The interim manager was commissioned by the spare parts division (IAM) of an automotive supplier to reorganize the world's largest warehouse location as Supply Chain Improvement Manager. At the time, the 20,000 square meter warehouse (250 employees, 15,000 items) was experiencing regular order backlogs of around ten days. The interim manager was tasked with managing the site, reducing the high order backlogs as quickly as possible and sustainably reducing the high employee turnover and high sickness rate with a personnel concept.
Analysis of processes identifies warehouse layout as a key weakness
In order to determine the reasons for the order backlogs, the interim manager first analyzed the key figures. In addition, he took many "walk the process" tours to get his own picture and held numerous discussions with employees. It quickly became clear that the warehouse organization did not meet the requirements of the constantly changing order structures. In many places in the warehouse, the goods were simply in the wrong place. This led to long routes and an unclear replenishment process. Added to this was the difficulty that the approximately 15,000 SKUs in the individual storage areas (automated high-bay racking, manual high-bay racking, block storage and automated small parts storage) were not stored according to the picking frequencies. In addition, the pick orders did not take sufficient account of the large differences in product weight. To make matters worse, the forklift fleet was outdated and had high downtimes due to repairs.
Warehouse layout adapted to incoming orders after ABC analysis
With these initial findings, the interim manager worked with the management and senior employees to develop a plan for a new warehouse organization and a new warehouse layout. Following an ABC analysis, the reorganization began: fast movers were assigned fixed locations with short routes and slow movers were assigned longer routes with partially variable location assignment. The automated high-bay racking was only responsible for replenishment. This ensured that partial pallets were not returned to the high-bay racking. This stabilized the performance of the high-bay racking.
In order to guarantee the availability of A-items at all times, the interim manager developed a system based on lean methods that optimized replenishment throughout the warehouse. The spatial exchange of incoming and outgoing goods enabled the flow of goods to run much more smoothly.
More permanent positions significantly reduce fluctuation and sick leave
In close coordination with the works council and the HR department, the interim manager then developed a personnel concept to reduce fluctuation and sick leave. As a result, the company converted a large number of temporary employment contracts (ANÜ) into permanent positions. At the beginning of the mandate, the ratio was 70/30 in favor of temporary employment. Now it is 65/35 in favor of permanent contracts. Thanks to appreciation and the prospect of a permanent contract, the sickness rate fell from ten to four percent. Employees were also more motivated to work extra shifts to clear the order backlog, which - in close consultation with the local works council - also took place at weekends.
Order backlog reduced by 90 percent and delivery reliability for daily new orders achieved
After four months of preparation and changeover, the measures began to bear fruit. When the new structure went live, employees managed 13,000 picks in the first week. After fine-tuning the processes, the rate rose to a sustained performance of 14,000 picks per day - compared to an average of 11,500 picks before the start of the mandate.
In combination with extra shifts, order backlogs were reduced from ten days to one day in the following months - while daily incoming orders were delivered on time. The switch to fixed contracts noticeably increased employee motivation and led to a permanent reduction in the sickness rate, which is common in the industry.
The interim manager drew up a tender for the outdated fleet of industrial trucks, which led to a 25 percent saving on the purchase of the machines.
At the end of the nine-month project, the current interim manager was able to hand over the warehouse to the new manager in very good condition.
