More: Distribution Cost Reduction

Find out more about Tompkins Associates' approach to cost reduction in the distribution piece of the supply chain puzzle.

Five Key Ways to Reduce Distribution Costs

Opportunity #1: Leverage best practices to eliminate unproductive labor

Direct labor inefficiency results from two typical sources: too many touches and too much travel. Use in-depth analyses of the present processes, touches, number of moves, system entries and confirmation, and hand-offs to identify repetitious and non-value added steps.

A storage and process area flow diagram along with a detailed zone and product slotting analysis will reduce labor spent traveling versus productive work. Subject work processes to constant revision and streamlining to routinely find excessive non-value added activities.

Opportunity #2: Reduce unproductive indirect labor using performance metrics

Each day, idle time caused by non-scheduled work, unbalanced work areas, and end of shift pushes, creates not only lost time, but often increase overtime and temporary labor costs.

Manage costs and efficiency on both average and peak days by understanding how, where and when work generally occurs, keeping staff flexible and cross-trained, and adhering to firm order cut-offs. Maintain labor performance by measuring it and establishing performance goals.

Opportunity #3: Reduce material usage and waste

Reduce waste generation to reduce waste removal costs, handling labor and space requirements, and new material costs. Analyze the use of cartons, dunnage, pallets, packaging and packaging process to identify excesses. Eliminate labor waste caused by errors that often take four times as long to correct as doing it right the first time.

Opportunity #4: Improve equipment performance

Analyze the condition and usage of fork trucks, conveyors, storage and other operating equipment against current and future requirements to identify artificial bottlenecks to performance. Over time, adapt equipment to changes in work processes to improve efficiency.

Opportunity #5: Improve space utilization through consolidation

Analyze inventory policies, storage methods, and facility layout improvements to reduce off-site storage requirements, use of storage trailers, and congestion in the existing facilities.

Reduce operating expenses by eliminating obsolete inventory and adjusting facility layouts to fit the present storage profile to allow consolidating inventory into higher density single-facility storage. Renegotiate lease agreements accordingly to generate additional savings.

Find out more about Tompkins Associates' approach to cost reduction in the distribution piece of the supply chain puzzle.

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