Wouldn’t it be wonderful if DC operations were as predictable and steady as their manufacturing counterparts? Well, at times, at least, they are. As discussed in my recent Sorting it Out blog (The High Cost of Next-Day Service), there are big benefits in being able to plan tomorrow's work today, and then taking advantage of the opportunity to plan the staffing to match a steady workload spread evenly over the day.

A primary tenet of the "lean" initiative is eliminating variation. However, many DC operations are faced with responding to orders that arrive continuously during the day, and are expected to be out the door before people go home.

Not only are DCs subjected to the ebbs and flows of incoming orders, but are also subjected to a changing mix of work content for those orders. Some may be dominated by full cases or pallets, while others have a high piece-picking content. Many may be single line, or single-piece orders. Still, others may require value-added services such as gift wrapping, price ticketing and serial number capture. These variations challenge DC managers to plan processes that are efficient for each, and yet can be turned on and off as the activity shifts.

The Solution Can Be Found in Clever Process Planning

Normally, MHS planners use historical data to establish capacity requirements for each separate process, and then design the processes and system flows accordingly. If the data is very granular, you can spot extreme peaks in demand. But, planning each process for its most extreme peak provides considerable excess system capacity most of the time, and can be very difficult to cost justify. On the other hand, you should avoid using annual averages – that would be like the guy who drowned while fly fishing in a stream having an average depth of only 6 inches.

I found that a good approach is to establish criteria for a theoretical “design day” based on an average day during the peak order processing period (week/month in a better than average sales year), plus a growth factor bump-up.

The following are a few planning ideas that can help you outsmart the variation problem: 

• First, be cautious of highly automated processes whose efficiency depends on running at full speed. They may not be so efficient when volumes are low, and still have the high capital investment to amortize.

• Choose the simplest process that works well for the majority of the orders and absorbs the inefficiency for the others.

• Create a mini-DC or independent line of flow (like a “slapper” line) for orders that have common characteristics. These might include a small sub-set of the product line, single lines or single units, the same shipping package and/or compliance labeling requirements, or the same carrier mode. This may feature a workstation for picking and packing as a single-step process. Or, a separate conveyor line may keep high-volume flow of small cartons off the primary system.

• In a conveyorized system, provide a path that permits flow from any process to another, and that makes the changes in order process requirements or sequence easier to handle.

• Design workstations that have the capability to perform a variety of tasks and locate them so that they are easily accessed from different points in the primary line of flow. These might be configured to support several activities. And cross-train employees so that as the mix of requirements changes, they can be quickly re-assigned to a different workstation.

Final Thoughts

No doubt managing DC variability is a major challenge. But, you don't have to be victimized by it. Careful data analysis and a little bit of clever process planning can put you back in control.

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