– Supply Chain Insight –
Looking to optimize your fulfillment operation? Strive for progress over perfection.
Progress over perfection. I’m sure you’ve heard the saying many times before. Whether you’re cleaning your house, developing software, or overseeing a fulfillment operation, the popular mantra serves to emphasize the importance of taking consistent action, even if it seems you’re only making small advancements toward your end-goal or, worse yet, the advancements you’re making don’t exactly match the lofty expectations you had in your mind.
I’m not here to tell you to not strive for excellence or to lower your standards. I’m talking about not succumbing to what’s known as the perfectionist fallacy.
The perfectionist fallacy is the idea that, when solving a problem, you should hold off taking action until you have the perfect solution. There are hundreds of examples of where this is applicable in real life but let’s look at the establishment of speed limits. The establishment and enforcement of speed limits on our roads, in no way, is the perfect solution to abolishing speeding, but it doesn’t mean we shouldn’t have them.
I’m sure most of you reading this article will agree that there’s no such thing as the perfect solution to a problem, but how often have you delayed a project (or scrapped it altogether) because you were waiting for a better solution, or better circumstances?
If you’re a regular reader of our blog, or follow our content on LinkedIn, you’ll know we talk a lot about the power of small – but consistent – gains. If you’re too caught up with the theory of a perfect or perpetually better solution, you miss out on making small, but steady, progress toward your end goal.
I’m going to offer a real-life example of this later on in the article but, before I do, I want to introduce another notable concept: the pareto principle.
The pareto principle (a.k.a. the 80/20 rule) states that, for a given event, 80% of the consequences (or problems) come from 20% of the causes. Now, I can tell you that this holds very true when analyzing distribution volumes. For the average operation, 80% of overall shipping volume typically comes from about 20% of the active SKU variety.
If you don’t currently have a fulfillment optimization system like SKUStream to give you that insight at the click of button, feel free to go ahead and do the math manually.
Additionally, but far less quantitatively, you could apply this principle to the majority of your existing challenges.
Challenged by low labor productivity?
Challenged by constant capacity constraints?
Challenged by increasing product damage?
All of the above?
At Syncontext, we’re, of course, big proponents of optimal item slotting so we do certainly have a bias here. But, as I’m speaking from experience, I’m fairly confident that the following will hold true in your operation.
As you may know, item slotting has an impact on every single direct labor function in your operation – some more than others, of course. Unfortunately, it’s not always looked at as a value-added activity, meaning that it’s done out of necessity – usually as quick as possible – without much consideration to the actual impact on direct labor downstream.
Even when it is viewed as a value-driven process, without the right tools in place, it’s very hard to achieve real optimization. There’s just too many things to have to consider manually. I’ve had the pleasure of working with many experienced inventory control professionals over the years who have built elaborate spreadsheets, and try to follow the slotting SOP as much as possible; however, I will say that most of them concede, under minimal pressure, that it IS truly impossible to follow the SOP word-for-word when you’re slotting 20-30 new items per day amongst other responsibilities.
This is why when I hear that an operation is challenged with low productivity/order throughput, consistent capacity constraints, and / or an increase in product damage, I first look at how items are currently slotted. Going back to the pareto principle, when an in-depth slotting assessment is usually done, most of the available improvement opportunity resides in a relatively small percentage of the active SKU mix (15-20%).
To illustrate my point, here are some interesting numbers from a recent SKUStream implementation. Our client was looking to lower distribution costs and increase zone compliance but they needed a way to do both without changing the layout or disrupting the existing operation.
It was an already high-functioning full-line grocery operation with high weekly volumes, large variety of material handling options, and 1000’s of SKUs with specific zoning and storage requirements.
The existing processes were solid and management personnel were highly experienced; however, they knew they needed to upgrade their toolkit in order to be able to fully maximize zone compliance and minimize financial waste to the level they were expecting.
To make a long story short, after SKUStream was implemented, each implementation site (3 sites and growing), started to bank between $6,500 and $10,000 per week in real operational savings, disruption-free, just by consistently and habitually re-slotting high-priority items.
In this case, aside from slotting all new items optimally – cost avoidance not included in the dollar total above – the slotting strategists at each site were re-slotting just 50-60 items per week (8-10 per day). That’s less than 1% of their overall active SKU variety each week.
As you can see, the savings add up very quickly.
The point is, there is no perfect solution to optimizing your fulfillment operation. There are, however, many ways to make small, but consistent, gains without even so much re-profiling a single rack.
Why wait? Start making progress today and you may find an extra $350,000 in your budget (per site) by the end of the year like our client above.
Progress over perfection.