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Dynamic Simulation for Distribution Centers
A nationwide office supply company’s vertically integrated supply chain providing logistics and distribution solutions works to ensure that supply meets demand with as little waste as possible.
Problem Statement:
The supply chain division has been working on improving receiving and put-away throughput, operational efficiency and labor utilization over the past 9 months. Throughout this time period numerous opportunities have been identified, analyzed, and implemented as determined by our traditional approach.
Traditional Approach:
Working on solving these issues involved many meetings with stake holders from every level, from executive officers to delivery drivers and employees working the line. Throughout the meetings we worked to identify which suggestions provided improvements from the perspective of the point of impact. This worked for low level immediate result perspective but as changes to the system were implemented we began to see the unintended consequences manifest in ways we would not have been able to predict with static analysis. Our approach involved; extensive lean training, many Excel spreadsheets, numerous rolls of butcher paper, countless Visio diagrams and many interesting “justifications” for, often times, pet projects. This approach was one where we could make some ground but soon the results where negated due to the unintended consequences. A change was in order.
Dynamic Simulation and ROI:
The issues encountered when employing traditional approaches to operational improvement prompted an in-depth review of advanced tools available for analysis of complex systems that maintained the relationships between the various dynamic s of the reality of distribution and supply chain environments. Reaching the conclusion that process simulation was the key to ensuring our future projects success we moved into a phase of product comparison. Identifying that dynamic, interactive process simulation was the prime solution led us to a purchase of Simcad Pro as well as a two day training session. As we built our environment in the virtual world we quickly understood how a change in one area of the operation often shifted the problem and led to unforeseen issues when implemented. With a dynamic simulation environment we have been able to quickly, without having to be programmers or IT experts, identify improvement opportunities very quickly. After identifying multiple scenarios Simcad Pro ’s integrated scenario analysis capability allowed us to prioritize and map out the implementation plan of what changes should be made and when. As a result the receiving and put-away times have been reduced by 50% and our direct labor costs have been reduced by 30%. Freeing up this significant amount of time we have been able to increase capacity and improve overall throughput.
Next Steps:
Now that we have implemented the changes to the initial DC and realized the gains our next step will be to model the additional 3 DC’s and then study the interactions among them including shipping charges and potential freight cost savings as well as our ability to improve operational responsiveness.