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!