Posts in category: Newsroom

Successful CPG businesses are reaching for efficient manufacturing operations and new supply chain and transportation models.

A fundamental shift is underway in labor management best practices today. And it’s coming none too soon.

As you well know, labor is tight and often on the move from one employer to another. And, we all know that’s not going to change anytime soon. In fact, the Conference Board doesn’t expect the blue collar labor shortage to improve until 2030 or later.

Meanwhile, distribution center managers are under constant pressure to improve productivity as the velocity of DCs continues to ramp up. Omni-channel and e-commerce are generally making the drive for higher performance even more acute—and that’s not about to change either.

That confluence has created a pinch point that can be difficult to squeeze through on many DC floors. But it’s not impossible.

“First-line supervisors and their managers need to focus on making associates confident and successful in their day-to-day activities,” explains Jim Chamberlain, senior director of industrial engineering at third-party logistics provider DSC Logistics. “That requires an investment of time and effort to balance success with accountability.”

Experts agree that a DC with that balance is a different kind of workplace.

“You can tell the difference when you walk into a well-run DC. People are working. They’re moving. They know they will be rewarded, and it shows. Nobody wants to be at the bottom of the barrel in terms of personal performance,” explains Steve Simmerman, senior director of JDA’s global and alliance team.

Better yet, those workplaces typically have a much reduced turnover rate than other DCs that report turnover rates of 35% or more, says Simmerman.

Chamberlain says DSC Logistics’ turnover rate attributed to its labor management program is less than 5% across 55 sites. “The only thing worse to us than losing an employee is a safety violation,” he says. That’s easy to appreciate for anyone who has interviewed 15 or 20 people just to find the one who both shows up consistently and does a good job.

Beyond measuring an individual’s performance, “labor management is a retention tool,” says Jon Kuerschner, vice president of supply chain solutions at HighJump.

That said, labor management is still building its base in DCs. Estimates for penetration of labor management software vary. But it is generally agreed that larger companies typically include the software when purchasing a warehouse management system (WMS). Smaller companies are not as enthusiastic while those with fewer than 100 employees use labor management software the least. But that doesn’t have to be the trend going forward.

Think digital as well as physical. When one first thinks of their supply chain they immediately go to the physical side: shipping, storage, and distribution. The Internet of Things, artificial intelligence, blockchain, and the application of advanced analytics must be included in your plans as well. Today’s commerce is driven by the digital side and supported by the physical side.

GNC Holdings is increasing inventory turns and sales with a strategic vendor drop ship program.

Leveraging enVista technology, GNC directly uses inventory from vendors to fill orders. This eliminates the step of processing batches of inventory in GNC fulfillment centers and distributing goods to stores, reducing order fulfillment time while making products more accessible to consumers.

GNC deploys enVista technology to ensure drop ship activities are properly monitored and are compliant with all vendor agreements. This includes ensuring GNC’s inventory, order and shipping activities are in sync with vendors. In addition, GNC checks vendor compliance with service level agreements (SLAs) in areas such as timeliness, order accuracy and fill rate. Furthermore, GNC tracks systems issues, as well as that vendors use the proper systems and that any issues are resolved promptly.

To make the monitoring and compliance enforcement of such as a broad set of activities and vendor agreements feasible, GNC employs exception management. This is the practice whereby only information that indicates significant deviation of actual results from budgeted or planned results is brought to the attention of management.

In addition, GNC attempts to maximize manageability of its drop ship strategy by carefully selecting what products it drop ships. When introducing drop ship products to its assortment, GNC ensures the new products target the same market as existing inventory. The retailer will not automatically add all the merchandise a drop ship supplier offers.