Materials Handling is the Cinderella of emerging market supply chains

This function has long been overlooked – and that’s why it has the potential to deliver some spectacular results.

Definition:
Materials handling is the movement, protection, storage and control of materials and products throughout manufacturing, warehousing, distribution, consumption and disposal.

First we had Warehousing and Transport, then Logistics, now we have Supply Chain.

Happily, as the terminology evolved, so too did appreciation of these functions – along with a growing comprehension of the criticality of supply chain functions to a business’ health.

Yet…within the supply chain there is still “poor old Materials Handling”, ignored and unloved.

It’s been our experience that, as the status of Supply Chain functions have blossomed, Materials Handling rarely gets considered as a means of achieving business improvement.

So why is this the case in emerging markets? We believe it is a combination of two factors:

Cheap Labour: Manual labour has traditionally been low cost so there has not been any great impetus to reduce numbers. This is beginning to change. Minimum wages are generally rising and there is increased realisation that the ‘noise’ created by large workforces impact performance. In the post Covid world, it is likely that physical distancing will ratchet up the pressure to reduce workforce numbers.
Helicopter Management: It’s a characteristic of emerging markets that most of the people who might be tasked with seeking supply chain efficiencies didn’t come up from the shop floor. This makes it harder for them to visualise what’s possible in the streamlining of materials handling.

So there’s been an inertia in materials handling. It’s probably because of this that we’ve repeatedly been able to uncover big, impactful opportunities where no-one expected them.

Example 1: Automotive sector

The Issue

Due to long term sales and production growth, our client’s factory warehouse was full and three large overflow warehouses were required to handle capacity. Rental costs were high and considerable sums were spent on the shunting and double-handling of product

The Solution

There was no potential to expand the factory warehouse, but by closely analysing product and throughput profiles and by replacing counterbalanced trucks with reach trucks, we were able to re-lay the warehouse in order to increase its capacity by 2.3 times.

This permitted the closure of all the overflow warehouses, significantly reducing rental and transport costs while simplifying the overall operation and allowing management to refocus their efforts on driving performance and quality at a single location.

Example 2: FMCG sector

The Issue

The client, a leading FMCG manufacturer serving multiple global markets from a large Asian plant, was struggling with on-site warehouse capacity for finished goods awaiting shipment.

The Solution

As an alternative to expanding the warehouse or installing high density storage infrastructure, we used the limited space available to dramatically expand the number of container loading docks. This meant that 85% of the product coming out of production could be placed directly into the waiting containers. This simpler, faster, lower cost solution could later be enhanced by installing AGVs or shuttles to drop pallets at their assigned docks.

Example 3: Beverage sector

The Issue

Our client’s leading product line was mineral water in reusable 19 litre dispenser bottles.

Manual handling was costly and time consuming. Furthermore, the lifespan of these bottles was reduced by the amount of ‘touches’ they received across factory handling, primary transport, depot handling and delivery transport – and then the whole thing in reverse.

The Solution

We designed and tested a purpose built (48 units capacity) steel rack into which the bottles were loaded directly from the production line. These racks lifted storage capacities at both factories and depots by 50%, facilitated a 25% cost reduction in primary transport and almost doubled the number of trips a sales van could make.

Even better, the bottles were not physically handled until they were carried into the customer’s facility – increasing their lifespan and reducing carbon footprint.

Extract from Heath Robinson cartoon

It’s important to stress that the solutions described above the graphic were, for the most part, not about automation. There is usually some sort of investment required, but that’s normally in steel and plastic, not technology.

These solutions were all components of broader ‘step-change’ projects. These sub-projects all demonstrated a stand-alone rapid return on investment, and each of them were critical in contributing to the simplified materials flow and ‘noise’ reduction needed to achieve ambitious project goals.

That’s the beauty of good materials handling. It demonstrably pays for itself, while facilitating and contributing to broader operational development.

Increased appreciation of good warehousing and cost pressures may start lifting the profile of materials handling, but we suspect it’s a long road as there still aren’t that many people with the ‘eye’ to spot the opportunity.

If you think that your Materials Handling may be letting your business down, do connect with us for a no obligation discussion.