GENCO Warehouse Experiment Delivers Peak Performance
Since starting out in 1898 with a horse and wagon, GENCO has come a long way in establishing itself as a leading third-party logistics (3PL) provider in the supply chain management industry. Today, GENCO is recognized as a Global Top 25 3PL, and has acquired a diverse range of customers, including many Fortune 500 companies in the technology, consumer, industrial, retail and healthcare markets. The Pittsburgh, Pa.-based company manages 38 million square feet of warehouse space across 130 operations. GENCO’s success can be attributed to its unwavering dedication to efficient execution, technology innovation and continuous process improvements.
As part of its proactive business approach, GENCO evaluated the labor of its lift truck operators and warehouse management processes to identify areas for improvement. Establishing the first relationship of its kind in the 3PL industry, GENCO partnered with labor management system (LMS) provider Easy Metrics and lift truck provider The Raymond Corp, Greene, N.Y. With goals of reducing costs, increasing efficiencies and improving productivity, a collaborative team began developing a plan for merging the two programs within its warehouse operations. After evaluating several facilities, the team chose a world-leading business process and document management company as its focus facility for this project.
“We didn’t select a facility that we felt was struggling with a particular problem; we selected one we felt would benefit greatly from the combined effort of the Easy Metrics LMS and Raymond’s iWAREHOUSE fleet optimization system,” says Bob Simon, director of process solutions at GENCO. “Our goals were to further reduce labor costs and cycle times, increase visibility toward productivity and, ultimately, improve overall warehouse efficiency. The complementary relationship between Easy Metrics LMS and iWAREHOUSE allowed us to achieve these goals.”
Identifying the issues
GENCO’s primary responsibilities are to manage inventory and the movement of product throughout the supply chain in an accurate, timely and cost-efficient manner. As this facility can load and unload as many as 25 tractor-trailers each day, it was imperative that GENCO could rely on efficient, durable lift trucks during distribution peaks and beyond. To assist with this, the test facility began using Raymond lift trucks in 2009 to transport products and pallets around its 410,000-square-foot facility, which is used to store and ship consumer goods and document management products on behalf of a GENCO customer. Specifically, the facility houses 26 Raymond lift trucks, including model 420-C40TT Counterbalance, 7400-R45TT Reach Truck, 540-OPC30TT Order Picker and a variety of 8400 Riders.
Initially, this business process and document management facility was experiencing many challenges with visibility from both a labor management and operational standpoint. It was unclear where labor dollars were being spent and how employees were measuring up against labor standards relative to productivity. This perpetuated inefficiencies in the company’s budget and left a major gap in performance accountability data. With regard to the facility’s lift trucks, the equipment usage, time traveled, number of impacts and utilization rates were not being accurately tracked, adding to the lack of accountability for lift truck operators.
Representatives from Raymond, Easy Metrics and GENCO initiated a plan to close the gaps on those identified issues and streamline the process for gathering and analyzing data in the warehouse. By combining their management systems, Raymond and Easy Metrics could provide a comprehensive view of operations from an equipment and labor management standpoint.
“We were looking at iWAREHOUSE as the program that would provide us with solutions to reduce costs and increase accountability,” Simon says. “The light bulb for us was bringing together a reputable LMS system and a state-of-the-art warehouse optimization system, understanding the collective benefits of both and realizing we had a game-changing solution here. No stone would be left unturned in terms of accountability and opportunities for efficiency.”
After seeing benefits with each system independently, GENCO realized early on that these two systems not only complemented each other but also featured opportunities for overlap. The Easy Metrics LMS focuses on employee activity in relation to performance goals, and the iWAREHOUSE system tracks key metrics relating to lift trucks, such as activity hours, travel distance with loads, impacts and maintenance needs.
In addition, the iWAREHOUSE system’s ability to assist in verifying that only appropriate personnel are authorized to operate each lift truck and ensuring that OSHA-mandated checklists are completed prior to operation was a perfect complement to the Easy Metrics database system, which supplies comprehensive data on individual and group performance. With these tracking and reporting capabilities working in tandem, GENCO can access information from iWAREHOUSE to see how its equipment is used, and access information from Easy Metrics to show unit costs from a labor standpoint, based on employee performance and compliance to industry standards. All of this information is combined in one streamlined report.
