentation is very important. We tell our people you’re shipping to your grandma.”

Something as simple as filling and taping a shipping container can ensure that a good product retains its quality on its journey through the supply chain. But even before a product reaches shipping, the people in a D&H distribution center play a big role not only in product quality, but in keeping supply chain costs low. That means making best use of the space in which they work. Because D&H is employee-owned, they are encouraged to feel responsible for how their distribution facilities are run.

D&H has five DCs: Mississauga, Ont., Canada; Fresno, Cal.; Bolingbrook, Ill.; Atlanta, Ga.; and Harrisburg, PA.  Rapid SKU growth in the high-tech industry, including Microsoft chips and tablet computers, has added complexity and mass to its inventory of industry miscellany ranging from cookware to fishing rods and golf clubs. Such growth has made it tough for this distributor to avoid facility expansion. D&H has a number of reasons to want to maintain its facilities as they are. First, the company owns them, and they’re paid for. Plus, it has comfortable relationships with carriers who are familiar with these facilities and it doesn’t want to do anything that will raise its transportation costs. And finally, getting back to its workforce, many of them are tenured and have been with D&H for at least six years. So just as making best use of a shipping box is the last line of defense for product quality, Paul said making best use of the DC box is their defense against unnecessary expansion. She saw it as unnecessary because there was still plenty of usable vertical space, particularly in their Harrisburg facility.

“We went up because we were landlocked,” she explained. “Building a greenfield site would have cost $50-$60 per square foot, whereas mezzanine would be $20 per square foot.  We looked at AS/RS and carousels, but with our breadth of SKUs those wouldn’t work right now.”

The Harrisburg facility was already at 85% of its storage capacity two years ago. It was losing efficiencies in picking and putaway. Putaway was directed by a WMS, and even it was having trouble finding available storage locations. Staffers had to go around rearranging products—which led to lost products.

In March 2011, D&H worked with Dematic and Wildeck to rearrange storage by incorporating an 80,000 sq. ft. mezzanine and designing a new picking system. This project was accomplished on third shift and on weekends, without incurring downtime. Picking is now done via zone routing.  The facility went from 280,000 sq. ft. of usable space to 360,000 sq. ft. As the Harrisburg project concluded in June of 2011, the Chicago site embarked on a similar transformation.

As a result of making better use of its Harrisburg space, D&H was able to add 15,000 new pick faces. That enabled the company to hold off on making any drastic changes to its distribution philosophy—until now.

“Just in the last couple months we took on a new project, and all of our mezzanine is full of new products,” Paul explained. “That’s how fast things change in our world.”

That means considering the support of a 3PL.

But as I said, D&H’s people are not just box movers. Because the company is employee-owned, they’re considered co-owners. As such, they are given responsibility to help choose technology to make them more productive. Receiving brings in 4,000-10,000 cases a day. Order fillers pick to totes, pick to carts and handle large items as well. Items are scanned, picked and conveyed through  various zones. The pickers’ names are on their scan guns, which means they are responsible for any damage.

“They know if they destroy them they have to pay for them,” Paul said. “But in the eight years we’ve had RF, only three have been destroyed. That’s pretty good for a 24 x 6 operation.”

These co-owners will soon be getting new RF guns (Intermec), but this choice wasn’t made for them.

“They took 4-5 months, and everybody got a chance to work with them,” Paul added. “We do a lot of batch picking so conveyors don’t get clogged.

Paul takes pride in the parcels that come out of her facilities.

“You’ll never know if an order came through Amazon or us,” she boasted.

For an operation that processes up to 10,000 cartons on the day shift, as D&H’s Harrisburg DC does, making best use of a box must become a best practice. That includes the box these co-owners work in.

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