Performance Improvement of a Retailer’s Distribution Center
We were engaged by a private equity firm to assist one of their portfolio companies with the project management and implementation of a turnaround program for a large distribution center in North America. The company is a global retailer that designs, produces, and distributes branded apparel, footwear, and accessories. The turnaround program included an in-depth examination of operations, identification of opportunities, development of a focused multi-year plan to invest in the facility, workforce, and capabilities, and the implementation of changes to improve performance.
The primary goal of the turnaround program was to determine root causes of throughput, customer service, and productivity failures at the distribution center. Working in partnership with the private equity group and the portfolio company’s management, we took the following actions:
- Supported and augmented ongoing analyses to identify issues and opportunities
- Established workstreams to capture identified opportunities and engage the organization
- Identified software issues related to inventory control processes; developed solutions with IT
- Created a safety roadmap for the organization
- Implemented improvements to “pull” planning processes
- Improved “dock to stock” processes and controls
- Designed and implemented targeted packing station enhancements
- Developed dashboards to provide visibility and accountability to performance
We also designed and implemented an approach to identify, prioritize, verify, and validate performance improvement efforts and share best practices across the distribution center. To ensure the sustainability of improvements, we implemented training and development programs to standardize the organizational best practices and support continuous improvement.
During the engagement, we identified annualized savings of $10-15 million, representing a >15x first-year return on investment for the projects. We improved inventory accuracy by implementing systems enhancements and standardizing quality training programs. Following these enhancements, we were able to recover more than 100,000 lost units from virtual locations to pickable locations. Packing station enhancements improved efficiency and resulted in a 25% increase in throughput.