7 Wastes in Distribution

Here’s a pretty common situation. I’m called in to visit a facility that has a space or productivity issue. I walk the plant floor and suddenly my days of being a lean manufacturing engineer come back to me. I see pallets on a greasy floor, unmarked boxes open and sitting askew on a cart and workers in a messy environment not being productive. We get to the client’s area of concern and I listen to why they brought us in. They need to increase their storage capacity and decrease their picking errors. Based on their calculations they will need twice the staff to fulfill their orders. This client wants to know what my team and I can do to help them solve these issues. 

“the definition of insanity is doing the same thing over and over again but expecting different results”

Albert Einstein

Before getting to what the client really wants, I always reflect on the 7 wastes. They apply to manufacturing in general but can be explicitly applied to order fulfillment as well. Implementing an automated storage and retrieval system (asrs) does not “fix” the clients problems. We may be able to mask their issues with machines but the real way to provide a true solution to their needs is to change the way they do business. This is much easier said than done. Countless times I’ve heard “this is how we’ve always done this” or “we won’t do that”. A skill that has taken time to develop is the ability to be compassionately straightforward with clients. Although I empathize with them I don’t sugar coat my responses to them. So when a client states “this is how we’ve always done this”, I ask why. I listen. And usually I can follow up their response with a simple statement. If you’ve always done things this way, why am I here. How can anyone expect to see a change in results if you’re not looking to change the variables that lead to the result. A fun phrase Albert Einstein once said, which also illustrates this point is, “the definition of insanity is doing the same thing over and over again but expecting different results”.  At this point I’ve usually captured the attention of the client. 

In my line of work I fall back on the 7 wastes as easy ways to identify opportunities fro process improvement. Overproduction, Inventory, Motion, Defects, Over-Processing, Waiting, and Transport. In order fulfillment we see all of these wastes. Let’s apply these to a Distribution Center or any other order fulfillment, or inventory picking operation.

1. Overproduction- In a manufacturing environment this is pretty self explanatory. You make too many widgets. This is a waste because you allocated resources making a product(creating supply) which outpaced demand. In our ever evolving world a small change in customer requirements can lead to obsolete products very quickly. Overproduction leads to other wastes as well. In a distribution center another way to think about this is over purchasing a sku. Why does this happen? A common response I’ve heard is that the client received a great discount to buy the product in bulk. That’s great that they saved a few cents off the each but their costs to process the sku has jumped significantly. The biggest risk is that the customer demand just isn’t there for that sku and now it’s dead inventory collecting dust.
2. Inventory- A major issue with overproduction, or in our relative scenario, over purchasing is the waste associated with inventory. So you have 100,000 widgets that nobody wants but you still need to store them, count them, heat them, cool them, provide adequate lighting around them, not to mention the opportunity cost associated with this issue. The capital expended on this inventory and the ongoing expense associated with maintaining this inventory outweighs the sweet tastes of the discount you received on the bulk buy. 
3. Motion- This is a BIG issue in order fulfillment! The larger your warehouse and the larger your staff the more significantly you are impacted by wasted motion. In a DC if you have personnel pushing carts or walking to find goods you have wasted motion. Even worse is that you have no control over the amount of wasted motion if this is your method of conveying goods. This equates to an uncontrolled variable cost. From picker to picker your cost to pick an item may be double, triple, or 100 times different. Removing wasted motion is one of the easiest wastes to capture, monitor, and improve.
4. Defects- From a process perspective, defects are your picking errors in a DC. World class companies understand that picking errors occur but they put processes and policies in place to do two things. First, catch the pick error as close to the pick location as possible. The cost of an error when someone is standing in front of the shelf is much less than when that item reaches the manufacturing line or in an ecommerce application if that item reaches the customer’s doorstep. Second, and this is in my opinion highlights world class, when there is a pick error they fully address the issue. The issue is not ignored or accepted as part of doing business. No, world class companies address problems when they know there is a problem. Letting that issue, whether it be a people or process issue, continue will only result in compounded picking errors. Pick errors do not have to occur. Accepting that they occur as a natural part of the process AND that they are not preventable is not world class.  
5. Over-processing- This is when you are performing tasks or other unnecessary non value add activities as part of delivering an end product. In distribution it’s seen in bagging parts which already exist in boxes, placing labels over existing usable labels, picking product to a box only to put it into another box. To determine if you have a waste of over-processing in your facility simply follow your raw material or inbound sku from dock to dock. Any time a change is made to that part or sku ask yourself if that activity added value to the end user/customer. If the answer is no then why are you doing it? Sometimes over-processing is a necessary evil to fulfil other requirements (data analytics, HR, etc) and in those instances consideration must be made as to whether this over-processing is of value to you as the company or is it simply…”how thing’s have always been done”.
6. Waiting- I have always been extremely patient. But in a DC being patient and waiting serves no one. Standing, waiting for that next tote to arrive. Waiting for orders to drop into a que, waiting for a label printer to spool up at the start of each order or batch. These are examples of the waste of waiting. The waste of waiting has numerous repercussions. We live in a world where seconds count, seconds can be the difference between an on time order and a cancelled order.
7. Transport- One of the wastes which is almost always necessary is transportation. Transportation adds no value to the customer in the strict context of the item being transported. But transportation can be beneficial to an end user by being expeditious. In a lean organization transportation of goods is minimized between touch points. A direct, damage free, path between point A and point B utilizing the least resources is the best possible transport of goods. Transportation is resource intensive. From equipment, personnel, procedures, and policies transportation carries a high resource burden. Is the transportation within your facility optimized? Optimizing transportation is one of many ways to streamline operations and reduce costs significantly and quickly.

 So how do we utilize the 7 wastes to provide a solution to a customer? Quite simply, we focus on which wastes can be reduced or removed with our solutions. Inclusion of any technology within a distribution center should be based on metrics and those metrics almost certainly have a foundation rooted in the wastes. By reflecting on these wastes within your facility you can identify opportunities to improve productivity, floor space allocation, customer satisfaction, and ultimately profitability. When you encounter process challenges or opportunities to develop new processes think about the 7 wastes and how they impact your business.