The company moved 415 truckloads of goods valued at more than $200 million in 75 days, into a facility closer to major customers.
Distribution center revamp yields big savings, customer service improvements
In the midst of increasing competitiveness in its industry, Lion Vallen Industries needed to ramp up supply chain management performance.
The maker of personal protective equipment for emergency services personnel and military workers targeted its distribution center operations, where improvements were needed for inventory of personal protective equipment and logistics operations supporting military customers. Lion also wanted to reduce labor and transportation costs, increase order throughput and accuracy, and optimize warehouse space utilization, all while using Lean and Six Sigma techniques. The project was laid out in four phases: analysis and planning, implementation of prioritized optimizations, continuous improvement, and relocation of the distribution center.
In phase one, the 5S Lean improvement technique was implemented throughout the facility, and a rapid improvement event was conducted to identify ways to improve processes. Using Lean tenets, a new database-to-database interchange was built between Lion Vallen and government supply chain management systems. This link facilitated exchanges and synchronization of demand planning and inventory data with customers in real time.
Phase two involved the first set of high-value operational changes. Management reporting was reworked so that key performance indicators could be tracked regularly. This helped Lion Vallen keep tabs on operating tempo and helped the company determine the impact of changes.
In the third phase, Lion improved process design, which resulted in manufacturing and distribution processes operating at maximum efficiency. The company added an enhanced flow-based process and visual Kanbans, and eliminated non-value-added processes.
Finally, phase four involved relocating and consolidating operations into a single facility. The company moved 415 truckloads of goods valued at more than $200 million in 75 days. The center was moved closer to major customers.
Upon completion of the project, Lion Vallen achieved a reduction in dock-to-stock time from two days to less than three hours, a 45% increase in order picking productivity, and a 34% head-count reduction. The company also increased location–by-location accuracy from 70% to 99%, and inventory carrying capacity by 52%. The cost of the project was $773,000, with annualized savings of $2,370,000. Project payback occurred in eight months.