No One Wants To Hear They Have An Ugly Baby


By Rene Jones


Gas is up over $4.50 a gallon, transportation costs are going through the roof, your employees are struggling to keep their homes and your customers are scrutinizing every cost on their invoices. I think it is safe to assume our economy is in trouble. This means your supply chain, which you have been neglecting, is crucial to your organizations success or its imminent failure. It is even more basic than that, “Your warehouse is about to make you or break you!”

I am not an economist but the signs look bleak for those organizations that have not addressed the issues related to the distribution of their product. In other words, “Their Warehouse Operations!” Your inability to provide the customer: what they want, when they want it, on a consistent basis, and at a reasonable price will affect the livelihood of your organization during this down cycle.

Woseley announced plans to close 75 locations and said their profit was down by 23%. Many other distributors are feeling the crunch and will ultimately begin “Right-Sizing”. “These are tough times” one CEO said, and I was told by a warehouse supervisor, “It doesn’t take a PHD to chop-heads”.

It’s time to admit you have an, “Ugly Baby!” Or, in distribution terminology, “Admit your warehouse is in shambles!” If your warehouse has returns that sit around for days without being processed, “Your warehouse is in shambles.” If your warehouse has receiving that does not get received for days, then once it is received it sits again before it is put away, “Your warehouse is in shambles!” If your customer service personnel spend more time in the warehouse checking stock, because your inventory is so inaccurate, “Your warehouse is in shambles!” If your warehouse appears to be bursting at the seams, which causes your pickers to spend twice as much time searching for product to fill orders and your receivers twice as much time to find putaway locations, “Your warehouse is in shambles!” Now, you will have to admit, “You have an ugly baby!”

Being in the distribution business, your organization is dependent on two things: “Your People and Your Inventory.” Which is more important to your personal as well as your organizations success?

The value of your inventory can be as high as 20% of your top-line sales. That means a $100 million company will have approximately $20 million of inventory on hand. And it cost you between 20% to 35% of its value to stock that product in your warehouse. Now answer this question, how accurate is your inventory, 70%, 90%, 95%? Ninety-five percent accuracy means your personnel lose 1 million dollars of inventory every year. Is that acceptable?

The value of your people is calculated differently but is just as crucial. Labor accounts for 65% of the cost associated with distribution. How much turnover do you experience in your warehouse? Do you have a training program for new hires? How do you motivate your employees? 75% of employees polled are searching for a new job while 20% of employees said they are disengaged. Disengagement is costing American organizations over $300 billion annually and to prove it, 66% of your lost customers can be traced back to employee disengagement or indifference. Again which is more important, “Your People or Your Inventory?”

Let me answer that question for you, “YOUR PEOPLE!” Your people are more important, because they control your inventory and communicate with your customers. With that being said, what will you do differently to service your customers, internal and external, during this economic downturn? Will you begin to: evaluate your slow and dead moving inventory to free up much needed warehouse space? Will you evaluate your stocking methodology to create a more efficient picking and putaway process? Or will you bury your head in the sand and hope it all blows over? I hate to admit it, but that is what most organizations are doing. In this economy, they do not have the capital to invest in improving their warehouse or supply chain operations. But when business was good, they did not have the resources or the time. So when do you do it? Your organization will suffer because you did not want to hear you had an ugly baby, or an inefficient warehouse. And it will suffer even more because you will bury you head in the sand and do nothing about it.

Your plan cannot simply be to lay people off. The reason that cannot be your only strategy is because you will layoff warehouse personnel but we have already established your warehouse is in shambles. How will you improve it with fewer people? You Won’t!

Now is the time to do the things you have been too busy to do. Now is the time to address inventory inaccuracies and picking errors. Now is the time to address the turnover you have been experiencing year after year. Now is the time to motivate your personnel, that are driving long distances to make it to a job they hate. Because in reality they have already begun looking for employment closer to home, which will be a pay increase for them. Think about it, a person making $10 per hour in your warehouse, can spend as much as $100 per week for gas. That means they spend as much as one weeks salary per month to make it to a job where they feel underappreciated thus being disengaged. This cycle is about to come to a screeching halt.

Your customers: that are fed up with receiving incorrect shipments, their orders not being ready when they arrive at your will call, and being placed on hold so the customer service person can check stock, are already searching for new more efficient suppliers. Again, now is the time to address your inefficient warehouse which is costing your organization to lose valuable customers. I am telling you, with no hesitation, “YOUR BABY IS UGLY!” Now what are you going to do about it.

Rene' Jones is the Founder of Total Logistics Solutions, Inc. A Warehouse Consulting organization headquartered in Burbank, Ca. Rene' is the author of several books including, "This Place Sucks - What your warehouse employees think about your company and how to change their perceptions!" Rene's is considered one of the most dynamic and inspirational speakers in the supply chain industry. Recently TLS was named one of the, "Top 100 Supply Chain and Logistics Providers" in the world. Visit www.logisticsociety.com or send an email to info@logisticsociety.com.


