Erasing Overtime in Unexpected Places

How Pick Line Balancing Eliminated Loading Dock Overtime

Opportunity:
A retail home improvement chain distribution center had challenges getting trucks loaded for dispatch without incurring overtime.  Although management increased the loader labor, overtime persisted and labor costs increased $6,000 per month.  Another critical problem was residual freight that could not fit onto the truck or arrived after truck dispatch.  The late merchandise had to be restocked and then reordered, creating additional labor cost and lost sales.

Solution:
Our initial observation revealed a productive loading process with active and motivated, yet frustrated, associates.  Our three-day assessment determined that adding over $1,000 in weekly labor payroll to the dock operations failed because it did not address the root cause of the problem.  The loading dock personnel was very productive when freight was available to load.  The problem was that over 20 percent of the time, the loading team waited for the correct freight.  The outward appearance of the dock looked like there was sufficient work because of the out-of-sequence freight staged on the dock.  The dock staff looked busy because they were moving early-picked freight that was in the way of what they needed to load.  

The root cause of the problem was the order selection area. Some picking areas finished orders much faster than others and would continue to pick, creating an imbalance that would flood the dock with “early” freight. Working with the Order Selection managers, we developed a wave sequence process that balanced picking production through process monitoring and labor deployment.  The operation also was using a “shotgun” start, where the stock replenishment, selection, and loading teams started at the same time.  We developed a new schedule that staggered the start time of the teams by 45 minutes to allow stocking to “get-ahead” of selection, and for selection to “get ahead” of loading, eliminating dwell time.

Result:
In this five-day engagement we diagnosed the root cause of the problem and helped management implement a practical and innovative solution.  In one week, we:
• Eliminated overtime, cutting $25,000 in annual overtime expense.
• Reduced loading dock labor hours 9 percent, cutting $26,000 in labor expense.
• Reduced selection hours 8 percent, cutting $175,000 in labor expense.
• Improved loaded cube utilization by giving loaders more time to “be creative,” eliminating  all “leftovers,” and reducing customer complaints about loading damage and shortages.

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