Material Handling Systems
Cost Reduction
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Case Study
Tompkins Associates performed a System Capacity Audit of a DC having difficulty meeting its design capacity for an industrial supply company.
Large gaps between conveyed product and high volume recirculation on the shipping sorter significantly degraded throughput.
The audit found the DC could gain 35% capacity in the number of cartons sorted and a 31% gain in the number of lines processed per day through conveyor speed and controls changes alone. Speed changes were made in critical conveyor sections and at the sorter. Controls were optimized to reduce gapping. Additional operational changes were recommended in pack-out areas to increase productivity. Labor overtime was sharply reduced.
These changes required little expenditure and saved the expense of a major capital investment. |
Is your existing material handling system operating at maximum capacity, but still falling behind?
A recent survey of leading consumer product and retail companies found that almost 40% foresee capacity problems in the near-term.
Most companies solve this dilemma with a capital-intensive system expansion or replacement. Yet, our experience tells us that most aging conveyor and sortation systems can be tapped for an extra 10-20% of capacity with little or no capital investment.
When budgets are tight, that extra 10-20% can be a lifeline for your distribution operations.
Symptoms of a Material Handling System Ripe for a Capacity Overhaul
System designers initially optimize conveyor and sortation systems for a given set of business assumptions and operational practices. As time goes by, these assumptions and practices change. The original group of trained DC personnel disperses over time due to natural turnover.
The staff that remains becomes used to “the way we do things around here,” even if that means extra work to manage around operational inefficiencies in the material handling systems.
Signs of such inefficiencies that rob a system of capacity include:
Receiving -- Packages are staged at induction points because there’s no room to process them at shipping.
Picking -- Pickers are unable to put completed orders on the conveyor due to pick-module congestion.
Packing -- Packing operators are stacking orders by their workstations because of poor order sequencing or the inability to locate the last item for an order.
Shipping -- The shipping sorter recirculation line is routinely full and/or the read-rate on shipping carton barcodes is less than 99%.
If any of these symptoms look familiar, a material handling system capacity audit may help you unlock additional capacity from your existing capital investment.
Many aging conveyor and sortation systems fail to achieve basic best practices benchmarks:
Only 9% of companies achieve 99% bar code read-rates.
At least 27% of companies experience sorter recirculation rates of greater than 5%.
Material Handling System Capacity Audit
Tompkins’ System Capacity Audit (SCA) is a short-duration effort to identify and remove inefficiencies that build up over time in most material handling systems.
The SCA process recognizes that your DC operations rely on more than just conveyors and sorters. The material handling system is really a combination of people, processes, information, and hardware.
People and processes: Observe and measure such elements as the travel-path and productivity of operators in the areas that show signs of trouble. Compare them to industry standards and each other.
Hardware: Investigate persistent conveyor jams or choke-points that may simply be a function of incorrect conveyor speeds that create an unbalanced system. Measure the speeds of conveyors leading to and from each processing area. Develop a node diagram showing the throughput to and from each area. Identify unbalanced performance from one area to another due to modifications, wear and tear, or misguided “improvements” that have evolved over time.
Information: Evaluate the material handling system controls for adequacy and timeliness of information. Validate that the control system provides the correct speeds and feeds for optimal throughput and that timely information is provided on equipment jams and overall operational throughput.
During the course of a System Capacity Audit, Tompkins experts will gather information in each of these areas. The deliverable is an actionable tactical plan to improve system capacity and operating cost.
Business Opportunities |
Solutions |
Typical Benefit |
Increase labor efficiency and optimize operational practices |
- Audit and analyze current performance against industry averages and original design assumptions
- Identify and implement corrective actions
- Implement training and performance-standards monitoring
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5% - 10% |
Improve DC throughput with minimum equipment investments |
- Perform system capacity audit
- Correct & adjust equipment according to findings
- Target investment in high-value improvements
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10% - 35% |
Deliver critical operational performance and management information to managers in a timely manner with minimal IT investment |
- Evaluate old warehouse control system in light of new technology
- Unlock the data inherent in your system by selective modifications
- Institute regular measurement and analysis for ongoing success
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Improved customer service levels
Improved ability to identify problems and react accordingly |
Learn More
Visit the material handling integration page for more resources.
Solving the Cost Reduction Riddle
For a complete overview on aggressive, intelligent supply chain cost reduction on all of the Buy-Make-Move-Store-Sell-Return elements of the supply chain, read the article "The Riddle of Supply Chain Cost Reduction" by CEO James Tompkins.
There are significant cost improvements that can be accomplished with little to no capital investment and with minimal resources. For detailed information, see what top performing companies are doing in areas such as transportation, inventory and outsourcing.
Bottom Line Impact Now:
Ways to reduce costs in specific sectors.
Five Key Opportunities to Reduce Distribution Costs
Three Key Opportunities to Reduce Transportation Costs
Food and Grocery Industry Cost Reduction
Cost reduction in supply chain technology for the food industry in this article from Food Logistics magazine.
White Paper on the Retail Industry:
Download the white paper: "Sourcing and Selling in Challenging Economic Times: How Retailers Should Re-think Their Operations and Methods."
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