Copy Paper in Tucson

We deliver a lot of product to customers in Tucson everyday, except Monday. Our semi-trailer is nearly full for the trip down each night. The trailer on Monday night, because of the deferred load from no Monday deliveries, is always very full. It often requires manual loading and unloading to get everything into the trailer. If it doesn't fit, the only alternative is to call for a second trailer and pay the higher cost. The second trailer, being unplanned, costs significantly more than the first trailer, so the line haul cost more than doubles that day.

An associate submitted a SPIN idea to stock a second sku of copy paper at our Tucson cross dock. We've been stocking one item for years, our best seller. But a branding shift has happened in recent years and that best seller has been losing sales to a new copy paper item, which is shipped via the nightly trailer.

An adjustment was made to reduce the amount of product from the original sku to be stocked in Tucson, and replace that product with the new paper sku. Although we stock no more paper on the floor in Tucson, we now have the two top skus represented. Pallet volume on the trailer has declined and productivity in the warehouse has increased. It is easier to send the labels than it is to select the pallet of paper and load them into the truck. The Tucson team also receives a time-saving benefit because they no longer need to unload the paper from the trailer. It is already on their floor.

This asociate idea is expected to save $3,600 annually in transportation and loading expenses. Congratulations to the team for an excellent idea and successful implementation!

Warehouse Consolidation

In November of 2008, we closed a satellite warehouse facility of 40,000 square feet. The soft economy and improvements in our inventory management allowed us to consolidate most of the product into our main warehouse building. However, we had too much floor stack product and not enough floor stack space, so we took a temporary rental space from a neighbor around the corner from us. This 5,500 square feet of space was for floor stacked products from only two vendors.

While the monthly savings was terrific, we wanted to achive more and get everything into one building. A Kaizen team was formed and options were discussed. There were a variety of innovative solutions determined by the team and implemented to great success.

In the end, specific furniture racking zones were created. Product profiling was conducted to keep similar products near each other. Racking was modified to create additional floor stack space within the racking. Profile changes were made to our existing floor stack area to include additional products and to move lighter products into racking and heavier furniture items into our limited floor space. Cost savings for this project exceeded $38,500 annually!

The SPIN Zone!

Specific Process Improvement Needed (SPIN). These are the ideas that our associates have while working on the job. Ideas that improve safety, reduce cycle time, improve accuracy, or drive cost out of our operation. Some SPIN ideas make improvements but demonstrate no measureable dollar savings. Other ideas generate deep savings.

SPIN ideas are submitted to our four location LEAN Captains. They meet once a week to review all new ideas and to follow up on the progress of projects underway. Interestingly, the management team does not participate in this process, except to provide some meeting facilitation support and to provide resources as needed. The LEAN Captains decide the priority, based on the impact to the location.

The SPIN Zone was created to explain the SPIN process to all associates. People can also obtain a status update anytime by visiting the detail on the board. Every SPIN idea is recorded and tracked through the SPIN system, with weekly updates posted on the SPIN board. Completed SPIN ideas are printed and posted in a binder that contains all ideas are completion and the 30-day review. Our goal is 120 ideas in 2009. We are a bit behind that pace currently, but we are tracking to process nearly 100 ideas. Improvements have been significant and associates are beginning to feel empowered!

Lego Fun for All !

Phoenix conducted "Lego Training" for all associates last week. This 4-hour training exercise was conducted in three different sessions to allow all associates an opportunity to participate. This training simulates order fulfillment in our warehouse environment. Each group had an opportunity to run the same simulation three times, but were allowed to make improvements between simulations. As expected, every group dramatically improved their performance in each simulation. The improvement from the baseline simulation to the final was dramatic!

Trainees learned about process mapping and practical ways to apply Lean Thinking in their work areas. They used spaghetti diagrams to identify and reduce motion. They applied 5S in their work areas. They applied visual controls. They redesigned work areas and operational floor layouts. Between simulations, they received instructions on some new tools, then had the chance to apply those tools, and others they already knew, on the simulated work floor. They had limits and time constraints, just like real life! They discussed ideas and found ways to implement the ideas with greatest impact.

In the end, most associates found the training to be helpful in understanding Lean Thinking. But more importantly, they learned new ways of how to apply Lean in their work areas. In addition, it became obvious that Lean becomes much more impactful in the work place when associates share their good ideas and understanding of our functions with each other and their leaders. What may be obvious to them is sometimes overlooked by those who don't work that job every single day!

