Savings A La Mode (Shift)
High container demurrage charges seemed inevitable for a consumer goods company that was operating in Santiago, Chile—until a Lean team uncovered a way to move some major financial mountains.
Most of the products at the operation come from Argentina and Brazil, which meant many of its land-based shipments had to travel through the Andes Mountains. And unfortunately trucks can frequently get stuck there during the winter.
Now many of those shipments travel via water instead, a modal shift that has saved $1.8 million.
Saying No to Overflow
When a Lean team in 2007-2008 conducted a detailed space utilization analysis for one of our multi-facility clients, it found several creative ways to accommodate more inventory, including double-stacking on racks’ highest levels, more efficiently replenishing pick areas and leveraging space in front of unused dock doors. As a result, the client was able to significantly reduce its use of overflow facilities—and the $1 million annual price tag that went along with them.
A Sequel Better Than The Original
It would be easy to assume that $400,000 in savings was the best thing to come out of a three-week Lean project that improved the lines per labor hour in a security facility’s packaging and shipping area. But the truly superior takeaway was a subsequent project idea that came out of it.
After spending all that time focusing on the packing and shipping area, team members had one of those aha moments when they realized that they could have saved even more by changing the layout of the conveyor and work stations. That’s exactly what the team did in a two-week follow-up project that saved the company an additional $1.1 million.
More Cases per Pallet, Lower Shipping Cost
When a team working for a consumer packaged goods account did a three-week Lean project focused on increasing the average cases shipped per pallet, the improvements it achieved shaved nearly $500,000 off its overall expense. Plus it was able to help three other facilities that were providing similar services optimize their use of pallets, too.
Making up Better Shipments
A facility serving a major cosmetics company found a way to ship 10 fewer trailer loads a month—and save $350,000 per year—by improving outbound trailer cube utilization.
After determining that dimensional data in the system wasn’t accurate enough to use for optimal load building, the team spent weeks gathering data on actual outgoing truckloads. Based on what it learned, it was able to confidently recommend increasing each load by 200 cases per truck, and that in turn made it possible to decrease the actual number of trailers it had to use.
Time Out for Overtime
When a long-running operation in Texas began seeing consistent increases in its overtime requirements, its Lean team saw a prime opportunity to re-evaluate order flow and work requirements. As a result, the facility wound up changing its work shifts so the work load was better distributed—a move that almost completely eliminated overtime, improved employee morale and saved close to $200,000 in annual labor costs.
One year after addressing piece picking in one of its first Lean projects, a facility in the Southeast revisited the process—this time to rearrange the pick line so that products were organized by weight and product type, with the heaviest products first.
It took them about six weeks to get the whole thing done because they had to make some empty spaces in the pick lines first. But it made the loading of pallets and carts considerably easier for the facility’s order pickers, because they no longer had to skip pick locations due to weight or balance issues.
Ultimately it improved each picker’s productivity by 20 pieces an hour—and saved the client approximately $8,500 annually.
Early Pallet Inspection
Timing is everything when it comes to catching poor pallet quality—or so a chemical distribution facility discovered when its Lean team worked on a project that focused on improving lines per hour. When the team realized that pickers had to spend a lot of extra time changing out any damaged wood pallets they came across, it ultimately concluded that much of that wasted time could be reduced by requiring pallets to be inspected during receiving. $60,000 in savings later, it turns out it was right.
Less Direct, More Economy
Direct store delivery seemed like the most economical way for an upscale grocery chain to receive incoming shipments from some of its vendors—until a Lean team at its California cross-dock/consolidation center identified unused space in many of the center’s outgoing trailers.
In order to eliminate this waste, the team approached one of the store’s vendors that was delivering directly to the stores to see if it would consider delivering to the center instead. Thanks to the vendor’s change, the client is now saving $40,000 annually on transportation—and that may only be the start.
Several of the stores’ other vendors have begun to show real interest in participating in the project, too. So that initial $40,000 may eventually morph into a lot more savings for this customer.
Saying Goodbye to Paper
Although many Lean projects are measured in weeks, some take considerably longer than that. However the potential payoff is often more than worth the wait, as the example of a chemical distribution facility’s nine-month effort to implement radio frequency data collection demonstrates.
The facility had already completed eight projects and generated more than $700,000 in Lean savings when it decided to implement the new system. As a result, it knew it was looking at a transformation that was much more involved than previous issues it had tackled.
With the generous help of funding from the client and a dedicated IT professional, the facility implemented the new system in four phases: unloading and put-away, pick routes, loading and quality control. The result is a 100 percent paperless facility.
We estimate that it will take eighteen months to two years to see the ROI we’re aiming for. But in the long run, we expect this to be one of the most successful projects in program history. And that’s saying a lot when we already have one that’s saved more than a million dollars.
Charlie Jacobs oversees APL Logistics’ Lean initiatives. Visit www.apllogistics.com.