“Our goals for this new reporting system were broken down into three main areas—cost visibility, accountability and alignment,” says Dean Dorcas, chief executive officer at Easy Metrics, Kent, Wash. “With the data we received from iWAREHOUSE, we were able to set up a more accurate pay-for-performance system with employees based on productivity in relation to industry standards. We set goals above and beyond industry standards in relation to performance and productivity. If they achieve those goals, GENCO shares a portion of the cost savings with them. It’s a win-win situation because our employees are motivated to be more productive, and the end result is cost savings for the company that are shared with employees and customers.”
Choosing the right solution
With a clear strategy and specific goals in place, the team began implementing at the focus facility. This required collaboration with the facility’s IT department to install the system. Because Easy Metrics is hosted in the cloud, having functional wireless communication was important, as was making sure data was collected properly and securely. Raymond and Easy Metrics worked with an industrial engineer from GENCO to identify which processes the company wanted to track within the facility and identifying 15-20 metrics for generating labor standards for those processes. In addition, the team implemented the iWAREHOUSE job coding function to capture the time employees spend on each process throughout the day. Once the data started rolling in from the iWAREHOUSE and Easy Metrics systems, the team began merging and developing both automated and manually downloaded reports of its results.
“With the information we pulled from the iWAREHOUSE system, we knew how many trips a lift truck operator made to load and unload at any given time. We knew the specific number of scans, orders and units completed and, with all that information, we were able to designate a performance score based on the labor standards developed by GENCO,” Dorcas says. “This is the kind of visibility we’ve been looking for and finally been able to achieve.”
As with any new venture, the team experienced challenges during implementation. Because it was the first merger of its kind in the 3PL industry, there were obstacles for GENCO and its operators in fine-tuning the accuracy of reporting. Programming job codes, time clocks and costing information, as well as educating employees on these new processes, were at the top of GENCO’s list to perfect. The team worked diligently, staging several scenarios to test the system from a reporting and operational standpoint. GENCO’s employees provided constructive feedback on areas for improvement and ways to increase efficiency, which made the training and transition process run more smoothly. In addition, GENCO, in conjunction with Raymond and Easy Metrics, was able to identify inconsistencies in reporting and develop solutions to fix them. Over the course of this trial period, this facility went from the bottom in terms of visibility to the very top, making it the most efficient operation GENCO has seen yet.
Months after GENCO implemented the iWAREHOUSE and Easy Metrics systems, this facility saw many benefits. The company noted increased productivity and visibility; reduced labor costs by nearly 10 cents per unit; decreased impacts, which resulted in savings on time and equipment repair; and reduced pick labor by 12%. Given that labor accounts for 70% of warehouse cost, improved productivity and lean practices were top of mind for GENCO throughout this process.
“We wanted to get out there and chip away at that 70% cost for labor in addition to savings through reduction of equipment, maintenance and facility damage,” Simon says. “If we attack the biggest elephant in the room and decrease a few percentage points in labor costs, the total turned out to be a significant dollar savings for GENCO and our customer.”
One of the biggest advantages for GENCO is its ability to track the travel distance of equipment throughout the facility. The Easy Metrics pay-for-performance system grants credits for picking up an item, so in a large facility such as this one, it was important to know whether operators were traveling a long or short distance to reach a location, which is information that iWAREHOUSE provides. Rather than doing complex calculations and mapping themselves, GENCO was able to quickly and inexpensively pull that data, giving managers a clear view of what was going on within their operations.
“This whole process was a kind of testing ground for all three companies,” Simon says. “I think everybody was confident that it would work. It was just a matter of how well. We are happy with the outcomes, we are happy with the benefits that we’ve seen and we’re excited about taking this to our other facilities.”
To learn more about Raymond Corp.’s iWAREHOUSE solutions, check out Refrigerated & Frozen Foods’ post-ProMat and post-Automate show coverage.
GENCO gains visibility with iWAREHOUSE and Easy Metrics combination solutions.