Saving $50k Annually with Flexible, Cost-Effective WMS Solution

Overview

Kenco Logistic Services operates the North American distribution center for a specialty pharmaceutical company that provides patients with prescription and nonprescription products.  Because the company is a specialty drug manufacturer, delivering the product on time can be a life or death situation.  Kenco has been the company’s exclusive domestic and international 3PL for over 10 years, handling all logistic issues on a 24/7 basis. Shipments are usually delivered within 8 hours of Kenco receiving the order. Kenco manages a 120,000 square foot pharmaceutical distribution center with 20 employees.

Challenge

The specialty pharmaceutical acquired a new product line with 560 SKUs and an order profile of 11 lines per order. The desire was for Kenco to eliminate any waste in their existing operation and absorb a 200% SKU increase without increasing labor. The timeline for implementing was short with the new product line being added within two months.  At project commencement, Kenco was managing 260 SKUs and 4 lines per order.  This was used as a baseline metric to track the increase in SKUs and lines.

Solution

The facility operates using Kenco’s proprietary WES (Warehouse Efficiency System) warehouse management system.  Kenco IT staff performed a systems and business analysis to determine ways to lean out the processes in the warehouse.  The IT team identified ten projects that would improve productivity and reduce costs.  The system was modified within one month to receive the new electronic SKU and inventory files for the new product line.  System configuration changes were also made in the same timeframe to implement a new zoning setup while also changing the layout of the pick line.  The pick line was originally set up on one side of the conveyor line. This system was arranged to allow for a second pick line and a serpentine path for maximum efficiency in picking.  Wearable scanners were also introduced to increase pick volume.

Results

The system changes in the short time frame allowed for an increase in volume, saving the company approximately $50,000 annually while still integrating the new product line into operation.

Implementing changes of large magnitude in such a short time are challenging for a labor force and require extensive training and on-site support.  With Kenco’s guidance, the site was able to improve efficiency while withstanding a 200% SKU increase and additional product line.  Lean initiatives will utilize system enhancements to drive further cost savings and labor improvements.