The COVID-19 pandemic has caused unprecedented disruptions to the national and global supply chain. From warehouse shortages to low inventory for retailers, the lack of raw materials and manufactured goods has affected nearly every industry. And with labor shortages and limited operating hours, many companies are struggling to meet consumer demand.
Watching companies react to and attempt to manage these supply chain challenges reminded us why we entered this business. At FHI, our goal is to assist organizations with everything from supply chain management to logistics so they can achieve their desired profitability.
In the face of current supply chain problems, we remembered one client who needed our help at the beginning of the pandemic.
An Unpredictable Time
In September of 2020, FHI was contacted by a successful adhesive manufacturer with over 65 years in the industry. Their Q4 business plan included merging two of their operations. Because of a loss of sales due to the 2020 pandemic, Q2 was projected to be a low-volume period. The decision was made to accelerate the merger process and capitalize on the downtime during what looked to be a slower quarter.
As the manufacturer began the process during Q2, sales unexpectedly began to soar with increased customer demand as more people started shopping during lockdowns. During this time, the manufacturer also lost key associates and soon found themselves with an extreme log of backorders and frustrated customers.
Their problem wasn’t product shortages or inventory levels, but the staff and inventory management. They had lost inventory accuracy, safety became an afterthought, and organization was no longer a priority. Supplies were scattered, stock rotation was lacking, associates were struggling, and they were running out of space.
Because of this backlog, shipments ranged from 50-800 units per day; but to reduce the backorders, they needed to exceed 4,000 units per day. They were stuck.
Unsticking the Stuck
The manufacturer called in FHI, and we immediately assigned two members of our Continuous Improvement Team, one to stabilize shipping leadership and another to define mitigating factors and present the overarching recommendations.
We got to work by first developing a punch list that contained safety concerns, productivity recommendations, and other key findings. Partnering with their Sr. Leadership, tasks were reviewed and prioritized. Based on task times, additional resources were added from FHI NOW's support team to remove constraints. Our plan of action included the following:
To eliminate other bottlenecks, additional shipping stations were implemented. During non-productive times, a team of FHI associates installed racks to utilize vertical space in the confined shipping area. This aided in pick/pack productivity and organizing their backstock.
Limited-use items were relocated to less essential space, while JIT items were identified and organized to increase throughput on their production lines. Using a lean methodology, convey lines were installed which streamlined the process from the production line directly to the shipping clerk and out the door.
Ultimately, this FIFO process improved quality and productivity and reduced the manufacturer’s backstock inventory.
Back to Business
Within a short time, the previously struggling adhesive manufacturer accomplished gains in the units shipped per day. The swift improvements afforded them the opportunity to focus on their supply chain strategy rather than operating in a panic. They also filled permanent Shipping and Material Management positions. The operation was producing the desired 4,000 units per day at the end of our partnership, a goal that seemed unachievable just a couple of months prior.
After a twelve-week partnership, the shipping workforce was stabilized. They had adopted the foundations of structure and accountability. Their backorders were reduced by nearly 70%, and their daily units shipped increased by +/- 400%. Our partner is now able to focus on growing their business and continuous improvement.
With the amount of supply chain disruptions affecting warehouses and distributors, it’s not uncommon to face seemingly insurmountable challenges.
FHI is here to help you. Schedule a call to understand how we can help you create stability in the midst of volatility so you can continue serving your customers despite the workforce and supply chain issues holding back your business.
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In any market, your supply chain can make or break your ability to compete well. Don't leave that to chance. We can help you create a stronger operation, so you never fall behind the competition.
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