Applying the Theory of Constraints to a Distribution Center

Herbie is in your Distribution Center. He could be at the Receiving dock. He could be in picking. He could be in Put-away. Or he could be on your Shipping dock.

Let’s push that fat kid out the dock door.

Herbie became a character for manufacturing and material handling engineers with the release of Eli Goldratt’s book The Goal in 1995. One of the first of the business novels, The Goal introduced managers to the Theory of Constraints (TOC) and a different way of thinking about the process—managing your business by managing flow through the constraints in your business process.                                  Read More...

A Case for Consolidating Carriers

We left off our story with the discovery that the receiving docks of a distribution center had become a bottleneck due to a combination of changes—higher-frequency smaller orders and new vendors. The inventory-management change was the right thing to do for the operating cash flow of the company, but it created an unintended consequence: it created a bottleneck where one did not exist before.

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An Order Throughput Problem

In Eli Goldratt’s The Goal, the plant management team discovered that two machines were the critical constraints; all products the plant made contained parts processed by these two machines. Managing these two constraints so that the parts flowed through production became the team’s focus.                                    Read More...

The Joy of Small Lots & Orders

Last time I shared with you the problem at a DC that picked orders with floor pickers and reach trucks. The DC fell behind demand, and orders shipped later and later. The season for the company exploded early, and demand grew faster and higher than expected. This is a great problem to have—except when throughput drops. Orders backed up, and then orders became past due. The backlog became deep enough that many customers had multiple past-due orders.

A problem became an opportunity—or so the sales and DC management teams thought. The idea: combine the multiple past-due and current orders into a single bigger order by the customer. The larger order (batch size) would be more productive, and the DC could blow through the orders faster.

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