End-to-end

“End-to end” costs, “end-to-end” savings. With all of the emphasis on supply chain thinking, it seems to be the rage these days. For years, we’ve tried to get our arms around the cost of moving products through the processes and facilities that get them from our suppliers all the way to our customer’s customer.

It’s easy to sketch the hypothetical build-up of costs over time and distance. But somehow, as the physical form changes from component to product to order, the task of actually filling in the numbers becomes extremely challenging. It’s important that we not be stymied, and to find a way to get started.

Undeniably, we reach different conclusions about designing processes when our thinking gets outside the four walls of a facility, or even outside a single process within the facility.

For example, in distribution centers, we have traditionally placed such great emphasis on picking costs and productivity that:

            1 – we have fewer and fewer people doing that task, and

            2 – other activities have been short-changed in improvement efforts.

To compensate, I now use a measure that compares orderpicking labor with the support it receives from storage and replenishment. I was surprised to find that this ratio is often as high as 1:1. “End-to-end” analysis surely needs to begin by examining opportunities in this support function.

As a start, determine how many of the products might move directly from receiving to the pick face. Of course, this won’t be possible for all products. But, for some, it may require only a small adjustment in the size of the picking location. Or, moving out- of-the-box we might be able to match our purchasing increments to the space available in the pick face at the time of re-order.

Sometimes, adding a step to the process can actually reduce “end-to-end” costs. Limiting the number of trips through the pick face by using some form of batch picking has always been recognized as a way to achieve higher pick rates, and to reduce congestion in the picking aisles. Usually, this approach is associated with downstream high-speed, automated unit sortation.

In a smaller operation, the benefits can also be achieved manually with a scanning station (ala: grocery store) that directs the operator who is separating the batch picked products into several orders. This process is inexpensive, scalable for volume fluctuations, and adds very little labor to each item picked. It has the additional advantage of providing a 100% scanning check of the order.

In looking “end-to-end,” we should not ignore the costs incurred after the orders leave our facility. Did we pack to minimize the number of shipping cartons? Are we leaving a lot of empty cube in the trailer/truck? These will become increasingly important as fuel related transportation costs are rising faster than others.

Once the order reaches the customer, how much time does it take to process what we sent? Did we provide advanced shipping notice? Did we provide contents broken down by shipping carton? Does the packing slip match the products sent? Are the products grouped so that they can be put away quickly?

Complete “end-to-end” analysis may be difficult. But, it is not too hard to find significant opportunities if we just take time to look “over the wall.”

ABOUT THE AUTHOR

James M. Apple, Jr. is a Director in The Progress Group. Prior to co-founding The Progress Group in 1991, he was a Partner with Coopers & Lybrand's SysteCon division. During 1992-1995 he served as a Senior Systems Advisor with Vanderlande Industries, a major conveyor and systems provider in Europe.

Jim is an internationally recognized thought leader in the area of facility design and integrated distribution systems. His contributions to the improvement of distribution practices have been recognized by his receipt of the prestigious Reed-Apple Award, which is given for lifetime contributions to the advancement of the material handling profession. Jim has also received the Institute of Industrial Engineers' Facilities Planning and Design Award. He has written numerous articles and handbook chapters on warehousing and logistics operations and is a popular speaker on logistics seminar and conference programs.

Prior to SysteCon, Jim worked as an Industrial Engineer with IBM, was Supervisor of Facilities Planning for the Oldsmobile Division of General Motors and was Executive Vice President for an automotive aftermarket parts supplier. He holds B.S. and M.S. degrees in Industrial and Systems Engineering from the Georgia Institute of Technology.