Proprietary Work Measurement Program Reduces Cost Per Unit Shipped by 40.9%
Kenco Logistic Services was chosen to operate a major manufacturer’s 300,000 square-foot distribution center in Louisville, Kentucky. This partner is a leading provider of home and building control products & solutions. Collectively, this company produces a variety of consumer products, engineering services, and aerospace systems.
Prior to Kenco taking management of the operation, the U.S. manufacturer felt it needed a 3PL that could streamline its operation and maximize cost savings opportunities.
Kenco formulated a solution that coincided with manufacturer’s strategic initiatives. To streamline operations while also reducing costs, our Efficiency Improvement Program (EIP) was implemented. EIP is a critical tool used in establishing data-driven understanding of an operation. This proprietary program involves all levels of management and associates in the development and implementation of the improvement process. It uses Activity Based Costing (ABC) principles, lean methodologies, and the implementation of work standards on key processes to measure employee performance to standards ensuring process controls. Kenco also uses Lean initiatives such as kaizen events, takt boards, line balancing, and visual management to complement EIP.
The implementation of EIP and utilization of Lean Six Sigma initiatives delivered the following results for the U.S. manufacturer:
- Total savings of $956,494
- Decreased cost/unit shipped by 40.95
- Reduced cost/line shipped by 16.8%
- Cut cost/special pack line shipped by 29.2%
- Lowered cost/retail return case (receiving by 17.1%)