Movement of goods: the short and the long of it

Sir Issac Newton figured out a long time ago that it takes energy
to move an object that otherwise wants to stay put. The green
supply chain focus that flows from this law is to figure out how
companies can save energy by cutting down on wasted movement in the
sourcing and shipping of goods between far-flung suppliers,
assembly locations, and distribution centers (DCs).

The discipline that’s evolved out this need is called supply
chain network design, or supply chain network optimization.
Software for this discipline can help a manufacturer figure out
where it wants to source materials, locate DCs, and in effect,
design their entire supply network for optimal savings. Of course,
this software doesn’t just factor in mileage or fuel savings,
but may also look at other factors such as impact on delivery cycle
times and customer service levels. Pioneering vendors in this area
included Numetrix (now part of Oracle) and Caps Logistics (now part
of Infor). Other vendors such as SmartOps and Optiant address the
management of optimal inventory positions within a supply
network.

But while supply network optimization is a good thing, companies
also should examine wasted movement within the four walls of a
facility. Recently I interviewed Steven (Jimmy) Benefield, a senior
director with enVista
Corp., a supply chain consulting firm that among other things,
is involved with supply network design, but also analyzing material
flow within the four walls of warehouses.

Within the four walls, says Benefield, a lean material flow
analysis using a software-based tool (enVista uses an Access-based
tool for such analyses) can reveal opportunities to cut wasted
movement in picking operations and storage of goods. Benefield says
that by analyzing the order and inventory profiles for a DC,
it’s sometimes apparent that storage locations for some fast
moving goods should be rearranged to cut down on wasted picking
movements. Benefield says 50 percent to 60 percent of time in
picking operations is spent on travel, so shaving travel helps save
both energy and labor. Besides rearranging (a.k.a. reslotting)
goods so that fast movers are closer at hand, says Benefield, other
tactics might include transitioning from static storage racks to
“deep aisle” racks that a lift truck can enter, or
“flow” type racks designed to accommodate faster moving
goods. Each warehouse’s order stream and storage needs are
different, however, so analysis might be needed to reveal the right
tactics.

For supply chain network design engagements, enVista uses
Infor’s supply chain network design software. Benefield
notes, however, that transport costs/mileage is just one factor
these tools look at. What’s more, because the price of fuel
used in transport has tended to swing wildly within the last year,
it’s important to use a long-term average when redesigning a
supply network, and consider other factors such as total costs and
customer service, not just fuel savings. “We would warn that
anytime you change your network, it’s a long term
change,” he says. “It’s strategic.”

Benefield concedes that in today’s economy, most companies
are looking for cost savings first, and green reasons second, but
even for companies who can’t spend much right now, there are
always smaller scale energy audits and material flow analyses that
can be done at the site level.

Today with low fuel costs, we aren’t hearing as much talk
about “near-shoring” like we did during the first half
of 2008, but keep in mind that reducing travel in the supply chain
isn’t just between sites, it can be within sites. The short
and the long of it, if you will.