PowerMax Inbound Kaizen

The first week of March found a Kaizen event in Phoenix going full speed. Subject matter experts were assembled from Las Vegas, Los Angeles and Phoenix to participate on a Kaizen team guided by our illustrious Lean Master!

Some items that are needed and ordered in full carton quantities cannot always be delivered in full cartons. This condition requires a great deal of extra work in the receiving department. When there are 360 widgets on the order, and there are 120 widgets per carton, receiving three full cartons takes much less time than having to count every widget when they come loose in 2-5 repacked cartons. So the team looked at what can be done to receive more in full cartons and how do we streamline receiving when the order arrives in repacked cartons.

The group recommended ASN receiving, developed a pallet lane concept for staging products to be put away, redesigned receiving carts, among other tasks. Their findings were significant, with an expected savings of $9,500 per year in annual time savings and these expected savings have already begun to be realized in the receiving department! The 30-day RASIC chart is under current review.

Satellite Building Relocated

Due to the soft Arizona economy, our facility has relocated our furniture building into a much smaller space. In the distribution world, more space isn't always better than less space. In our case, we were able to make several improvements in our process through relocation.

First, we moved more product into our primary building. This translates to a higher percentage of orders being filled from our primary building and improves our productivity rates. We will spend less time off site at the satellite building and there will be less time spent driving between the two buildings because only one trip per shift will be required.

Second, the new building is much closer to our primary building. Our previous satellite building was 15 minutes away, so 30 minutes was spent daily driving for each trip. The new facility is 3 minutes away, so 6 minutes for each trip. Obviously, there is a gain of 24 minutes per trip, with two associates in the truck, for a gain of 0.8 labor hours per trip.

Couple those results with the reduction of one trip on average per night and the labor savings is 1.8 hours per day or just over 450 labor hours per year! That is equal to gaining a full time associate for 11 weeks at no cost! This is LEAN at its best, a true reduction of transportation waste!

Third, because we have much less space, we pay a lot less for that space. Our rent expense for off-site space will decline by nearly 80%, a very significant savings.

So we spend less money and increase warehouse productivity at the same time. These are the gains we look for all the time with LEAN production!

T-Outs Kaizen Team

In theory, inventory on hand for a given item should always be accurately reflected in the computer inventory file. Inaccuracies can cause us to either carry more inventory than we need for a given item, or to disappoint a customer by not being able to fill an order we thought we could fill. From a LEAN perspective, both are problems to be corrected by tightening processes to maintain strong inventory control. If we have 100 widgets on the shelf, our computer system should say we have 100 widgets as well.


Several times per day, our computer system communicates to our customers that we have an item in stock, but it is not available on the shelf when the warehouse associate goes to pick the item for the order. This situation is called a T-Out in Phoenix, and our objective is to have as few as possible. In October and November, our T-Out rate in Phoenix was too high at 0.13%. Our target is 0.10%.


During the 3rd week of November, we gathered a Kaizen team to look at our T-Outs and see if we could bring them down below our target. The team included six associates, two from inventory control, two from the receiving and put away shift, and two from the order fulfillment shift. They determined there are four significant opportunities for improvement that, if improved, will reduce T-Outs in Phoenix. Those key opportunities are Housekeeping, Pick Accuracy, Product Astray, Low Stock on Hand. The team created a RASIC chart with all action items to improve each area, a person assigned as responsible, and a completion date. We expect to see a 40% reduction in T-Outs, beginning as early as late December.

Tier 4 Meeting Board

Phoenix has incorporated tiered meetings into the operation on every shift. Delivery, Warehouse 1st Shift, Warehouse 2nd Shift, and the Office team all have a daily Tier 1 meeting, usually at the start of the shift. These meetings are conducted by Leads or Supervisors and all shift associates attend the meeting.

Tier 2 meetings, held by Supervisors with their Leads, are also conducted daily, often more than once per day. Department Managers are conducting Tier 3 meetings, usually daily. These higher level meetings are held by Managers with their Supervisors and cover LEAN components and continuous improvement opportunities.

So what is this Tier 4 Meeting? This is a daily meeting with the Managers and the Director of Operations, a recap of the key performance indicators for the prior day. A 3' X 4' MDI board has been designed to record and review all the metrics. Trends are reviewed briefly, and the team makes certain that unfavorable trends have root cause analysis underway and countermeasures applied or soon on the way. Notes are made right on the board, making location performance very visual for all associates to see clearly and apply improvements.

