Monthly Archives: January 2013

Three Silver Bullets to Solve (and Raise Red Flags on) Nearly Every Supply Chain Fire

This past Wednesday, I was presented with a problem. “Alex, your team needs to unpackage, relabel, and repackaged 10,000 of these items by noon Friday.” The product needed a warning label that we just barely learned was required by law. Running on our smallest possible staff, my team suddenly had a mountainous challenge before us that years ago would have kept me up at night worrying. However, I slept just fine because I knew we could handle the challenge with one of my three secret weapons. In fact, I’ve learned that I can solve nearly any supply chain fire with one or more of three things:

  1. Air Freight
  2. Temporary Workers
  3. A Rotary Drill

I initially put together this list as a joke. Executives would approach me with a problem, to which I would reply, “it’s nothing air freight, temps, or a rotary drill can’t solve,” and suddenly the stress of the problem decreased. I still don’t completely rely on these three silver bullets as the solution to any problem. However, with these three tools, my team has conquered surprisingly large amounts of fires that our small supply chain faces.

Perhaps more importantly than taking the stress out of emergencies, these three silver bullets also serve as a signal that our processes have room for improvement. Throwing money at a fire through expedited freight and increased payroll is a sign of deeper problems. Nevertheless, when 10,000 items need to relabeled in the next 36 hours, I need to solve the immediate blaze with whatever I can before backing up to prevent future sparks.

Silver Bullet One – Air or Expedited Freight

Silver Bullet One - Air Freight

Air freight is a needed miracle in modern supply chains. When problems arise, switching to faster shipping can save the day by cutting lead times from distant suppliers significantly. Those precious extra days can help capture last minute sales opportunities and help avoid expensive stock outs. Recently my company learned that one of our products was scheduled to ship to twice as many retail stores than originally planned. We had purchased inventory according to the original forecast, which would be insufficient to meet the new demand. However, by air freighting in product that was just finishing production in China, we were able to fulfill the order and capture the extra revenue. The higher shipping costs took some margin, but the ability to prevent three or four weeks of stock outs was well worth the cost. Realizing that I have an expedited restocking option has helped me reduce my safety stock and keep my company’s inventory investments smaller.

Another problem I often face is large customers needing product before we have it. We’ll tell customers that the launch date for a product is May 15, but then the customer will send a purchase order for an April 25 delivery. We often push back, but sometimes the customer will simply cancel the order if we cannot meet the date. Enter air freight again to save the day.

Although air freight can help your company get through a variety of tight spots, it’s not a good habit to constantly use it. Each time we’re forced to use air freight, it’s an expensive red flag telling us that we need to improve our systems, vendor performance, or customer relations. Nevertheless, expedited freight is an excellent tool to combat supply chain uncertainty.

Silver Bullet Two – Temporary Workers

Temporary Workers

When emergencies blaze out of control, we instinctively call in reinforcements. Dealing in consumer products, I’ve had countless experiences of relabeling, repackaging, and reworking product days or hours before it needs to ship. Often the rework could have been easily avoided months ago from simple communication or error proofing. However, problems slip through insufficient safety nets, and suddenly I’m flying to an offsite warehouse to oversee emergency rework for an urgent order.

Some time back, we had a large promotion ready to ship to one of our top customers. It was in our offsite warehouse prepared to ship the next day. As I reviewed the pictures of the product to confirm everything was good to go, I noticed some unfamiliar labels on the carton. I inquired for more detail and found that although the outside carton labels were correct, the inside product had incorrect barcodes. Over 70,000 products needed new barcode stickers put on them – and they still needed to ship within the next day or two. I jumped on the next flight and assembled a team of 18 temporary workers to help. We quickly created a system to move through the pallets and relabel the products. It was August, and the heat made me sweat almost as much as our looming deadline. However, thanks to my 18 new friends and my assistant who made sure I ate and took breaks, we were able to complete the project in less than 24 hours and ship the entire order on time.

Using temporary workers for unexpected fires is a clear red flag that upstream processes need help. However, as stated at the beginning of this article, knowing that calling in a few extra people can easily solve the problem takes much of the stress out of supply chain firefighting. Using temporary workers consistently may also be a sign that you may need more permanent additions to your staff.

Silver Bullet Three – A Rotary Drill

Rotary Drill

Originally not part of the silver bullet arsenal, a rotary drill in the right hands can solve major problems or inefficiencies in just minutes. It’s my weapon of choice with hands-on problem solving because of its versatility. With a rotary drill (and other tools), my team has built holders, pegs, product paths, and jigs that have often quadrupled production speed. Rather than accepting a process as just slow, a few minutes or hours of building additional tools, holders, or aids can skyrocket efficiency.

For example, as we manufactured one of our products, we needed somewhere to put the small raw materials before they were processed. Laying them next to the worker often resulted in a slight breeze blowing the very light material off the table. Additionally, the worker spent more time aligning the pieces on the machine than actually using the machine. Enter the rotary tool.

By creating a board with nails to put each piece on, we could drastically reduce the time it took to align the raw material on the machine. Putting it on a nail would allow it to stay aligned the entire time. The problem was that the nails were rough and would often snag the materials to create defects. Rather than complain and brainstorm different solutions, we just grabbed the rotary tool and smoothed down the nails. Suddenly, the entire operation was running smoothly, and much quicker than before.. Building small, creative tools – even if they’re not perfect at first – can save loads of dollars and hours.

