Supply Chain Digital: Cognizant Business Consulting Experts Say High-Flying Distribution Success Starts on the Manufacturing Floor

Niraj Singh and John Lowe

Adapting strategies for distribution center management is becoming a key protagonist in the never-ending strive for lean optimization, write Niraj Singh, Director, and John Lowe, Manager, of Cognizant Business Consulting. “As we look at innovative ways to cut costs in the distribution center, we only have to look as far as the manufacturing floor,” they aver. “Manufacturing has historically represented the largest percentage of cost within the supply chain. This has led to a focus on cost-cutting strategies and efficiency gains to help increase margins and improve operational effectiveness and productivity – ultimately eliminating waste from the production process.”

“By adapting these strategies,” they say, “supply chain players can achieve huge competitive gains to more effectively manage product flow, reduce costs and improve flexibility within their distribution centers.” According to Singh and Lowe, for large distribution centers, the planning process offers some of the best opportunities to leverage best practices from the manufacturing industry. Their suggestions include forecasting resources to more effectively utilize capacity, right-sizing of equipment (in this case labor force) through capacity planning algorithms to determine labor needs based on the demand profile; and driving world-class order fill rates while minimizing costs.

“Distribution center managers should also look to integrate the sales and finance departments into the planning process to proactively identify and react to demand fluctuations proactively, reducing costs and improving order cycle times,” they advise. “Additionally, leveraging ‘just-in-time’ management systems can help to remove waste from different operational elements such as raw materials, WIP and finished goods.”

Singh and Lowe point out that distribution center managers are increasingly looking to apply the theory of constraints to the bottlenecks of their facilities. Distribution center managers—they suggest—should look to industrial engineering principles, such as lean manufacturing and six sigma, to enhance the productivity of distribution centers. “In distribution centers, process can be designed to catch issues as soon as they occur – defining thresholds for order quantities to prevent inventory discrepancies or giving visual aids to workers to encourage adherence to SOPs – which eliminate some of the risks,” they write.

Distribution centers should also look to take a cue from flexible manufacturing systems that help produce a wide array of goods or use different machines to produce the same equipment; providing greater efficiency, reducing lead times and often improving quality. “Distribution centers especially have the ability to leverage manufacturing strategies effectively to reap the cost benefits on the way to gaining a distinct advantage over competitors,” they write.

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