Sustaining Warehouse Network Efficiency and Productivity Improvements

At A Glance:

After five years of Carlisle analysis and warehouse improvement coaching in focus sites, which resulted in over $11M in cost savings, a 3PL client was ready to institutionalize the process internally. To successfully deliver the program, Carlisle provided training and coaching to high-potential employees identified by the client. This provided the 3PL with the people, knowledge, and tools needed to own the continuous improvement program and move the process into a self-sustainable state.

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The Context:

Supply chains are under constant pressure to execute effective processes in a cost-conscious manner. To execute performance improvements, with an emphasis on cost reductions, organizations must assess current state, identify initiatives to combat identified issues, and roll-out newly developed programs. This process helps address immediate problems, but it falls short of incorporating longer-term, continued sustainment of performance improvements.

Carlisle worked with the client to address the needs for a viable sustainment strategy, focusing on institutionalizing improvement across the warehouse network. Carlisle’s goals for the multi-year warehouse improvement program included implementing a continuous improvement program that would reduce costs, improve service levels, and develop talent within the warehouse. Success was achieved through standardizing a KPI scorecard (including monthly productivity, quality, on-time putaway and shipping, and financial metrics), implementing recurring leadership report-out meetings, slotting and storage design, as well as process training and auditing. In addition to these focus areas, that were the foundation of the approach, the sustained improvement strategy also included formal boots-on-the ground support in identified project sites. High potential internal 3PL employees were selected to transition the improvement process from Carlisle and to continue implementation throughout the network.

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The Approach:

1). Site and Improvement Leader Selection

The initial step was to work with the client to identify project sites and high-potential individuals to lead the improvement in the project sites. To aid the site selection process, Carlisle provided guidelines including minimum monthly volume, blue collar headcount, and direct operating expenses (DOE). We also assisted in identifying the criteria for internal client candidates who would manage the improvement program at each selected site

Financials

• What are the monthly direct operating expenses (DOE)?
• How much of DOE is variable cost? Fixed cost?
• What is labor cost per month?
• What is the monthly gross margin?
• What is the contract structure – cost plus or line tariff?

Size and Scope

• How many lines are shipped per month?
• How many full-time-employees (FTE) does the site have?
• How many years are left on the contract?

Baseline KPIs

• Productivity
• Quality (errors per million, floor denials)
• On-time shipping

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2). Training Academy

After project sites and improvement leaders were selected, Carlisle hosted a week-long classroom-style training program for the selected leaders. The purpose was to train them in the fundamental knowledge needed to drive warehouse improvement. The training also presented the skills needed to successfully step into a program management role in which the improvement leaders would be responsible for people management, KPI and project status reporting, and on-site improvement coaching.

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3). Hands-On Immersion

Following the training academy, Carlisle spent one week with each improvement leader, working with them individually to kick-off the new process in their project site. This included current performance benchmarking, gap and opportunity analysis, meeting with the warehouse management and operator teams, and formulating initial improvement actions.

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4). Performance Sustainment

After site kick-offs, Carlisle held regular coaching sessions with the improvement leaders to gauge progress and provide support and feedback. As the program progressed, the improvement leaders assumed full responsibility for site performance, improvement actions, and program management

To spread the program and foster sustainability, Carlisle repeats all four steps with a new wave of project sites and improvement leaders every six months. The overall goal is to institutionalize a replicable program for the 3PL, led by the high-potential improvement leaders who will spread the improvement program structure through their region.

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Training Academy

1 Week

• Intensive classroom training was built foundational lean process improvement understanding and associated leadership skills
• Classroom learnings was solidified through a site-visit to a warehouse that demonstrates benchmark performance

Hands-On Immersion

6 Months

• Carlisle collaborated with Regions to inform criteria for ideal project sites through the Leadership Program
• Carlisle Coaches guided each trainee through a 6-month warehouse improvement plan that included on-site support and remote mentoring

Performance Improvement Sustainment

• After classroom training and hands-on immersion, each trainee was equipped with the educational tools and on-site knowledge to drive the continuous improvement transformation across the network
• Trainees were poised to take on more challenging leadership roles within the organization with a critical performance improvement mindset

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The Result:

In addition to the more than $11M Carlisle has saved the client through operational improvement to date, the results of the new program have been very positive. Project sites are already showing KPI improvement and are on-track to meet their monthly and annual cost savings targets. Additionally, client leadership, improvement leaders, and project site management teams have expressed the value they see in having internal resources to drive the improvement, provide program ownership and accountability, and manage various workstreams to generate operational savings.