Improved Efficiency and Cost Reduction in Distribution CenterSurface Transport & Logistics
A furniture retailer’s warehouse and distribution center continued to experience inventory issues, impacting the bottomline revenue. The methods used by RTG Solutions Group team increased product flow, decreased processing time, provided significant cost savings, increased available space in the warehouse, and worked to improve efficiencies.
In a furniture distribution center, there is a constant need to repair in-stock furniture prior to customer delivery. In addition, the distribution center manages repair of customers’ returned furniture. Processing despised inventory and product through the company’s repair shop in its distribution center was inefficient and costly.
- There was limited cross-functional communication and escalation of information.
- There was a significant backlog of product waiting for repair.
- There was immense square footage of the distribution center dedicated to managing the queue for repairs. The overflow of product interfered with truck loading lanes and warehouse storage and product movement.
- Employee morale and effectiveness of the repair shop specialists was low.
- Significant revenue was being lost as a result of the organizational inefficiencies.
We developed an internal delivery schedule to control and allocate rework/repair Work in Process (WIP). Dedicated tools and equipment were implemented to improve efficiencies and capability. Standardized and streamlined workflow with visual cues for ease of product tracking and status. Built a capacity model that is supported by manpower and throughput analysis with appropriate financial balancing.
- Performed a three-day Kaizen event that encompassed lean principles and techniques to increase efficiencies, reduce costs, and eliminate waste.
- Built a model to illustrate the ideal processing of in-need-of-repair inventory.
- Implemented the new standard in all distribution center locations for the company across the United States.
Through the Kaizen event, the repair shop area team took ownership of creating a functional rework and repair area that supports First In First Out (FIFO) prioritization for all furniture products. We addressed the 7 Wastes of business to cut costs and improve efficiency.
Lean principles such as 5S, tiered escalation, Heijunka (load leveling), value stream maps, spaghetti diagrams, and visual cues were developed and instituted throughout the rework and repair area. Tiered escalation with Safety, Quality, Delivery, Employee & Cost (SQDEC) was instituted for effective vertical and cross-functional team communication.
- 53% increase in product flow and throughput
- 88% decrease in processing time
- $350,000 in overall cost savings per year
- 32% increase in available floor space