RETAIL INDUSTRYWAREHOUSE PRODUCTIVITYIMPROVING YOUR RESULTS TODAY, SECURING YOUR RESULTS TOMORROWCredentials and track record1Your progression is our obsessionFounded in 1980, EFESO Consulting is a global management consultancy firm specialised in ensuring the Perfect Execution of the Progression Strategy across the Client ecosystem.Over 400 consultants, operating from 26 offices, working in over 75 countries and representing more than 40 different nationalities currently support more than 900 progression programmes working in Tandem with our clients.Our Progression motto “Improving your results today, securing your results for tomorrow” means achieving business results faster and building the capabilities to continue to improve faster than competition.The progression approach delivers results and capabilities working at 3 levels, first at strategic level to anticipate and deploy, second at systemic level to connect the organisation and build the winning routines in terms of capabilities, leadership, engagement and behaviors and, last, at specific level to build collaboration and involve everybody in executing the actions orchestrated in the plan. “Improving your results today, securing your results for tomorrow” is possible only when all the 4 Dynamics that determine the company progression are addressed at the same time:Value Dynamics - Where and how we create and capture more value (e.g. keeping a clear link between strategy and actions asking all the time which value the company programmes and projects are bringing to the shareholders and stakeholders)Flow Dynamics - How we generate more value developing the tools, methodologies and systems to improve the performance and results of the key value chain processes in terms of flow effectivenessAsset Dynamics - How we generate more value developing the tools, methodologies and systems to improve the performance and results of the key value chain processes in terms of resource efficiencyHuman Dynamics - How we develop and motivate human capital enabling our clients’ organisation and leadership to adopt the new values, mind-sets and behaviors needed to successfully drive the new processesOur people bring together hands-on experience and expertise spanning a wide range of sectors and functional capabilities. The success of the EFESO approach is reflected by our 90% client retention. “Coming together is a beginning, keeping together is progress, working together is success” - Henry Ford For more information check our website: www.efeso.com1234The challenge in Retail Logistics is not just about spotting the most important trends, it’s also about how to translate the trends into the strategic warehouse design and flawless implementation. There are many companies that have unbalanced operations and unrealised potential in terms of labour efficiency, capacity and service level, despite mobilising a variety of programs and initiatives. This is often caused by a lack of attention to the link between performance and behavior. Modern technologies enable leading edge service opportunities that consumers not only value, but increasingly demand. This requirement for high service extends to business-to-business distribution centres where customers are pressing for the same advantages that consumers enjoy. The evolution to Omni-Channel sales is driving supply chain changes which challenge the traditional role of retail outlets and distribution centres. For many businesses there is a need to adapt to new requirements such as detailed picking and packing, home delivery, co-location, shortening lead times, and accurate forecasting to anticipate huge levels of demand variability. Increased levels of supply chain synchronization requires the support of suppliers, outsourced partners, customers, and the optimization of internal processes in order to stay ahead of the competition. The way these trends are translated into Distribution Centre (DC) requirements is not evident. Approximately 50% of the 200 largest companies with an online retail presence also had physical stores, and companies are experimenting to find the best solutions for their business. We see some companies focused on cost leadership and others that focus on offering broader services (return flow support, stocking extended ranges and slow movers etc.). Where consolidation in pallet transport from DCs was common practice for years, the co-location model providing fulfilment for multiple companies is now an emerging option. In a DC, the lever to successfully execute any strategy still is human capital. Automation helps to increase productivity, but the level of automation in retail remains modest compared to manufacturing. This is primarily due to low levels of product uniformity in retail and because of substantial peaks in workload that can make manual processes surprisingly flexible and cost-effective compared to automated or robotized ones. For third party logistic providers long term contracts are not guaranteed, making substantial investments in automation a risk. However, we often see misallocation of labour within a site (not the right people at the right place at the right time), that not only costs money but also limits capacity. This could mean that operatives have to be scaled up over the day to match the order pattern. To link performance to behavior, management at a very detailed level is crucial (Key Performance Indicator deployment from the week all the way down to the hour). This also includes a daily review of observed behaviors together with the coaching and facilitating of shop floor to ‘top floor’ leaders to demonstrate the required and desired behavior every day. We include motivation and leadership in our improvement programs because (technical) systems will not resolve issues where the workforce are not motivated. Good employee engagement also plays an important part in staff retention and helps avoid the additional costs of perpetual recruitment and training. Developing and maintaining a strong grip on productivity, throughput and service level is crucial, and requires performance behavior. We help companies to achieve this, and clients that are able to link behavior to the operational performance demonstrate an increased performance of 10 to 25% in a multiyear program.