Managing the Overall Distribution & Production Cycle

The Challenge:

The Salvation Army invited Carpedia to conduct an analysis of the National Recycling Operations in Central Ontario, in order to understand opportunity within the distribution and sales network of its 30 Thrift Stores.  In an increasingly competitive environment with a growing market in the retail thrift industry, improving net operating profits from the Thrift Stores would generate an increase in funding for the organization’s charitable programs and services.

In a retail environment where product is generated through community and corporate donations, items within the Salvation Army network could circulate perpetually with an infinite associated cost. Multiple handling of donations and poor utilization of space in both stores and the central recycling facility led to observed lost time and inherent cost.  A project was launched in order to improve retail sales while reducing costs in the central recycling facility and within the distribution network.

The Results:

At the conclusion of the project, improvements were tracking 68% above the range identified at the time of Analysis. Overall store revenue improved by 9% relative to performance in the same period from the previous year.  Clothing revenue increased through a 13% improvement in items sold and a 2% improvement in revenue per item.  Labor reduction of 46% was achieved in the central recycling facility and 11% in trucking, which was largely reinvested into activities at the store level.

Key process changes included:

  • Reduced rag-out cycles to promote the cycle of fresh product in stores.
  • Reorganized back room store layouts to optimize material flow, reduce truck stop times and eliminate the need for driver helpers.
  • Implemented a process to inspect, mark and clearly communicate product, waste and recyclables to eliminate multiple handling and secondary sorting in stores and at the central recycling facility.
  • Developed smaller controlled networks to manage donation distribution and better utilize truck capacity
  • Aligned the number of truck routes with volume fluctuations.
  • Optimized the layout of the central recycling facility  to reduce forklift rework and travel and to increase the velocity of inventory movements through visual queues.

The Management Operating System was improved to better plan, execute and measure performance within the National Recycling Operations:

  • Installed a donation database to facilitate inventory and resource planning.
  • Defined production targets based on store capacity and sales budgets.
  • Improved sales and labor planning tools to ensure leaders plan an alignment with budgeted requirements and to measure results and document variances.
  • Increased visibility of results for key performance indicators at the store and within the central recycling facility.

The Client Experience:

“The Carpedia team helped to bring focus and urgency to process, in order to make significant changes to our processes and tools in a relatively short period of time. Their ongoing support through the implementation has been appreciated as we work through the final steps.”

Managing Director, The Salvation Army 

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