Think While You Reload

As you remove the spent cartridges from your silver bullet six shooter, think about what could have prevented you from pulling the trigger. Every good Western movie needs a shootout, but the best supply chain cowboys I know avoid pulling the trigger altogether. Each time you resort to air freight or temporary workers think about how you could have solved the problem further upstream. The rotary tool may not raise the same number of red flags since it often helps create better processes, but sometimes I also use it as a last-resort solution that could have been solved earlier on.

A good way to improve is to hold a quick meeting each time you fire a silver bullet solutions. Five minutes addressing three questions could prevent future shots:

  1. Why were we forced to us a silver bullet solution to solve this fire?
  2. What could we have done to prevent this fire?
  3. What will we do differently next time?

A quick meeting with answers to these questions, combined with action items, will improve your processes and help you build up fire prevention measures.

What other silver bullet solutions do you have in your arsenal? Please share yours in a comment below, and don’t forget to subscribe to future articles.

Strategies to Fulfill Customer-specific Labeling and Packaging Requirements

Similar to each child in a family, each customer your business ships to has different needs. Specific labeling requirements help move your product efficiently through your customers’ supply chains and into consumers’ hands. Failure to follow requirements often results in a fine, chargeback, or deduction. Of course, you want to fulfill each customer’s requirements perfectly, but those requirements have an unfortunate tendency to be different. This article explores four different systems of fulfilling customer labeling and packaging requirements.

Level 1 – Rely on People and Memory

This is the weakest system, but often where most small businesses start with a new customer. A manager or supervisor will read the customer’s routing guide or vendor manual. He or she will make note of items to remember, such as pallet height requirements, labeling requirements, preferred carriers, etc. Then, that person will help ship the first few orders, remind the team that Walgreen’s pallet height limit is 60 inches, or that CVS needs the customer specific item number added to the package. With a good team and little turnover, this usually works for a while. However, eventually an exception arises, or things get busy, and the team makes a mistake or forgets a detail. The team then often gets blamed for the mistake, even though they have simply been victims of a poor system. Relying on people instead of processes is often unfair – and problems can be avoided by simply creating a better process.

Level 2 –Create a Requirements Checklist

For most customers, creating a checklist of requirements is enough to avoid problems. It gives a quick, consistent reminder of what the shipper needs to do for the customer. It also creates a level of accountability if you have the shipper sign off on the order. Signing a name to an order certainly makes one realize the importance of accountability, and the employee is more likely to ask how to fulfill each line of the checklist if he or she doesn’t  already know how.

The checklist may look something similar to the section below:

  • Customer PO# Appears on Master Carton Label and Packing Slip
  • Carton Count on Packing Slip
  • Lead Carton Marked with Bright Color Sticker
  • Stacked on Grade A Pallet without Any Defects or Spills
  • Shipped via Preferred Carrier (YRC, UPS Freight, Old Dominion)

Shipped by (sign) ______________________

If you can get these checklists to print on the pick sheets, then you’ll never need to worry about whether the order included one or not. If that is not possible, then manually stapling a checklist to each pick sheet may be an effective, although cumbersome, solution. However, the money saved in chargebacks and deductions will quickly make up for the increased order preparation time.

Level 3 – Two-Person Password Authentication

Some customer requirements are especially difficult to follow and especially expensive to mess up on. For example, forgetting a label can easily create a chargeback of $300 for some customers, a fine several times higher than the order value. For these types of customers, you want at least two people to carefully scrutinize each order. A two-person checklist is effective, but in the rush of emergencies, sometimes those checklists are ignored. For example, how many bathroom cleaning signoffs have you seen at restaurants or stores that haven’t been filled out for several days, or longer? When analyzing the problem with the 5 Why’s technique, the result may be something similar to the chain below:

Problem: We were fined by customer X

Why? Five Cartons were missing a specific label

Why? We shipped them without the labels

Why? We did not follow our checklist

Why? Because nothing stopped us if we didn’t follow the checklist (and we haven’t had a problem in months)

Why? We have no checkpoint in place in our system to ensure the checklist is followed

Solution: Create a checkpoint, or tollgate, in which we ensure the checklist is complete

Two-person Signoff Screen

 

Just like action movies in which two people must turn their key simultaneously to launch a missile, you can have two people enter a username and password verifying that they completed the checklist. When shipping an order in your system, a screen could pop up asking two people to log in and acknowledge in the system that the order meets all customer requirements. While this may feel a bit stringent, it creates shared responsibility and can help ensure that procedures are followed even in the most hectic of times.

Level 4 – Complete System Automation

The ideal is to have all customer labeling and packaging requirements automatically done by your system. Complete automation is the dream of any shipping manager, and is close to what most large distribution centers do. However, the high cost and frequent need for customization often keeps this option out of the reach of small businesses. Obviously, the more you can automate, the less human errors you’ll see – which means a decrease in fines and deductions. Creating customer specific labeling is usually the first step in automation, especially as requirements for Advance Ship Notices (ASNs) become more common. Work with your team to identify the most repeated or expensive mistakes and focus your automation efforts on reducing those first.

As you grow, you’ll eventually reach a point in which you can confidently watch truck after truck leave your docks knowing with 99.9% certainty that you won’t see any chargebacks of fines because your system helps your team perform flawlessly.

What thoughts and experiences do you have? What are some problems have you repeatedly run into? Share your comment below, and don’t forget to subscribe to future articles.