“The lever to successfully execute any strategy still is human capital” Ourperspectiveon warehouseproductivityfor theRetailIndustry3Warehouse productivity solution overviewWe help organisations to deal effectively with one of the most important enablers for performance improvement: the Human Dynamics. Working from top floor to shop floor we help to engage the organisation on the change journey.• Adoption - Leadership and workforce mobilization (vision deployment and operationalization, communication strategy, mobilization events)• Leadership - Leading Performance (leadership values and behaviors, high-impact moments, coaching and facilitation)• Anchoring - Performance Behaviors (from shop floor to top floor: Performance Control System, Visual Management & Obeya room setup & coaching)Human DynamicsWe help organisations gain the most value from local and global operations by focusing on physical assets and footprint to optimize the full lifecycle and set the framework for higher productivity and safety – taking the most important asset along: the people.• Operational Excellence (TPM, maintenance & operations excellence, WCOM™, Advanced process excellence/Lean Six Sigma & yield management).• Program Management Office & Digital Knowledge Managementintelligent knowledge databases).World Class Operations ManagementWe work on all the value creation levers to deliver revenue increase, cost reduction and assets/ cash efficiency. We do this by identifying and eliminating “losses” and “non-value added” activities and by optimizing and synchronizing critical dynamics in the value chain. • Value Chain Improvement (complexity reduction, customer/ supplier synchronization, route-to-market)• Integrated Business Planning (S&OP progression, supply chain performance management)• Working Capital Optimisation (inventory balance, order-to-cash improvement)World Class Supply Chain Management“Approximately 50% of the 200 biggest companies with a web shop had a physical store as well, and companies are experimenting to find the best solutions for their business.4We help organisations gain the most value from local and global operations by focusing on physical assets and footprint to optimize the full lifecycle and set the framework for higher productivity and safety – taking the most important asset along: the people. (TPM, maintenance & operations excellence, WCOM™, Advanced process excellence/Program Management Office & Digital Knowledge Management (portfolio & resource management, World Class Operations ManagementWe help leaders in all aspects of organisational effectiveness – including designing the organisational structure, developing high performance teams and structurally develop the human capital.• Organisational design (organisational assessment & design, shared service organisation)• High Performance teams (team mobilization and collaboration events, creating balanced profile of teams including DISC profiling, Belbin assessments etc.)• Human Capital Systems (talent acquisition, development and management)Organisational EffectivenessOne important key to focused change is linking the corporate vision to daily reality. We help management teams to translate business strategy into concrete deliverables that impact operational performance and result in clear cost savings/lines of growth.• Operational Strategy Alignment (operational strategy challenging & benchmarking (how “ready to go?”), leadership alignment & mobilization sessions)• Operational Strategy Deployment (operationalize strategy (progression roadmap), strategic initiatives management)• Operational Footprint Re-design (strategic make-or-buy, footprint rationalization)Operational StrategyApproximately 50% of the 200 biggest companies with a web shop had a physical store as well, and companies are experimenting to find the best solutions for their business.” 5Delivering tangible business valueCLIENT SITUATION & APPROACHThe company has shown impressive growth in International fash-ion retail. A request was made to perform an operational scan at the main warehouse to find improvements in:• Low man-hour efficiency• Lost and damaged goods• Debottlenecking.RESULTS:• Workshop to align shop floor and top floor• Improvement plan focussed on the main issues in goods intake and put away• Analyses on losses in planning and on shop floor• Insight in flow paths to increase capacity.Goods Intake and Internal TransportPerformance Improvement PlanCLIENT SITUATION & APPROACHOur client is a rapidly growing non-food discounter with more than 900 stores in northwest Europe. Because of the impres-sive growth rate, the warehouse needs to look at sustainability in results and behavior:• Anchoring the values in the cultural foundation• Developing performance behaviors (from shop floor to top floor)• Supporting and increasing participation for CI programs• Standardizing to be an example for roll out to other warehouses• Establishing a daily management system in all departments.RESULTS:• Inspiring culture based on shared values and successes• Improved performance with 8-10% per department• Planning and forecast improved from 95 to 98%.Shop Floor and Top Floor PerformancePerformance behaviorCLIENT SITUATION & APPROACHThe client is a wholesale/cash & carry division of a global multiple format retailer. carrying food and non-food product ranges for trade customers. We supported the client in:• Some small step changes in performance improvement had been achieved, but more improvement was needed• The actual on-shelf