Imagine this: You’ve just been offered a standalone warehouse where you can experiment with systems and fine-tune schemes to pick up operational gains here and there.
Such a site, away from your day-to-day business, would provide opportunities to optimize routine but crucial activities such as storage, pick-and-pack and dispatch processes. The potential would be great for practical learning.
McKinsey thinks that’s the case, which is why it already operates a number of supply chain model warehousesOpens a new window worldwide, from Atlanta and Chicago to Venice and Singapore.
The consultancy believes that sizable investments in distribution centers would afford companies little benefit if their senior executives lack a strong understanding of the ins-and-outs of daily operations. Putting them through such virtual warehouses can give them the wherewithal to find performance improvements in their own facilities.
And it’s true that making the supply chain more efficient often can be about making a lot of marginal gains rather than one giant — and very likely expensive and disruptive –- one. And much of this is about reducing friction in what should be smooth-running processes, as well as about introducing handy little fixes.
Trimming times, tweaking floor plans
That’s important because the warehouse itself has become a key strategic asset and trimming time off multiple activities may well provide advantages in highly competitive segments.
In fact, improving recurring tasks such as receiving, putting away and replenishing goods may increase efficiencies. And a simple layout redesign may make certain goods more accessible and ease movement for workers around the floor.
For sure, marginal gains aren’t up for grabs solely in the warehouse.
On the road, increasing productivity won’t necessarily just be about acquiring expensive self-driving trucks because the cabs of modern, non-autonomous vehicles already pack enough computing power to make a real difference.
It’s easy to see how preventative vehicle maintenance via the real-time monitoring of items like tire pressure, as well as the condition of brake and engine parts, can be used to avert breakdowns and reduce costly fleet downtime. And, as e-commerce continues to grow apace and more vehicles enter the fleet, there can be a serious multiplier effect to such operational-level benefits.
A marginal gains gizmo?
In fact, vehicle telemetry could almost be viewed as a custom-made tool for identifying marginal gains in the fleet. Not only does it provide information on correctable driver behaviors such as harsh acceleration, heavy braking and sharp cornering, it also supplies easily actionable data on items such as truck door and load status, as well as temperature and humidity levels for reefer trailers.
In retail, there’s payback to be had in making life a bit easier for customers. For example, grocery click-and-collect is expanding rapidly at Walmart, where the service is available in its 3,000 US stores. At these locations, the retailer takes the trouble to track approaching shoppers so that workers can pinpoint their parking slots and reduce pickup times.
As Tom Ward, Walmart’s senior vice president of digital operations, told the recent Groceryshop conferenceOpens a new window in Las Vegas: “We want to be able to take out any level of friction from that experience.â€
Of course, it can be difficult to quantify the benefits gained by operational fixes. But for Walmart and other retailers, it simply could mean keeping your customers from switching to a rival.
The costs of getting it wrong
The mapping and route-planning firm Mapillary, for one, believes it can pin numbers on inefficiencies in the last delivery mile. From a survey of delivery driversOpens a new window across the country, it estimates that inaccurate map services lead to an annual $2.5 billion in wasted salary as drivers head to the wrong drop-offs.
In addition, on average they drive more than 5 extra miles a day following faulty routes from these services, and that costs carriers more than $600 million a year.
Mapillary points out that while most of us would just find it irritating when we get misdirected by map apps, “to logistics companies, this quickly becomes a multi-million-dollar problem.â€
Which suggests it can be well worth sweating the small stuff.