New Facility Planning and Investment Criteria

The client is a multinational company that provides third party logistics, handling many varied items from car parts to electronic items. Distributing items from their own holding facilities to their customer's facilities as required created a very varied and hard to measure process. KM&T were engaged to assist in preparing the investment criteria, facility planning and process flow for the establishment of a new Asia Pacific spare parts distribution centre in Singapore. The purpose of the new facility is to replace the existing two facilities in Singapore and stock the parts for a large automotive manufacturer, one of the clients largest customers. The facility would be distributing the parts within Asia and Australia.

Client Objectives

The client's objectives were to ensure that the new facility was future proof for their automotive client's projected 5% growth per year and have the capacity to supporting this growth over a ten year period within the warehouse facility. The client had a proposal drawing that envisaged the quantity of material that would flow through the facility over a 10 year period, KM&T were to support by demonstrating an effective warehouse layout which would give an improved delivery time to the customer and improved throughput.

Strategy

Phase 1: Confirmation of Requirements & Planning Assumptions

• Review all base planning assumptions including a review of inbound, outbound and cross docking data, this data was based on the clients and the automotive manufacturer’s future forecasts. Once this data had been analysed it would allow development of top level conceptual plans for the facility
• To review the current manning and technology levels within the existing facilities, including the key performance indicators and performance

Phase 2: Future Process Development

• Development of future process workflows and base level standard work for inbound material handling, outbound material and cross docking process
• Further refinement of planning volumes and right sizing of storage locations, taking into consideration the new process workflows that had been developed

Phase 3: Detailed Layout Development

• Develop Return On Investment (ROI) criteria and assessment criteria for automation concept and investment
• Review options for material handling and storage automation, assess and make recommendations based on value and effectiveness and recommended technology
• Develop detailed facility layout based on new process workflows and types of technology selected

Phase 4: Productivity and ROI Assessment

• Develop ROI criteria, efficiency and effectiveness gains for the entire project

Phase 5: Development of Final Investment Application

• Ensure process, layout and technology is kept in line with building and internal infrastructure development
• Assist in developing and writing the final Investment Application based on project deliverables and ROI

Predicted Results

• The predicted 10 year savings on the entire project were 19 Million Singapore dollars on the building and development and 5 million Singapore dollars on the labour savings /productivity
• Initial data / plans showed a requirement of 88,775 cubic metres was needed for the facility, after the planning by KM&T was complete only 66,471 cubic metres was required
• Current staff required over the existing two sites is 87 operational staff including 7 leaders. With a ten year projection of 50% growth, 120 staff and no extra leaders would be required. The new facility would require 46 operational staff including 6 leaders at current operational level, a saving of 53% over current business. In ten years the operational staff required will be 68 including 8 leaders, a saving of 56%
• Inbound process method is to receive material. Average total time is 16 minutes per pallet, with the new method that KM&T have recommended the average total time would be 10 minutes per pallet a saving of 62.5%
• 800 incoming parts per day could currently be processed to the correct destination. The new method would allow 1200 line items per day depending on the container mix, which would be a 50% improvement
• The above improvements would allow the potential removal of night shift working with the obvious saving in shift allowance