Feedback Form
Home Features Mastermind Videos About Advertise Blog Network Contact
   

Have A Suggestion?
Toronto Salsa Classes / Toronto Salsa Lessons Email us your ideas on how to make our website more valuable! Thank you Sharon from Toronto Salsa Lessons / Classes for your suggestions to make the newsletter look like the website and profile younger entrepreneurs like Jennifer Lopez and Sean Combs!
Have A Suggestion?

Featured Ebook


ebook Famous Entrepreneurs - Modern Empire Builders


Featured Ebook

More Evan Carmichael
Have A Suggestion?

Sales Lessons From Starbucks And Dell

When outsourcing warehouse and distribution gets too inefficient and expensive what is the solution?



When outsourcing warehouse and distribution gets too inefficient and expensive what is the solution?
   

Questions along this line is popping up with greater frequency. The following is from a recent answer I had provided on the subject of warehousing and distribution that should serve as an introduction to a sound str4ucture.

Here are a series of excerpts from an NYCTA Case Study you should find interesting. (Note: if you would like a copy of the actual study as well as a corresponding DND study please contact the author.)

Challenges
The NYCTA contract established a target SLA of 90% same day (Pick-Up
service within 1- hour, and On-Site service within 3-hours) for critical systems.

95% of all service calls required the 1-hour Pick-Up service.

Solution Mehtodology

Utilizing a consumption forecast model developed internally (Part Requirement Rate Formula or PRRF), the analysts were able to accurately estimate the frequency of consumption per device based on the current NYCTA install base.

Once consumption rates were established by device type, an Parts Compression Function (PCF) was employed to reduce the number of inventoried SKU’s without negatively impacting the established
SLA.

This resulted in a significant savings for the client as they were able to; a)
lower their investment in inventory, b) reduce warehousing costs, c) eliminate variables for field technicians i.e. device drivers, d) establish a more proficient Life Cycle Management process and, e) capitalize on volume discounting.

In an effort to effectively access inventory on a timely basis, Strategic Stocking Locations (SSL) were established which could be accessed
through a central application referred to as the Interactive Parts Ordering System (IPOS).

An advanced time zone algorithm was employed which through a real-time polling capability was able to ascertain within seconds which SSL site was best suited geographically to meet the required SLA. This innovation combined with the PCF reduced the process handling time by approximately 95%, thereby addressing a significant bottleneck.

While the establishment of the SSL sites and the corresponding deployment of the IPOS application enabled the client to meet and even surpass the 90% SLA contractual requirement in the majority of instances, the challenges associated with service calls for which the required part a) had not previously been requested or b) where past requirements were infrequent or sporadic, a process was which incorporated the utilization of Strategic Geographic Suppliers (SGS).

SGS Overview

To illustrate how the SGS process works we will reference an actual transaction.

The client had a contract to support a company’s centralized network server farm located in New York City. Critical to their day-to-day operations, the company demanded a minimum 3-hour response time.

When an essential cooling device failed the client attempted to obtain the part through normal channels including the Original Equipment Manufacturer (OEM). The best ETA the client received was 2 to 3 days (far beyond the 3-hour scope established in the contract with
the company).

While the client had close to 300 overall possible sources in the U.S. alone, they had neglected to establish strategic sources within established hot zones, re centers in which the SLA requirement called for a same day or better response/resolution time.

Through the establishment and implementation of an SGS process, the very next time the requirement for a critical component arose, the client was able to locate and satisfy the 3-hour response time.

Results

Combined with the utilization of IPOS to effectively manage SSL
consumption, the Strategic Geographic Sourcing mechanism enabled the client to consistently satisfy the SLA requirements of a demanding contract, while simultaneously reducing the associated costs of managing the large pools of inventory.

When outsourcing warehouse and distribution gets too inefficient and expensive what is the solution? - To learn more about this author, visit Jon Hansen's Website.

Like this article? Share it with your friends
[Get Copyright Permissions] E-Mail | Print | More  


Related Articles Related Articles
Documents of title to the goods in international sale transactions
  The distinction between a document of title to the goods and other documents not representing title to the goods is of crucial importance to the banker's security against the account party's insolvency
What is a reasonable cost model for providing a 3PL warehouse management service (Survey Result 2)
  What is a reasonable cost model for providing a 3PL warehouse management service and how would it best be structured to hit the key points with both the logostics and finance executives?
What is a reasonable cost model for providing a 3PL warehouse management service (Survey Result 3)
  What is a reasonable cost model for providing a 3PL warehouse management service and how would it best be structured to hit the key points with both the logostics and finance executives?
Outsourcing is not as easy with SLA's and metrics
  Information technology enabled services (ITES) or BPO has enabled India, Philippines and other developing markets to grow and provide badly needed jobs in those markets. I used to consult in the outsourcing industry...
“It is too expensive”
  What do you think your customer means when he raises this objection?

Related Forum Posts Related Forum Posts
Don't sell books on eBay Don't sell books on eBay
Anyone Uses Elance.com? Guru.com? Rentacoder.com? Anyone Uses Elance.com? Guru.com? Rentacoder.com?
outsourcing tips? outsourcing tips?
My homepage is... My homepage is...
Outsourcing?? Outsourcing??
Document Your Processes Document Your Processes
OpenAds vs. Adify? OpenAds vs. Adify?
Shopping sucks in Canada Shopping sucks in Canada

 
About the Author
Have A Suggestion?

View Author's Blog
Become An Author

View Author's Video
Become An Author

Free Downloads


Jon Hansen's

Complete
List Of
Small-Business-Consulting
Articles

First Name
Last Name
Email
 
If you enjoyed this article, get Jon Hansen's Complete List of Small-Business-Consulting Articles For FREE!

More Jon Hansen
Similarity Hueristics Iterative Methodologies and the Emergence of the Modern Supply Chain
What are the 3 biggest challenges faced by supply chainpurchasing professionals today Survey Result 14
Supply Chain Confidence A PI Q and A
What are the 3 biggest challenges faced by supply chainpurchasing professionals today Survey Result 3
What percentage of people that visit a site click through to purchase
Challenging the Integrity of your Supply Chain The Weak Links of Hidden Risks Katzscan Profile
Procurement considerations when dealing with a merger A PI QA
Is Fords autoxchange the Real Deal Survey Response 2
Member Question Regarding Ariba Experience
How will Web 30 affect online customers experience
Become An Author