Optimizing ERP Parameters to Improve Profits and Performance

The Challenge:

Since its inception in 1975, Market Day has developed into one of the marquee fundraising companies in the United States. From the first “produce day” conducted by Trudi Temple at her daughter’s school to over 6000 monthly deliveries per month today, Market Day has seen tremendous growth over the years. In recent years, both competition in the fundraising industry and the advent of discount grocers have challenged the company’s traditional sales base.

At the project outset, year-over-year sales volumes were forecasted at 80-85% and a recession was underway. Despite internal cost-cutting measures, the management team recognized a need to aggressively rein in costs in the face of lower revenue expectations.

During Carpedia’s preliminary analysis, opportunities were identified to reduce operational expense across direct and indirect areas of the business. The former would be concentrated in the Transportation and Warehousing areas of the business whereas the latter would affect 5 supporting areas in the head office. Through process re-engineering and planning improvements, a 15% increase in labor productivity was committed to.

The Results:

Results across installed areas are projected to provide a 3.9:1 ROI in the first year since implementation. Results achieved include:

  • 17% year-over-year increase in Transportation labor productivity and an equivalent decrease in associated variable equipment costs.
  • 36% year-over-year increase in Warehouse labor productivity.
  • 7.5% reduction in indirect labor expense.

Multiple process changes supported the financial benefit that has been achieved. In Transportation, parameters used to route trucks were optimized and all planning activities were centralized at the Chicago distribution center. In the Warehouse, crew size was balanced with workload and product placement strategy was changed to minimize travel time. Enhancements were also made to bin labeling to support accurate, right-first-time picking.

Improvements have also been made to the planning, control and measurement tools used by the Market Day management team. Direct labor areas have scheduling tools that clearly quantify resource requirements at budgeted rates. Supervisors are equipped with tools to manage work execution as it unfolds and quickly recognize and react to variances.

Structured daily meetings occur between Supervisors and Managers with a focus on quantifiable results and actions taken to address off schedule conditions.

Changes in management behavior developed over the project will ensure that these process and planning improvements are sustained. Supervisors now spend 10%more time actively managing their employees. Supervisory expectations are clearly defined, periodic audits are conducted and constructive feedback is channeled through each area’s Manager from the Sustainability Champion who was part of the Carpedia team throughout the engagement.

Over the project, the Market Day management team has been trained in continuous improvement methodology. “Method Changes” are being developed and installed on a monthly basis that will allow the business to expand on the significant progress it’s already made.

The Client Experience:

“The financial results that were originally projected at the beginning of the project have been exceeded. In addition to the original scope, the work done by your group cascaded into other projects and helped us to develop an improved approach to continuous improvement in all areas of our business.”

President & CEO, Market Day

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