Think your distribution operations have been put to the test? A closer look at the U.S. Army's multi-million-square-foot distribution center that was established in Kuwait two years ago to support Operation Iraqi Freedom provides some insight for companies looking improve distribution operations under harsh conditions.
Is there a difference between the distribution operations of the U.S. Army and your supply chain? There is a difference in the operational conditions for most soldiers and your distribution center (DC), considering there can be more critical consequences from the U.S. Army not getting the right supplies to the right place at the right time or consequences from stock outs. However, distribution operations fundamentals are the same in your supply chain as they are in the U.S. Army. And the goal of this article is to provide insights from the operations of the Theater Distribution Center in Kuwait that will assist you in improving your supply chain operations.
We will look at the following areas that were critical to the success of the Theater Distribution Center. We will also look at some general observations on distribution and the correlation between the Operation Iraqi Freedom support and commercial logistics showing how you can learn from our mistakes and successes to improve your operations.
1. Planning and layout
4. Team building
6. Infrastructure and communications
9. Command and Control
Let's take a closer look at each one of these lessons individually, and then we will look at how they are related to improving distribution operations.
The first lesson from the Theater Distribution Center in Kuwait is that planning and layout are important to the success of the operation. The planning has to have a long-term focus while not forgetting about the short-term. For example, if you are going to design and build a new distribution center, are you going to consider the out years, or just build it for today's requirements? Of course you would want to consider future requirements. In doing so, you may find out there is a reason for the recent increase in activity in your distribution center that may not be present in the future. You may conclude, therefore, that you won't need to build a new center, but rather acquire a short-term third-party logistics (3PL) solution to a temporary problem.
One major distributing company, several years ago, discovered that it was quickly outgrowing its relatively new facility. The problem began when the facility was built and the company failed to look to the future expansion and growth of its business. In addition, the company found itself in a position that prevented expansion of the current facility as other DCs had been built around it. The result was a new multi-million-square-foot facility built only a few miles down the road.
In planning for the Theater Distribution Center, it was necessary to pick a location that was centrally located to as many units as possible during the build up for Operation Iraqi Freedom. Unfortunately, this location was not convenient to the other distribution warehouses that also served as customers of the Theater Distribution Center. The result was additional handling and transportation to move supplies from the Theater Distribution Center to the supported warehouses, and then on to the customers. And, as most of you can quickly ascertain, the more times the product was moved and the more times it was loaded onto and off of a truck, combined with the additional movement over some less-than-ideal roads, the more likely that products were lost, misrouted or damaged. The lesson here is to consider all alternatives and combine that with the future requirements for your operations when designing and laying out your distribution center.
The second lesson is to identify your staffing needs before you start your operations. I know this sounds almost too simple: Sometimes the best solution is the simplest one. You would not start a family vacation trip with out a plan of how to get to the vacation site, would you? Of course not. Nevertheless, how many distribution managers fail to do a good assessment of how many people they really need in a distribution center? The answer to that question would probably surprise you. All too often I hear complaints that a company doesn't have enough people to operate the DC. But when I ask, How many people do you need to be efficient in the operation? I get the same answer: I'm not sure.
When we started the Theater Distribution Center in Kuwait, we had no idea how many people were necessary to operate the center. This was primarily because we did not have a good idea of the workload and volume of supplies that would be coming through the center. (Remember that this had never been done before in a theater of war.) We started with a volunteer staff of 25 per twelve-hour shift (I call them volunteers because they happened to be in the wrong place at the wrong time and were volunteered to work in the center). Today there are over 1,000 employees in the Theater Distribution Center in Kuwait. What was the right number? Based on an analysis known in the military as a troop-to-task analysis, the correct number should have been about 60 per twelve-hour shift. A troop-to-task analysis is simply determining what has to be done and then determining how many people are necessary to successfully accomplish the tasks. This analysis can be accomplished using sophisticated models and simulations, or more likely done using professional experience and knowledge of the abilities of your workforce.
The third lesson is to ensure that your staff is properly trained to accomplish the missions and tasks. As I stated earlier, the majority of the early staff of the Theater Distribution Center was not properly trained. This required training each new volunteer crew much of which was discovery learning and about the time the crew was comfortable with the tasks, it was time for a new crew. Toyota provides over 80 hours a year of training for the employees of its North American Parts Distribution Center in Ontario, Calif. Another major retailing distribution center in California recently boasted that the only training it provides its workforce is the mandatory training to get Occupational Safety & Health Administration (OSHA)-certified on the forklifts. Which distribution center do you think has an employee turnover problem? In the long run, it is much less expensive to properly train your workforce on a continual basis than to be in a constant new training and retraining situation.
The need for proper training was obvious with the new daily crews of temporary help at the Theater Distribution Center. The real benefit of having a properly trained crew became evident when a Supply Company with experience from Afghanistan arrived a few days before the start of the combat operations. This company provided two fully trained crews of soldiers that were able to handle the increased workload and conditions that would make other distribution center managers around the world cringe. The success of the distribution operations was because of these trained soldiers.
Team building is often an overused, almost cliché term in today's business world. In the Theater Distribution Center and in your distribution operations, however, this is not something should receive lip service or become cliché. Organizing your workers into functional teams can produce major benefits and, when coupled with a little competition, can build a strong sense of belonging and pride. At the Theater Distribution Center, we gathered all of the new workers when the Supply Company arrived and explained to them the importance of the distribution center in ensuring success in the combat operations and possibly preventing the loss of lives. This was important because all too often in the supply and distribution business we forget to take the time to build the team and let them know how important they are in the total supply chain. Ask your forklift operators what he or she does for a living and you will probably get, I drive a forklift all day. But when you start doing some team building and letting your employees know how important they are in getting your customers those items that are critical to the success of their business or the goods that they ordered as presents, suddenly they have a sense of pride in what they are doing. We organized teams of soldiers responsible for off-loading the inbound trucks, another team responsible for clearing the dock and another team responsible for loading the outbound trucks. These teams competed against each other to stay ahead of the other teams.
