Moving from Warehouse to Distribution Center Cross Docking

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Moving from Warehouse to Distribution Center
Cross Docking
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• Todd Brandt
• Unit Head - Logistics Warehousing
• Tom Stewart
• Finance Manager
• Materials Management Financial Analysis
• Mayo Clinic
• Rochester, MN

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Agenda

• Mayo Clinic Background
• Warehouse vs. Distribution Center
• Need for Change
• Road to Success
• Value

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• Mayos Mission
• Mayo will provide the best care to every patient
  every day through integrated clinical practice,
  education, and research.
• Primary Value
• The needs of a patient come first.

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Mayo Clinic
Mayo Clinic Scottsdale, AZ
Mayo Clinic Rochester, MN
Mayo Clinic Jacksonville, FL
St. Lukes Hospital
Rochester Methodist Hospital
Mayo Clinic Hospital
Charter House
Saint Marys Hospital
Mayo Health System
A network of clinics and hospitals in 64
communities in southern Minnesota, northern Iowa,
and western Wisconsin
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Mayo Clinic Rochester
28,080 Employees 322,772 Unique Patients 1,951
Licensed Beds
77 Buildings 633M of Supply Spend
as of 9/06
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Mayo Distribution Center

• 60,000 sq ft with 24 ft Ceilings
• 5,000 sq ft Mezzanine
• 4,000 sq ft Controlled Environment Area
• 8,000 Lines / day Ordered
• gt 50 low unit measure lines
• 700 Customer Requisitions Daily
• 400 500 Receiving Lines Daily
• Average Tenure 16 Years

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What is a Warehouse?

• Warehouse
• Storage
• Minimize expense
• Fill it up!
• Few metrics

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Past- The 90s

• Product Migration
• Inventory
• Low visibility
• Few policies and procedures
• No stocking criteria
• Traditional Approach
• Fill it up!

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Measurements
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Past- New Millennium

• Product Stabilization
• Inventory
• Increased visibility
• Develop policies and procedures
• Unofficial stocking criteria
• Guarded Approach
• Limited space available

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Measurements
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Need for Change

• Customer Needs
• Just in time
• Low unit of measure
• Growth
• Space utilization
• Financial Viability
• Change patient demographics
• Improving cost structure

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What is a Distribution Center?

• Distribution Center
• Organized process
• Customer focused
• Unique demands
• Visible metrics
• Cross docking
• Consolidation area

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Road to success

• Assemble Team
• Create Strategy Map
• Determine Baseline
• Implement Plan
• Measure Progress
• Have Some FUN!

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Assembled Team

• Leadership Sponsor
• Analytical Staff
• Line Staff
• Supervisors
• Systems Support
• Consultant

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Strategy Map

• Current State
• Future State
• Road Map

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Slow Moving Parts

• Defined Slow Moving
• Identify Items
• Criteria
• Communicate
• Disposition
• Monitor

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Velocity and ABC Codes

• What is Needed
• Create Legend
• Slotting
• Correct Size
• Label SKUs
• Reporting

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Velocity and ABC Codes
Classification Based on Point System Order Schedule Location Capacity
A 2 points Ordered daily by the largest customer base. Min. 3 days
B 3 points More than one Customer was ordering either daily or weekly. Min. 1 week
C 4 points More than one customer ordered at least once per week. Min. 2 weeks
D 5 points 19 customers are ordering less than once per week or less than 52 times per year.   All
E Single Customer SKUs One customer orders daily.  Min. 3 days
F Single Customer SKUs One customer was ordering either daily or weekly Min. 1 week
G Single Customer or Critical (NMMC) SKUs One customer was ordering less than once per week or less than 52 times per year.   Min. 2 weeks
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A Velocity SKUs Current Locations
631 A SKUs 29 Pick Aisles 2 Floors 427
Over-Stock Locations
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Order Management and Staff Optimization

• Current Patterns
• Institution Needs
• Customer Needs
• Who Controls?
• Change

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Technology

• Enterprise Resource Planning
• Point of Use
• Warehouse Management
• Lot tracking
• Expiration tracking
• Electronic transactions
• Staff productivity

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Standard Operating Procedures (SOPs)

• Requires Process Changes
• Inventory control
• Slotting
• Receiving
• Picking
• Cycle counting
• Communication Tool
• Change Behaviors

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Distribution Processing

• Customers Needs
• Lean Process
• Save Space
• Reduced Inventor
• Internal or External

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Cross Docking

• Consolidation
• Non-stocks
• Delivery Times
• Reduce trips
• Space

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Current State

• Stock to Non-stock
• Inventory
• High visibility
• Turns
• Implement SOPs
• Official stocking criteria
• Lean Approach
• Low unit of measure

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A Velocity SKUs New Locations
631 A SKUs 10 Pick Aisles Ground Floor 211
Over-Stock Locations
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Product Slotting
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Measurements
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Value

• Customer Satisfaction
• Right product
• Right place
• Right time
• Growth
• Optimize space needed for growth
• Financial Viability
• Optimize Staffing
• Improved inventory turnover
• Inventory reductions

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Cost to Serve Benchmarks
Data provided by National Medical Logistics
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Future State

• Laboratory Expansion
• Lot track
• Temperature sensitive
• Clinical Growth
• Space constraints
• Flexibility

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Best Practices

• Key Performance Indicators
• Documented SOPs
• Point-of-use Replenishment Process
• Scheduled Pick Waves
• Scheduled Deliveries
• Velocity Slotting

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Summary

• Evolution
• Traditional warehouse
• Distribution model
• Customer
• Flexibility
• Value
• Lower cost
• Quality

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• Q A
• brandt.todd_at_mayo.edu
• stewart.thomas_at_mayo.edu