Transforming Production and Logistics at High-Speed

Transforming Production and Logistics at High-Speed

By Ferry Bakker, Corporate Vice President of International Supply Operations, Henkel [ETR: HEN3]

Ferry Bakker, Corporate Vice President of International Supply Operations, Henkel [ETR: HEN3]

Everyone is talking about Industry 4.0, VUCA —a dynamic and changing market place. Yes, many new and exciting capabilities are entering our supply chain. But do not forget your basic and key pillars. One of them is your warehousing operations and footprint. Optimizing the footprint in combination with determining the warehousing strategy has been and will continue to be one of the critical success factors.

Within Henkel Supply Chain Laundry and Home Care, our Logistics footprint is one of our key fundaments to optimize our cost and drive customer performance and satisfaction. During the last years, we have continuously reviewed and (re-) designed our network, made significant changes to our footprint, and implemented changes to ensure it fits with our warehousing strategy. For the years to come, we will have to continue to do the same to prepare for the future!

Our Laundry and Home Care products are mainly high volume and related heavy products. This means our logistics costs are impacted by a lot of pallet handling and heavy (delivery) loads. Optimizing handling and focusing on full pallet (and full truck) delivery is essential, both from a cost as well as from a sustainability perspective. From a warehousing perspective, this means the following:

1) The strategy builds on the right production allocation. This means we produce and distribute close to the markets (i.e., DC’s) of our customers and the consumer population.

2) Reduce transportation costs.

a. Replenishment cost can be minimized by having the warehouse close the factory, ideally wall-to-wall.

b. Freight to customers should be done within a predefined range to optimize both cost and service to customers.

3) Automated warehouse operations, in case of:

a. The high density required, e.g., in areas with expensive or limited availability of land

b. The high cost of labor or scarcity of labor

c. The high level of full pallet handling

d. Availability of infrastructure, knowledge, and capabilities in the market to run an automated warehouse

4) Conventional warehouse operations in case automation do not make sense (see above). However, modular or partial automation can still be reviewed as an option, even for the future.

During the last years, we have focused on optimizing our warehousing footprint and have reduced our footprint since 2005 by 50%.

"We believe we have now built the foundation for the future. But we also see an increasing complexity and volatility in the market, impacting our logistics and warehousing operations"

We believe we have now built the foundation for the future. But we also see an increasing complexity and volatility in the market, impacting our logistics and warehousing operations. Higher complexity in terms of product portfolio, picking share, and order size reduction are trends and driven by consumer requirements as well as the change in the market place with new players (such as E-Commerce and Omni-channel). To prepare for these further challenges, we focus on further optimizing our warehouse operations through new Digital capabilities such as Robotics (AGV, modular automation), Visualization (real-time dashboards), and Sensorics (energy metering). In all these areas, we have already started to implement new capabilities or have kicked off pilot projects to learn. All of them, with the objective of optimizing cost, improve customer delivery performance as well as drive our sustainability efforts. We have been and will continuously revise and adapt our footprint and set up to cater for changes in our consumer and customer landscape (incl. multi-distribution channel requirements).

In summary, get ready for the future and also for regarding your warehouse operations. Continue to look at your footprint and warehousing strategy is a key pillar of business and customer satisfaction. Be clear on your strategy, stay focused, but have an open mind regarding upcoming changes such as Modular Automation, sharing facilities, reviewing cross-dock platforms, and others.

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