Ask the Expert: Taking Stock

Question: How can companies in the Middle East restructure their operations to maximise effectiveness?

Expert: David Dronfield, divisional manager of storage and handling solutions, Al-Futtaim Auto & Machinery Company (FAMCO)

Fighting for Survival
In order to survive this period of economic uncertainty, it’s essential for companies in the Middle East logistics industry to optimise their performance. While others are expanding their warehouse facilities or increasing their rental of storage space, it’s actually a wiser idea to look inwards and restructure your existing supply chain operations to maximise effectiveness. Take a look at how your assets are being utilised and research the true Return on Investment (ROI) for capital and human assets, whether it’s land, buildings and equipment, or shift timings.

Getting the basics right
A number of common principles are traditionally utilised for the design and construction of warehouse facilities. During a boom period, a concerning number of projects will suffer from unrealistic deadlines, without a suitable amount of time for efficient completion. This is particularly apparent in the design stage, when distribution centres are hastily conceptualised from the “outside in” and fail to take into consideration the intricate details of operations. As such, the designs are not necessarily based on best practice. A simple example is the position of building columns, where the majority of column grids are not suitable for efficient storage design and will have a detrimental effect on efficiency. This could lead to a severe reduction in storage capacity and have a long-term impact on picking operations too.

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A step-by-step approach
The correct planning for warehousing facilities is based on core principles, which can also be used to benchmark your existing operations and evaluate a path for increased efficiencies. There are four factors that should be considered. The first is key objectives for the warehouse facility. This is generally the fulfilment of customer orders, with a focus on getting the right product to the right customer in the right place at the right time, at the agreed cost. Therefore, the primary objective of the warehouse operation should be fulfilling orders and secondly, ensuring sufficient stock to maintain this order fulfilment operation. The second factor to consider is inventory – in terms of what is required to ensure the picking operations are supported, and what reserve stock is sufficient to cover the stock criteria, such as order cycle times and re-supply. Remember, gaining efficiencies in manufacturing can be offset by forced inefficiencies in the supply chain.