By Ed Romaine
By Ed Romaine
Not just being competitive, but excelling in inventory and order picking is essential in meeting corporate financial expectations. Often the difference between good and excellence is an expert eye doing a space and labour survey.
Two of the biggest cost factors in every facility and industry are space and labour. Space is the physical footprint required to manufacture, distribute and/or manage a product or service.
By minimizing this operational footprint, organizations can significantly reduce operating costs. There are many common and best practices that can be employed to minimize an organization’s footprint and provide the increased value and savings associated with it.
Labour is often the largest cost consideration of a business and is the most difficult to manage and control. Good practice here also requires that the elements that add to the cost of labour, such as health insurance and training, be minimized without risking output or quality or time. A quick fix to reducing space and labour costs has been to set up offshore operations.
Clearly the simpler the manufacturing process and commoditization of the product dictates the success of these operations. Going offshore provides space and labour for pennies on the dollar when compared with direct costs of operating in North America. However, many businesses are seeing the true cost of offshore operations as being much higher than anticipated.
By calculating the additional costs due to an extended supply chain, poor quality control, loss of intellectual property, corporate officer’s personal legal liability for product issues, and lack of responsiveness to the marketplace is turning many companies back to North America. In fact, the movement of manufacturing back to the North America is called re-shoring.
Often the differentiation can be found by looking to improved processes, procedures and automated material handling systems. Whether it’s refurbishing existing equipment or integrating new equipment, software, processes or procedures the real answer will always come down to the ROI (return on investment) which a good survey will always provide.
By conducting a space and labour survey, organizations can quickly gain insights into space and labour dynamics and how they influence profitability. A survey allows an organization to find the processes best suited to optimization, which translates into the competitive advantages required to excel in today’s global economy.
Space…use it or lose it
There is an intrinsic value associated with space, and successful organizations convert space into opportunities. For example, consolidation and optimization might be the right solution for too much space. Can multiple facilities or departments carrying spare parts for manufacturing, maintenance, customer service, customer walk-ups, ecommerce, mail order, retail and wholesale facilities be combined? Consolidating operations, particularly non-value added operations such as storage, not only reduces inventory, but also recovers space for more valued-added operations. In some cases, entire buildings can be removed from operations.
Space optimization, or the reclamation of unused space, can be achieved through process improvement and the installation of high-density storage and material handling equipment. Improving processes often translates into balancing zones better, reducing buffer storage, eliminating inventory and human touches by combining applications and areas. By reducing the amount of space required for operations, companies can construct smaller, more energy efficient buildings, shrinking the construction footprint by up to 15% in some cases, conserving natural resources and reducing maintenance costs. This improved space utilization helps reduce energy costs, which helps reduce an organization’s overall carbon footprint. With a proper survey these space optimization elements can be observed, measured, analyzed, and implemented.
Ed Romaine is CMO – VP Marketing for ISD – Integrated Systems Design is a manufacturer and systems consultant, designer and integrator for warehouse, manufacturing, distribution, wholesale, institutions and retail organizations in North America. To learn more, visit www.isddd.com.