Over the past five issues—with the help of my colleagues—I have covered everything about building a new retail DC, except for how to get this strategic initiative moving, sustain the momentum, adapt to changes and still deliver what is expected. So now it’s time to tackle those key drivers.
Our initial thought was to discuss the key lessons learned from previous DC expansions, retrofits within operating DCs and new facility build projects. We thought about the importance of engaging the client early in the design process. The client is the operator of the distribution centre, and is concerned with two primary objectives: optimizing efficiency in flowing merchandise, and managing the cost of operations.
The client and each individual stakeholder (including transportation, finance, and real estate) bring their own unique, independent wants and needs to the design table—most of the time without understanding the true impact of their views.
Retail business continues to be a moving target. Technology advances, consumers become more demanding and competition for their dollars continues through different channels. This is evident today with the advent of new retailers entering the market and the repositioning of current Canadian retailers with e-commerce business models. To accomplish the objectives set out at earlier stages, the project delivery team must be acute, agile and adaptable. The team must make decisions based on experience, skill and knowledge of supply chain requirements.
Design of the facility, processes and product flow cannot be done independently. We have worked with many cross-functional teams and have collaborated successfully by pulling a group of subject-matter experts together. Ensuring productive use of resources in such a group is difficult, but working independently will likely not produce the desired results.
Depending on the tenure of the design/build team, it would be a good idea to have a “how are we going to work together?” meeting. The meeting should aim to establish overall objectives in terms of time, cost and quality, and determine the importance of each. Having the design/build team accept and support the ultimate vision of the building will help ensure success.
Adding or replacing a DC impacts many internal and external stakeholders. They need to be involved from the beginning, to design and assume ownership of the processes that will be adopted in the facility. Since there are so many factors involved in the design of a DC, the starting point of any project needs to be the creation of an overarching organizational structure. Developing one is very difficult, but it must be achieved before taking the next steps.
Individuals are advised to lift their focus from a single technology or feature and explore how the technology fits into the end result of an efficient, effective retail distribution facility. This often proves difficult for individual business area owners, since it is a departure from day-to-day operations.
Project organization—the integrator role
The best way to create a solid organizational structure is simple: hire an effective leader and facilitator. Unless you have a mature, experienced, strategic-thinking group of cross-functional business leaders, you are advised to solicit the talents of a consulting firm.
An effective approach is to position an independent consultant in the role of integrating the design, construction and implementation. Independent is the key. This individual is motivated only by the successful delivery of the overall project, and he or she is not influenced by corporate politics or self-preservation. The integrator allows the individual business leaders to contribute their area of expertise then return to their primary operational focus. The integrator does not have accountability for integrating the individual business areas into a final design.
Seldom is enough time allocated to the design and integration phases of the overall project, but it is important to make enough time for consultation and planning. It is advisable—especially early on in the project—to collaborate with construction companies, materials handling vendors, distribution operations and information technology experts to establish controls, determine schedules, project costs and establish how to measure quality.
Next issue I’ll wrap up my series with some words of caution and my final thoughts.
Edward Stevens is the pseudonym of a Canadian retail supply chain professional with over 30 years of experience in the industry.