Scanning Improves Accuracy

Phoenix has spent the past six weeks training associates and rolling out new processes for handling inbound freight. With over 10,000 different items in stock, it is easy to receive a product and lose it before it finally ends up it the correct warehouse location. Using technology, Phoenix has improved inventory accuracy through the addition of a carton tracking system using bar codes and scanners.

Using the new process, cartons arrive via semi-trailer and are unloaded. Products are received using the scanner (which immediately makes the item available for sale) and scanned to a pallet. Some items have ASN pallet tags (pallet ID bar code) which make receiving even faster! That pallet (whether built or ASN tagged) is moved and scanned to a drop zone. The pallet or individual cartons are then scanned to a specific warehouse location, at which time the system declares the product as "putaway" where it belongs! Every warehouse location available for storage of product has a unique barcode.

With these tools in place, every carton can be tracked from point to point as it moves from the receiving dock to the assigned warehouse location. If it is side tracked along the way, an exception report flagged the carton and notes where it was last scanned, making it easier to find. If an associate selects the wrong item, the wrong pallet, or tries to put something away in the wrong location, immediate feedback is provided by the hand held terminal. The associate can make the necessary adjustment and perform the function correctly.

In the next 60 days, we'll be adding scanning to our outbound processes. Since we already scan cartons at delivery, we'll have comeplete electronic tracking for items from receiving to delivery. The impact on inventory accuracy is expected to be significant. This is one example of how we are using technology with LEAN to improve our performance to customers!

CI Project - Inventory Accuracy Improvement

The team in Phoenix has struggled with T-Outs (unexpected inventory shortage) for the past couple of years. There has been improvement, but it has never been sustained. Recently, a team of inventory control, receiving and stocking associates worked together to improve our inventory accuracy. In addition, our much improved (and sustained!) facility housekeeping has helped to identify items out of place on the stock shelves.

The net result has been astonishing! Over the past three weeks, T-Outs in Phoenix have declined by 40%! The facility has met the inventory accuracy target for the past three weeks, and even had a day with no T-Outs at all! This is terrific improvement! It represents much hard work and effort over many months, and demonstrates the effectiveness of LEAN in our workplace. These results don't come from one or two improvements. Rather, these results are the product of many small improvements over those months, which are finally beginning to pay big dividends!

Expected vs. Actual

Phoenix has been working hard to integrate the concept of expected versus actual thinking in production. Following a basic LEAN concept, we are establishing an objective standard based on prior performance in a given area. We measure our actual performance against that standard. Both expected and actual performance are recorded on an MDI board or document. Some measurements are taken during the shift, while others measure the entire shift.

As the actual data is posted with the expected data, abnormalities are discovered. These abnormalities are discussed in the Tier 2 meeting by the Leads and Supervisor of the team, and with frontline associates in the next Tier 1 meeting. These abnormalities can be either favorable or unfavorable. Efforts are made to understand and replicate the favorable abnormalities, while unfavorable results receive countermeasures as soon as possible to get back on track.

Areas where Phoenix is applying this principle include Bin Production, Bulk Production, Truck Loading, Item Profiling, and Delivery Performance. Improvements have been noted in each of these areas.

Expected versus Actual performance measurement doesn't accomplish the desired result by itself. It must be combined with Tier Meetings, Leader Standard Work, and use of an Action Item Board to apply countermeasures quickly. When those elements are used together, the results can be very powerful!

Kaizen - Housekeeping Sustained!

Phoenix has been through several cycles of housekeeping improvement ... that is, we clean up, we slide downhill, we clean up, we slide downhill, etc. For this event, the Kaizen team was charged with improving our ability and sustaining that improvement. The scope of this project was to focus on warehouse bulk aisles, static bin aisles, and flow rack aisles. Representatives from both warehouse shifts participated on the team.

After four days of hard work, cleaning, and debate, the Kaizen team developed a plan to bring the warehouse up to standard by the end of March, and more importantly, to sustain the spring cleaning long into the future!

For the initial clean up, all warehouse and office associates will be involved, including supervisors, managers, even the director. Training was provided for all associates to establish a standard to which all may work. A Standard Operating Procedure or Standard Work Document was written to measure and maintain the standard over time. Daily maintenance assignments have been issued so each aisle in the building is refreshed daily and returned to standard, as well as inspected by a Lead or Supervisor. The Leader Standard Work documents for all leaders have been updated to include a daily review of the housekeeping in each aisle. Following this road map, housekeeping standards in Phoenix will move sharply forward and remain there!

