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, tandel@penton.com
