MOVIN' ON UP

PAT NATSCHKE LENIUS

Today's most successful distributors have discovered how to deliver products to customers with the highest degree of accuracy and efficiency, while getting the greatest possible productivity for wages paid, and at the lowest cost in terms of equipment upkeep and employee injury.

For some companies, this means implementing the latest in computer software to create engineered labor standards, schedule equipment maintenance, direct order selection or to create the most efficient routing for trucks.

Few companies can excel in every area, but a superior performance in even one area can single out a distributor from the rest. Here are a few that do an outstanding job in a particular aspect of their distribution operations.

Hughes Family Markets, Irwindale, Calif., has maintained an exceptionally high level of productivity through engineered labor standards and incentive programs.

Roundy's, Pewaukee, Wis., has surpassed projected results with an employee compensation program built around tasks that should be completed within a specified period of time at associated flat rate of pay. The company also takes pride in its cross-docking activities, achieved in a non-traditional manner.

H.E. Butt Grocery Co., San Antonio, is now on the second-generation version of a computer program that directs its order selectors' activities to maintain maximum productivity and accuracy in delivered store orders.

Following are case studies to illustrate how these companies achieve such exceptional results:

Hughes Builds Productivity With Labor Standards

Hughes Family Markets increased warehouse productivity by 10% to 15% with the introduction of engineered labor standards several years ago, according to Robert Roode, vice president.

"We were happy with that increase, but as time has passed, we have reached a plateau, so we have started looking at ways to fine-tune and eliminate all the unnecessary hours we possibly can. Managers receive daily reports that show off-standard time vs. on-standard. We have maximized the computerization of labor standards," he said.

For example, in the produce department, re-picking of produce is required because produce is received throughout the entire shipping shift, which means that some product arrives after an order has been selected.

In the past, this meant that the first order selection was performed under engineered labor standards, but the subsequent order selection was not. Hughes has developed a system where re-picks of the produce are also put on engineered labor standards, Roode said.

"The computer calculates the merchandise received and prints up a new trip ticket for the order selector so that he is able to pick what is left. So all of the time spent on that order by either individual is on engineered labor standards. That is one of the big things we have done -- to get as much produce as we could on engineered labor standards. We started doing this a couple of years ago, but keep tightening up," he said.

Hughes is also looking to eliminate re-picks. "We have done a good job of eliminating most of that through on-line inventory control.

"There are many pros and cons on incentive pay, but we feel we are obtaining the highest level of productivity while giving the employee an opportunity to be in control of his own destiny. Our new 700,000-square-foot distribution center has enabled us to obtain the best equipment and manpower utilization possible by having our entire operation under one roof," Roode said.

Roundy's Incentive Pay Program Motivates Driver Efficiency

Roundy's utilizes performance-based unit compensation for drivers in all divisions, enabling the wholesaler to improve productivity while staff earn incentive pay.

The Milwaukee division has been using it on a trial basis since early 1996, and fully implemented the system late last fall, according to Robert Stefani, director of distribution.

"The supporting data utilized in the creation and implementation of this system was gained through historical data [collected by] our on-board computer system. The system is able to interface with our company payroll system, creating a harmonious and almost effortless transmission and calculation of data," he said.

Historical data at the Milwaukee division indicates that prior to using unit compensation, the average refueling of a vehicle took about 20 minutes. Now that same task is being performed in approximately nine minutes.

"This is a substantial reduction, and similarly realized in almost all tasks performed by drivers. The system has a direct correlation back to an hourly wage and provides drivers the ability to raise their average hourly rate upwards of approximately 120% of base pay," Stefani said.

The program has yielded some substantial savings, such as reduction in rolling stock, quicker and more efficient turning of vehicles and reduced manpower requirements.

"In the Milwaukee division, we have seen a significant reduction in the time it takes to turn specific runs based on prior historical information. We have experienced an overall decrease in manpower needs of about 10%," Stefani said. "This represents a pretty substantial reduction of around 400 hours on a base of 90 full-time drivers," Stefani said.

"With this program some of our drivers are able to do as many as five or six loads in a day instead of a past history of one or two, he added.

Drivers are motivated to spend less time on each facet of their job because those who are more efficient will earn more than those who are not. "Traditionally, the only way the driver could make more money was to spend more time on the job," he said.

Roundy's customers also see a benefit, Stefani noted. "The amount of time our trucks are backed into their doors has been dramatically reduced. Their back-room help can therefore be more productive. We have had realizations on average delivery, of approximately a 15% reduction on each delivery," he said.

H-E-B Puts Power of RF in Selectors Hands

H-E-B has utilized two versions of radio frequency computers to improve order selection in its warehouses.

The first version consisted of a radio frequency unit, external hand-mounted scanner and a wrist-mounted keyboard. H-E-B started using it about three years ago, installing it in all facilities, with about 450 units in operation.

The move from paper-based selection to RF-scanning based selection resulted in significant improvements in accuracy, as the error rate dropped from four or five cases per 1,000 audited to one-half case per 1,000 audited. Such high rates of accuracy have virtually eliminated the need for stores to check loads when they arrive and has increased the service levels.

A newer generation of the technology makes use of hands-free scanners. About 280 of the new units are in operation at H-E-B, in all but one facility.

The new units are lighter, less bulky and feature a radio ring scanner, about the size of an ice cube, that is worn on the order selector's finger. Unlike the first version of the technology, which had two, 5-foot cables, the new version has only one cable, about 5 inches long, extending from the wrist to the finger.

The cables in the original system were probably the greatest point of failure, and required frequent plugging and unplugging, a source said.

With the recent availability of on-site service for the Saturn equipment, H-E-B should be installing the Saturn units into its largest dry-grocery facility within the next two months.