More Resources

Unable to open RSS Feed $XMLfilename with error HTTP ERROR: 404, exiting

More Management Information:

Related Articles


On The Job Training is Something You Can't Afford to Skip
Trained employees are more productive employees; there's no doubt about that. Whether you're your only employee or whether you've got a growing staff, put OJT (on the job training) at the top of your To-Do list.
People Literacy
Every Manager has experienced the frustration of not understanding why one management approach that works beautifully with one employee is ineffective with another. That's because what we think would be motivating isn't always motivating to someone else.
Big Company Intelligence on a Small Company Budget
Information is the lifeblood of the economy. That's especially true for businesses, because the ability to identify current customers and locate new prospects makes the difference between boom and bust.
The Survey Feedback Process for Organizational Development and Change
THE PURPOSE OF SURVEY FEEDBACK:In globally competitive environments, organizations are seeking information about obstacles to productivity and satisfaction in the workplace. Survey feedback is a tool that can provide this type of honest feedback to help leaders guide and direct their teams.
Doing More With Less
This is a bottom-line environment.Decreasing the downtime of revenue producing employees is a major concern.
Is Your Management Style Assisting or Hurting Your Business?
Many times business owners can have significant differences in management styles that can deter the growth of both the employees and the business.Employees can have differing needs that require differing methods of management as well.
Structure Your Payment Offers to Sell More Products
The way you structure your payment offers can increase your sales. I'm not talking about the way people pay like credit cards, digital payments, checks, and cash options.
Using the Six-Sigma Methodology to Improve Wafer Fab Productivity
As a result of consolidation of operations and significantly increased production requirements, Intersil's main Fab was facing bottlenecks in supply versus demand. Intersil enlisted Tefen USA first to support identifying the Fab bottleneck, and then to develop a comprehensive roadmap for capacity and cycle time improvements.
Meeting Your Meeting Expectations
"To get something done a meeting should consist of no more than three people, two of whom are absent."~Author unknownOne of the complaints I hear most often is about the number of meetings people attend during any given week.
Transparency: A Key To Your Effectiveness
Last month I talked about the Skilled Facilitator principle of being curious. This month I want to talk about the complementary principle transparency.
Know Your Client - The First Rule of Business Coaching
Whilst the very best coaches have undertaken independently accredited training and or have years of experience with clients, new self-assessment questionnaires are coming available which is evolving coaching into a far more focused activity. And that is to the benefit of coach/client relationships for the following reasons:- Key AreasResults from assessments enable the coach and client to understand key areas for development and the client can then choose which will be most beneficial.
Compensation and Six Sigma Black Belts
One of the more ambiguous elements of a Six Sigma project is the level and type of compensation the organization should give to its Six Sigma leaders and team members. On the one hand, setting compensation is not an integral part of any stage of a Six Sigma project; on the other hand, compensation is an important instrument to build loyalty and a sense of accomplishment that is a crucial element to the organization's Six Sigma success.
Ringing Doorbells Without Howitzers
Many operations leaders have been there, done that with re-engineering. And they report, in effect, that the process is like ringing a doorbell with a howitzer shell.
Catch Your Staff Doing Something Right
A long time ago, I learned something about being a manager that has proven to be one of the most valuable lessons I've ever heard.You can't manage people from inside your office.
Implementation the Catalyst of Change for Management to Reach that Next Level of Success
From the personal and professional experiences of other colleagues and myself, one of the more critical success factors for management is implementation. Through my observations, I have discovered that people and organization spend a great deal of resources including time, dollars and the cumulative total of the energy generated from these efforts to create business or strategic plans.
10 Critical Questions to Ask Before Hiring a Consultant
Talk to as many consultants as you can before hiring one. Even if you have one person or firm in mind, interview at least a few others as a sort of due diligence.
Want to Manage Your Time? Get Real!
You know the drill - the ridiculous deadlines, the relentless barrage of email, voicemail, phone calls, all those "got a minute" interruptions, the constant worrying that one of those many balls you're juggling is going to unexpectedly drop.When you're on total overload, all you want is relief - preferably the fast and easy kind.
Uncovering the Secrets to Effective Performance Management
In many ways there are no secrets to implementing effective performance management. Performance Management is a process and a process which if implemented effectively should ensure that both employees and managers remain both productive and motivated.
A Rare Leadership Skill: Dealing With People Who Want Out By Offering Crowns For Convoy
As a leader, you'll inevitably be faced with people wanting to leave your team or organization. Dealing with the challenge is critical for your leadership success.
Score the Rainbows Pot of Gold: Become the Boss That No One Wants to Leave
Leadership is lifting a person's vision to higher sights, the raising of a person's performance to a higher standard, the building of a personality beyond its normal limitations.Peter DruckerLadies and gentlemen, the captain has turned on the seat belt sign.