The Kaizen team expects to improve Safety, Accuracy, Productivity and reduce Damage as a result of this event. Some of these will be difficult to measure specifically to this event, but it is consistent with other recent events in Phoenix as the same areas will be impacted. Most importantly, the Kaizen event will help associates show respect for themselves, each other, and our customers by maintaining a clean, well organized work environment. Everyone prefers to work in a neat and tidy operation!

Kaizen - Bin Carton Flow

Phoenix has been working to make improvements in the flow of order cartons along the primary conveyor line. In early February, a Kaizen event was held to look for opportunities and make improvements. The team had 8 members, including managers, a supervisor, a lead, and front line associates. Everyone made good contributions and the results are proving substantial.

The scope of the event was all zones from the production printer to the rough sort process. This included order printing, induction, flow rack, static bin, check pack, and rough sort. Out of scope was bulk and truck loading. In the past, cartons have been bunching up and stopping the conveyor line in spots. The event objective was to smooth the flow of cartons on the conveyor while maintaining the integrity of our production waves (pitches).

The event ran from Feb 5-8 and the early results are very encouraging. In fact, the first three days after the event demonstrated a productivity gain of nearly 4% versus the previous 10 business days! Such a gain translates to one full time person, and since we are running overtime right now, that full time person earns time and a half! If sustained through the year, such a gain will translate to more than $40,000 in annual savings!

Class II Item Creation

After focusing on the holidays in December and working through the early January rush period, we are back in the saddle and focused on process improvement in Phoenix!

A Continuous Improvement team addressed the issue of creating new Class II items when an item has too much product to fit only in a bin-pick position. Too often, such items were being held for 1-4 days waiting until someone had time to change the status and find a bulk rack position for the product. This was causing inventory discrepancies as orders would be released but no one could find the product.

Several solutions were attempted over the past year, but nothing seemed to make an impact. A team of associates in Phoenix met and divided responsibilities for the process, making some adjustments to the process along the way. Now all Class II items are processed and put away in bin and bulk racks before the next production shift begins. Manual stock-outs have dropped by 40% in the two weeks since. What a wonderful improvement!

Kaizen - Bulk Floor Stack Aisle

Continuous Improvement is alive and well in Phoenix! November 26-29 found a team in Phoenix working on a new Kaizen, an effort to improve processes in the Bulk Floor Stack Aisle of the warehouse. The primary objectives were to improve productivity, reduce mispicked product, and reduce damage to products. Each or these objectives will be measured with a specific before and after metric, to insure the desired improvements are realized.



Savings from this effort are estimated (conservatively) to be $2,400 per year, all coming from productivity improvement. But, savings could actually be much greater if increased associate satisfaction and customer satisfaction is considered. How much gain some from keeping one strong associate that might otherwise have left the organization? What if one customer renews a contract because of good accuracy? The soft savings could roll up to be much, much higher.



A number of LEAN tools were used by the team, including RASIC, 5S, Standard Operating Procedures, and Leader Standard Work. The team created and SOP for both stock putaway and stock selection on the aisle. In addition, Leader Standard Work was created and implimented for both the eceiving and production leads.



The team's biggest fear? Will our hard work be sustained in the weeks and months to come? Since both the receiving and production leads participated on the team, it is really in their hands! Will they train properly? Will they follow their standard work? If so, their hard work will be sustained far into the future!

Improving Special Order Process Flow

During the week of November 5-9, a CI Project team in Phoenix worked on the development and installation of some improvements to the processing of special orders. A cross-functional team was assembled to address the issues, including misplaced product, missing paperwork, and searching for the items needed.

The team developed a simple Standard Operating Procedure and implimented it, all in the same week! As a result, special orders are processed in a standard way, everyone knows what to expect, small orders are filled and processed immediately, scheduled orders are filled and staged on a cart waiting for their scheduled delivery day, and large furniture items are filled and staged in a special warehouse area set apart and assigned for those orders.

In three weeks following the event, there has been a significant reduction in the time required to process the orders, no more searching to find the product or the paperwork! Most importantly, there hasn't been a single customer complaint about a late or missing special order! Congratulations on a CI well done!

Kaizen - Truck Loading Process

Phoenix conducted their very first Kaizen event in October 2007. The team included eight members, including office, delivery and warehouse associates. The group was guided by our Region Logistics Manager as her "graduation" exercise for her LEAN Champion certification. Her mentor, our corporate Sensei, attended and participated in the event as well.