Forecasting is not just for the bean counters at corporate. To be successful in the distribution business, you have to be able to forecast what is coming, what should be cross-docked, what needs to be expedited, how many workers are needed on what shift, and how many assets are needed to get the items out of the distribution center and to the customer. Included in these forecasts are the number of truckloads and less-than-truckload shipments that are necessary to support all of your customers. The Army's logistics automation systems provided us visibility into what was coming in every day. This, in turn, enabled us to be able to forecast the workload and the necessary number of trucks every day. In the beginning of the operations, we did not do a good forecast of the sheer volume of stuff coming through the distribution center, and that led to the shortfall of staffing. Forecasting is usually viewed from the sales and manufacturing point of view. However, there is a direct link between forecasting and layout, staffing, and training to ensure success of the operation. If these factors are not considered in the forecast, you may very well find yourself with a flawed layout, a shortfall of assets or a shortfall of trained personnel to accomplish your distribution missions.
In Kuwait, we learned the importance of adequate infrastructure and communications to the success of distribution operations. Too often, we take these factors for granted. We assume that when we pick up the telephone there will be a dial tone and the ability to connect to the desired number. We assume that when we turn on the computer it will work, and that the cable modem or dial-up modem will be able to connect and transmit the necessary information to our suppliers or customers. Do you have a back up plan if the communications network does not work? How do you handle infrastructure problems? Problems in these areas need to be part of your planning process. Any possible contingency should be considered. If you do not have communications due to a computer glitch, a virus or weather-related problems, how do you communicate with your customers? After September 11, 2001, this should be part of your back-up or contingency plans. Dell's ability to communicate with suppliers proved to be a competitive advantage immediately after September 11 when many modes of transportation were not available. It is also important to decide what infrastructure needs are critical to success and which needs are really nice-to-have items that may or may not actually impact operational success.
Leadership is important to success whether you are a multi-million-square-foot operation or a mom and pop distribution operation. The ability to get more out of your workers is an important aspect of leadership. In the harsh environment of Kuwait, this was critical to keeping the workforce, comprised of soldiers, contract employees from the United States and contract workers from other countries, motivated and focused. Granted, making distribution operations work when there is a constant threat of rocket attack or the occasional Patriot Missile being fired overhead is something that most distribution professionals will never have to endure. However, some of the distribution centers that I have been in over the past few years faced the same challenges of keeping employees motivated and focused. It is easy to motivate soldiers that are being shot at; it is not an easy task to motivate a forklift driver making a little more than minimum wage. However, the techniques are very similar in nature. When you show the workers that you are genuinely concerned about them as individuals, and you try to better understand their backgrounds and working conditions, you will find that you can get more out of them. There is an amazing power in leadership. Regardless of your operations, remember that you are in the people business and people need leadership to help them reach new levels of operational success. Leadership can turn average operations into world-class operations. Do you have an employee turnover problem? Take a look at your leadership that will give you a clue as to why there is a problem in that area. You may be surprised to discover the link between the power of leadership and the morale of your organization.
Stress affects all of us, but it is how we deal with stress that separates leaders and survivors from everyone else. While the stress of operating a distribution center in a theater of war is a bit higher than operating a distribution center in Southern California or Kansas City, there is stress nonetheless. As a leader in the distribution business, it is your job to help your employees handle stress. Okay, so how do you handle stress of your own? In Kuwait, one General Officer did not handle it so well. One night, during a SCUD missile alert during dinner, this particular General started running through the dining facility and yelling at everyone because he did not think they were responding fast enough. In fact, the only one that was not responding fast enough was him. Do you take you stress out on your employees? Do you take your job-related stress out at home, or home-related stress on your employees and co-workers? Find someone that you trust enough to be able to talk about anything, and use that person as a sounding board or outlet valve to blow off steam. I have been lucky enough to have a couple of close friends that fit those criteria. I know I can call them at any time and talk about a problem or idea, and they know they can do the same with me. This is critical for maintaining your own sanity and not allowing stress to affect your job performance, health or family.
The final lesson that we will discuss is the concept of Command and Control for your operations. Regardless of the size of your organization, there has to be someone in charge. And, there has to be a clear chain of command or leadership. This is important because employees need to know who to go to if they cannot find their immediate supervisor someone who has the capability to make a decision. It is also important for the people in the chain of command to get out of their offices and see what is going on in the operations. One of my favorite techniques in Operation Iraqi Freedom was to get on a forklift and move supplies, move orders and load trucks. You may not need to go to that extreme, but you do need to see and be seen by the folks who work for you. The key with Command and Control is that if placed in charge, take charge. Lead by example, control the operations, but take care of your employees.
These are only a few of the lessons learned in the course of operating the Theater Distribution Center in Kuwait. The lessons that we learned in setting up and operating the center can and should be applicable to your operations, regardless of whether you operate a distribution center, warehouse or manufacturing operation. Learn from our mistakes and efforts to improve your operations. The key to our success was the quality of the soldiers working tirelessly to do whatever it took to support our customers. Take care of your people, learn from our lessons and I will see you at the top.