27 Aug Third Party Logistics: Cycle Time Reduction
A large 3PL had a 500,000 square foot incoming logistics facility that was contractually obligated to process customer deliveries in less than 24 hours from the time of arrival. Processing included approximately 15 steps beginning with de-boxing and ending with transfer to the outbound facility. The 3PL was routinely taking over 24 hours to process units and was paying heavy financial penalties specified in the contract.
eMRI was asked to co-lead a small team of employees to make improvements and ensure that units were processed in less than 24 hours. Desired was to complete the improvements in less than 30 days. Based on this, a Lean approach, augmented with the DMAIC framework for rigor and structure was selected and eMRI assigned a Master Black Belt and co-selected the team.
It was quickly discovered that units were being processed in batches of 40, rather than one piece flow. To enable a reduction in batch sizes, significant portions of the process layout were revised to minimize product movement and enhance flow. Once this was completed, batch sizes were reduced to 20, then 10 and eventually 5. Within the 30 day window, 24-hour compliance rates had increased from 78% to 98.6%. Units without “exceptions” were meeting the cycle time requirements virtually 100% of the time.