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Mistakes to Avoid in
Distribution Center Planning
From Our Free "Best
Practices" Booklet
Operations Associates has executed nearly
one-thousand projects. We have documented key mistakes
that are typically made by less experienced project
teams. Our goal is to share this critical information
with you so you can avoid these mistakes. We hope this
helps your project team successfully plan and design
your DC improvement project.
We would like to share “Mistake #3" with you. Please
contact us for a free pamphlet to view all 10 of the
lessons. In subsequent newsletters, we will focus on
each of the 10 Mistakes to Avoid in Distribution Center
Planning.
Mistake #3
Overstated Inventory Levels
A clear understanding of inventory levels is critical
to plan the size of a DC. Often, in the initial planning
stages, gross inventory assumptions are stated as fact
and drive up the space required in the DC. Usually,
these assumptions overstate inventory and reduce the
project ROI. This is especially important if higher
projected inventories lead to the use of more complex
and costly automated storage solutions.
To properly plan and design any DC, perform an
inventory analysis at the SKU level. This not only sizes
the facility accurately but also defines throughput
requirements by product type, handling and control
requirements, and location slotting. An SKU level
analysis typically identifies slow movers that are
overstocked and fast movers that may be under stocked to
meet customer demand. When we perform this analysis, we
often reduce inventory (and space) while maintaining or
improving customer service levels and fill rates. In
addition, we use this information as a basis for order
picking and storage zone management in the material
handling system design.
Rationalize inventory
levels by SKU to improve DC planning.
FREE Offers!
Call us for our free "Best Practices"
booklet:
Ten Mistakes To
Avoid In
Distribution Center Planning
also...
OA'S New Overview
Brochure
The Logistics Site
Selection Article
Advanced Project
Management Seminar
Call Mike Rigg for information and
pricing on seminars for your office.
Operations
Associates would like to welcome our two new team
members,
Johnathan McRary and Tray Anderson!
Johnathan has 12 years of experience in operations
analysis, network analysis, process improvement,
facility design, and solution implementation. He has
successfully completed logistics and manufacturing
projects in North America, South America, and Europe for
industries including retail distribution, retail supply
chain, agricultural supply chain, food, pharmaceuticals,
consumer products and furniture. Johnathan has a
Bachelor of Engineering degree from the Georgia
Institute of Technology. Previously, Johnathan worked
with St. Onge, Lowe’s, The Home Depot, eToys, and
American Drew Furniture.
Tray has 13 years of experience in transportation,
supply chain modeling, third-party logistics and
distribution operations. He has worked in distribution,
3PL, retail, and manufacturing environments. Tray
specializes in process improvement and has managed
large-scale networks and operations with P&L
responsibility. Tray has a Bachelor of Engineering
degree from the Georgia Institute of Technology.
Previously, Tray worked with The Home Depot, Mizuno
North America, School Tools, CHEP Americas, Interface
Floorings, and Menlo Logistics. |
Making Sox 404 Work
For You
By: David Edwards,
CPIM
Sarbanes-Oxley 404 Compliance is mandatory for all
publicly traded companies. The cost of compliance is
significant. Audit fees are expected to increase
approximately 38% during the first year of compliance
with section 404, according to a survey of public
companies by Financial Executives International (FEI) in
January 2004. The survey also reveals that total costs
of first-year compliance with section 404 could exceed
$4.6 million for each of the largest U.S. companies
(companies with over $5 billion in revenues).
Medium-size and smaller companies will also incur
significant additional costs to comply with section
404―the survey finding an average projected cost of
almost $2 million.
The benefits of compliance are very simple on the
surface. Access to the public markets will be denied to
those who refuse to comply, and the markets themselves
will most likely respond very unfavorably to companies
who attempt to comply but fall short and receive a
"qualified" opinion on their quarterly and annual report
filings to the SEC. The cost of SOX 404 compliance is
now an inescapable cost of being a publicly traded
company.
So, the question isn’t whether or not you will spend
the money required to comply, the question is whether or
not you will be able to benefit from the process. Public
accounting firms have developed comprehensive programs
targeting this new and explosive compliance market. In a
recent USA Today article "Rules Spur Demand for
Accountants", By Barbara Hagenbaugh (1-17-05), Brent
Inman of Pricewaterhouse Coopers stated "It's clearly
one of the hottest markets (for accountants) that I've
seen." On-campus hiring by his firm in 2004 was up 45%
from two years earlier and is expected to grow 20% this
year.
Operations Associates is also participating in this
market. We have provided resources and led projects to
help several clients meet the new compliance
requirements. During the course of participating in this
process we have seen companies take two fundamentally
different approaches to compliance.
- Minimum Effort – Perform the minimum amount of
work necessary to meet the compliance regulations at
the lowest possible cost.
- Maximize Benefit – Use the compliance effort as
a springboard to identify real business process
improvement opportunities that can offset the
inescapable cost of compliance itself.
Obviously, we believe the second approach is the most
rational way to deal with the compliance requirement.
Companies are going to spend millions of dollars to
comply with SOX 404 regulations. If they can recover
some of this cost through improved business processes
the total cost of compliance can be minimized.
So the question becomes one of approach and the
resources used to achieve compliance. While public
accounting firms are well versed in the accounting audit
principals required to meet compliance regulations, the
focus of their business is not process improvement.
Teaming business process improvement experts and
accountants in the compliance process adds tremendous
value to the client. It will cost more up front to bring
this type of resource into the process, but the end
result will be a process that meets compliance
requirements and provides real operational improvement
benefits that will reduce the cost of compliance.
For more information
contact:
Alan Nager, Principal
AlanNager@oallp.com
Mike Rigg, Principal
MikeRigg@oallp.com
Christi Suchyna, Marketing Manager
ChristiSuchyna@oallp.com
800-860-4902 |