Our challenges with loading trucks were causing a real "pain point" for both the loading team and delivery drivers. As noted in the "before Kaizen" picture to the left, drivers were having a difficult time with no aisle in the truck, the truck loaded differently every day, labels not facing out, loose cartons stacked where they could fall easily in transit, floor stacked cartons crushed under the truck racks, and general chaos and disorder. It was taking a long time for drivers to leave for deliveries each day so overtime was higher than desired. Cartons were not always on the truck when the driver reached the destination, so extra trips were often necessary.

The Kaizen team met for three days, plus a few training hours just prior to the event. They worked Oct 16-18 from 11:00P-7:30A, a terrible shift to work, but necessary to observe the work being done and to test new processes. They worked well as a team, checking regular titles at the door, and pulled together to make this Kaizen event a complete success! The expected results include reduced loading time, reduced driver overtime, and reduced undelivered cartons for customers. In the early stages following the event, all of these outcomes are being noted!

Since a picture is worth 1000 words, the image on the left is the "after Kaizen" picture of a properly loaded truck. Note how easily one can move through the truck via the clear center aisle. Full pallets are shrink wrapped. Labels are facing out. The Kaizen team created an image-filled SOP, which is posted for reference at every dock door. Standards allow loaders and drivers to know exactly where to load cartons, how to load cartons, and how to handle exceptions to the norm that happen on a regular basis. The dock near the loading doors had 5S applied. A communication white board was installed and standardized for every truck. A leader standard work document was created for the Lead to use during the shift, for preparation, loading, and inspection.

Now the hard part; Sustain! The work has been done for two routes, and it is working beautifully. We are applying the same SOP to all other routes. We expected to have the same results noted for every route in our delivery area! The associates involved with the event felt terrific about their accomplishments and drivers are appreciative of the results. Our customers may not know what we did, but they are receiving the benefit none-the-less. Our first Kaizen event in Phoenix was a wonderful success! Now we need to sustain the success and apply the principle of Kaizen and continuous improvement again and again as we follow the path of our LEAN journey!

Single Point Lesson - Loading Trucks

A new single point lesson has been prepared to outline the proper process to be used in loading a delivery truck from our private fleet. The purpose of this lesson is to load the trucks accurately, making sure all of the correct cartons are on the truck, and the truck is loaded according to our standard work document. This lesson uses pictures and words to define the process. It touches on laydown code review, having the labels visible, the placement of heavy cartons, securing large and odd-sized packages, and including all of the equipment necessary for the driver to make deliveries. As the internal customer, the delivery team will appreciate trucks being loaded to our standard every day. Our external customers will enjoy better sortation accuracy, higher on-time delivery, and less damage.

Copies of this single point lesson will be laminated and mounted to the inside wall of each truck, in a place easy to see for any associate loading the truck. A teaching moment will also be provided in a team meeting and copies will be distributed to all associates certified to load private fleet trucks.

Single Point Lesson - Picking

Phoenix has created a new single point lesson aimed at improving the accuracy of our order picking in flow rack and static bin. The lesson uses pictures and words to describe the standard work for order selection. In addition, the lesson describes the correct way to place items into the order carton, improving the quality of carton packing and reducing damage in transit. Customers will appreciate the improved accuracy, quality, and general appearance of the order contents.



Copies of this single point lesson will be laminated and hung within each picking zone in the flow rack and static bin areas of the warehouse. A teaching moment will also be provided in a team meeting and copies will be distributed to all flow and bin order pickers.

Production Carton Kanban

In August, 2007, our facility ran dangerously low on cartons used in order production. In fact, some sizes did run to zero and the production team needed to substitute different sizes to complete their work. That extra effort resulted in waste and lost productivity!

To insure such a problem never happens again, we installed a production carton kanban system to maintain our production carton stock on hand. Using visual controls in the form of an MDI

board prominently displayed in the office, we have raised awareness regarding the status of our production cartons for all associates. The board displays average usage per day, average days on hand, the reorder point, the last five days on hand counts, and any cartons on order from our supplier. Each size is counted daily, which doesn't take long because the pallets are standard. The count quantity is entered onto the board daily. If an on hand quantity is below the reorder point, it is circled and an order is placed with the carton supplier. If something goes wrong, such as a count being missed or we forget to place a new order when running low, it is obvious to anyone looking at the MDI board and can quickly and easily be corrected.

Setting the reorder point properly, allowing for production time and safety stock needs, coupled with daily counts, insures we will never again run short on our mission critical production cartons!