Prepare Tech's Welcome

May 1, 2002
Make sure business processes are sound before eyeing automation.

Prepare Tech’s Welcome

I worry about you folks sometimes. You’re in the industry trenches fighting for your lives. We in the trade press are passive observers who comment on the thrill of victory. We rarely show the agony of defeat. My concern is, by reading the automation success stories so prevalent in the trades’ pages (ours included), you might feel the time is right for you to walk technology’s leading edge.

Before you take that step, listen up:

A survey conducted by management consultants PRTM reports companies achieved only 25 percent of their inventory reduction target, and half of their supply chain cost reduction target after implementing supply chain planning software. A PRTM director surmised that companies tend to resort to the easy answer technology provides instead of aiming at the more difficult target of improving business results. The survey also showed that only half of the companies used quantitative criteria at the outset of an automation project to judge their success. The majority of companies used soft criteria as targets. These focus on the technology itself, not on the specific impact on business operations, the researchers concluded.

Nobody understands the lure of technology better than Mark Schiller, director of Kennametal Distribution Services. Imagine his situation. Kennametal consolidated the logistics operations of 22 distribution centers into one, based in Cleveland. That would be a logistics challenge for any business, but for one responsible for stocking 500,000 metal cutting products, 87 percent of which are slow movers, it’s a logistics nightmare. Schiller’s goal: ship perfect orders the same day they’re received while minimizing inventory investment.

Put yourself in his place. In your DC there are at least 100 different operations where a piece of paper is produced. That means 100 opportunities for human error. That sounds like a job for a radio-frequency-based warehouse management system, right?

Wrong. Not yet.

“You need to first decide what your business is, how you want to run it, and what the key factors are that determine your success,” he says. “Then you’ll be ready to talk to someone about helping you to either replace or enhance the systems you have.”

Kennametal appointed a director of lean initiatives who helped identify 30 potential process improvements. To date the company has implemented 10. The other 20 are in some level of development.

With those 10 improvements alone, without high tech, the company is shipping 99.9 percent of its orders same-day. Inventory accuracy is at 97.5 percent (an area of opportunity for them, Schiller admits). And by their most current measure, the DC’s shipping errors are down to 150 per million lines shipped.

I saw these operations firsthand on a recent tour of the facility, sponsored by the Northeast Ohio WERCouncil, one of the Warehousing Education and Research Council’s regional chapters. I even saw how Kennametal mapped and identified its fulfillment process. The company wanted to prove, first to itself, then to its visitors, that it was ready to fulfill technology’s promises.

First on its technology to-do list is radio frequency data collection. It will help the company eliminate manifesting and checking operations, and pick orders directly into shipping cartons. This will streamline flow and improve accuracy.

If more companies were as careful about preparing technology’s welcome, we trade press editors would have a lot more success stories to cover.

Tom Andel, chief editor, [email protected]

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