I. Basic Problem
The Hiram Miller Office Products Division does not have an adequate main warehouse facility to support the operations of their business. This is seen throughout the company causing problems with inventory levels, shipping/receiving, and workforce levels. Both the available space outside the warehouse and the building itself are significant problems.
II. Support for the Basic Problem Insufficient dock space had more than one second order causal problem.
Demurrage and redelivery charges had to be paid, lead time had to be increased by 2-4 weeks on full truck shipments, and larger inventory safety stocks were needed because there were not enough docks to accommodate the shipment load. The charges hurt the company directly with financial losses, the longer lead time meant the company had to rely on forecasting more heavily, and extra safety stock results in unnecessary usage of warehouse space.
Trucks were forced to line up in the street, violating traffic rules, which had to be compensated by bribing police officers. This cost the company money and was unethical. The lack of dock space also caused outgoing shipments to be delayed because there was no room to drop a trailer which meant longer lead times for the customers. Weak floors, low ceilings, and the use of elevators created major inefficiencies within the warehouse.
Not being able to use forklifts increased the amount of people needed to move merchandise and added time to the unloading/loading process. Pallets couldn’t be stacked with low ceilings so the space sitting inventory used up could be used for other purposes. Animosity between workers is never beneficial to a company and the presence of elevators means that people are continually fighting over who gets to use it, which caused constant battles.
III. Alternate Recommendations
My first recommendation is to improve the existing building on Jefferson Street by enforcing the floors to allow the use of forklifts. This would cut down on the labor force and make moving merchandise faster, but wouldn’t help the lack of dock space. The company could attempt to buyout land around the Carpenter Street warehouse, renovate it, and use as the main warehouse. This would provide more dock space but could be difficult if no one is willing to give up their land.
The Jefferson Street warehouse could be redone to create more docking area, less warehouse square footage, and higher ceilings so that such high inventory safety stock isn’t necessary and merchandise could be stacked higher. This would preserve the company’s current prime location but would be difficult to complete because of the heavy traffic of daily shipments.
IV. Best Recommendation The best solution is to build a new warehouse on the thirty acres available. While it’s being constructed, the Jefferson Street warehouse could still be in full operation.
There would be more space for docking, customer parking, higher ceilings, and the ability to use forklifts and rail possibly could benefit the company tremendously.
V. Methods of Implementation Plans for the number of docks, employees, material handling systems, and office space would be needed. The company’s budget would have to be looked at for inefficiencies with simple fixes in order to fund the project more feasibly. Analysis would be needed in order to gauge the customer’s reactions as well as the cost-savings benefit of becoming much more efficient.