– Supply Chain Insight –
Fishbone Friday: New site (or expansion area) full earlier than expected
Missed Distribution Budget
Welcome supply chain leaders, to the eleventh edition of Fishbone Friday!
If you missed the last edition where we discussed possible root causes for a warehouse labor shortage, you can find it here.
Let’s get into the topic of the week: New facility (or expansion area) full earlier than expected.
Now, if you’re a consistent reader of our Fishbone Friday continuous improvement series, you know we like to discuss not only the most relevant topics to the average distribution executive, but also the most common.
Experiencing capacity constraints within a distribution operation is inevitable. As organizations grow, so to do distribution requirements. In this case, more specifically, space requirements.
Typically, every new distribution facility, or expansion to an existing facility, is sized and implemented considering a certain amount of future growth. Whether it’s 3 years, 5 years or 10 years, there is a plan and an expectation built in as to how long the site or expansion can handle anticipated throughput and storage requirements.
Unfortunately, no matter how conservative the growth projections are during the planning stages, available storage capacity – whether it’s judged in available pallet positions or cube capacity – always seems to disappear a lot quicker than expected.
Now, from our previous Fishbone Friday editions, and likely from experience, you know that a build up of capacity constraints is one of the most problematic obstacles you can face as a distribution executive.
Capacity constraints can lower productivity, increase product damage, lower throughput, and increase safety concerns within an operation, but when they appear earlier than expected, they can prove to be very costly and disruptive to the operation and distribution network a whole when it comes to additional expansions, re-slotting, re-racking, or moving to a new site.
Although it’s hard to forecast future requirements, especially 5-10 years in advance, there are some common mistakes that are made not just during the planning stages but also in the day-to-day operation of the site that have a big influence on capacity utilization.
So, with all that in mind, here is this week’s root-cause analysis for a new facility (or expansion area) experiencing capacity constraints earlier than expected.
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