The problem

A global company found that the Delivery Lead Time achieved by one of its European warehouses was significantly longer than that of its other warehouses.

The organization got ahead of itself and came up with several hypotheses to justify the delay: e.g. a higher ratio of international deliveries which require different processing steps and the use of a different IT system that made additional steps necessary. Regarding the first problem, not much could be done. To solve the later it was suggested investing in a new IT system

The initial measurements and analysis already took apart these preconceived hypotheses. The international deliveries did suffer a longer delay but the Lead Time of national deliveries was still longer than that of other warehouses: an average of 3 additional days.

Stratification and analysing the process step by step (delivery order creation, pick up of material and transport) we noticed that the long delays were not created by that warehouse’s specific IT system.

An analysis of weekly statistics then showed that the delays were correlated to a rise in deliveries. However, surprisingly the data indicated that these peaks were not created by an increase in customer orders (one of the organization’s hypotheses), but by a built-up of orders in the warehouse.

The chronic lack of staff generated an accumulation of deliveries that could have been solved by hiring temporal workers during the last week of the month. However, to solve the problem the organization instead decided to increase the number of permanent workers by 20%, balancing the workload and thereby preventing the buildup in the first place. Compared to employing temporal workers this saved 20% resources.

The result

Costs were significantly reduced (the cost of permanent staff is lower than that temporary staff). Furthermore, accidents were also reduced and quality was improved (permanent staff is better trained and motivated) and, above all, the Lead Time was dramatically improved: the average 3 day delivery time was reduced to 1 day for local services and from 6 to 3 days for international orders.