availability was not fully understood, resulting in lost salesRESULTS:• Identified quick wins to improve availability based on effort and reward• Developed a “what good looks like” tool for step change in range management• Created a framework to roll out and sustain the benefits.Supply Chain Process ImprovementProgression RoadmapCLIENT SITUATION & APPROACHThe company is a retailer that is gradually increasing its online sales and divesting its food business. Sales are decreasing slowly and profits are under pressure. The DC struggles to:• Implement improvement projects• Get the continuous improvement loop running.RESULTS:We ran a diagnostic to identify the potential and mobilised a 3-year program that led to:• Definition of a steering and accountability structure• A breakdown of KPI’s to Action Indicators and frequent monitoring of these to evoke performance behavior• Trained and coached personnel to act as facilitators during performance meetings (shift handover, daily meetings etc)• A 6% improvement in productivity performance 10 months after the start of the program.Distribution Center OptimizationPerformance behavior6CLIENT SITUATION & APPROACHOur client is going through a process of establishing an omni-channel strategy. This requires a restructuring and inte-gration of its distribution network. The opportunity for change at it’s key distribution center includes:• Optimisation of operations and cost reduction• Identification and delivery of improvement projects• Creation of a continuous improvement culture and way of working• Development of performance oriented culture and behaviors.RESULTS:• Increased productivity and reduction of labour costs (>10% within year 1)• The establishment of a new management system, including the training and coaching of all managerial and supervisory levels• Optimised product flow and resource planning resulting in an increased capacity of the DC• Incorporated a continuous improvement approach within the operating model.CLIENT SITUATION & APPROACHOur client is a major food manufacturer that had invested £40m in a new National Distribution Centre serving the UK market. The facility needed to support sales growth and in parallel, achieve productivity and cost reduction targets that were not being met. Inventory was poorly controlled and customer service was on a downward trend. An extensive improvement programme was required to:• Build and develop capabilities of the client NDC team• Engage the team in cross functional workshops to identify issues and review solutions• Improve inventory management processes & controls• Streamline workflow & set performance targets linked to business KPI’s to drive productivity improvements.RESULTS:• An engaged workforce committed to Continuous Improvement• Achievement of On Time In Full targets• 20% increase in space availability• 6% cost reduction (£1.2m) within the first six months.DC Performance ImprovementPerformance behavior & WCOM™DC Performance ImprovementPerformance behavior & WCOM™CLIENT SITUATION & APPROACHThe company is a national food retailer that has grown in recent years through acquisitions. As a result, the potential distribution network synergies had not been realised. Challenging issues where:• Different product group characteristics (fresh, frozen)• Predicted volume growth, stretching the capacity of the network.RESULTS:We modelled the future demand per postal code and the effect on the supply chain. We ran scenarios to find the best option for our client:• Base case: business impact if current situation is maintained• Improved base case: what if we optimize current network? • The integrated delivery wholesale option saved 17%-20% in terms of operating cost • Future Case: identified the ideal DC network in terms of footprint and goods flow to accommodate growth.Network StrategyDistribution Center Footprint OptimizationCLIENT SITUATION & APPROACHThe company is a global beverage firm with production sites in over 60 countries. A continuous improvement program (already established in manufacturing) needed to be extended to logistics, supply chain and planning. RESULTS:• Roll-out in over 40 countries in 6 continents, over 5.000 people involved in the program, over 3.000 projects finished. Impact on bottom line >250MEuro• Company standards introduced for operational excellence in the supply chain across core pillars (plan, deliver, return)• Prioritised opportunities according to client business requirements and supply chain strategy• Knowledge transferred via PKE training courses to make client teams self-sustaining.Logistics, Supply Chain and PlanningSupply Chain Excellence7TokyoStockholmSingaporeSeoulShanghaiSão PauloSaint PetersburgRiyadhParisNew YorkNew DelhiMilanMexico CityLisbonIstanbulGothenburgGalwayCairoBirminghamBuenos AiresBudapestBrusselsBerlinBarcelonaAmsterdamAbu DhabiCopyright © 2017 EFESO ConsultingAll rights reserved. No part of this publication may be reproduced, distributed, or transmitted in any form or by any means, including photocopying, recording, or other electronic or mechanical methods, without the prior written permission of the publisher, except in the case of brief quotations embodied in critical reviews and certain other noncommercial uses permitted by copyright law. For permission requests, write to the publisher at info.marketing@efeso.comEFESO Consulting brings more than 35 years’ experience and thought leadership, supporting many of the leading global brands in both mature and emerging markets.EFESO Consulting is a group of over 400 experienced consultants representing 45 nationalities. It operates from 26 offices around the world with a strong presence in Europe, USA, South America, Middle East, Africa and Asia.An international scope and local delivery capability ensures that clients have access to the specialist skills they require whether at national, regional or global levels.Next >