Cut costs, track inventory and maximise efficiency

One sector that is never out of the news is the food sector. Some of the leading retailers have had their supply chain inefficiencies laid bare when evaluating their performance versus competitors. Not to mention, the Sudan 1 Dye crisis where many food distributors and retailers had to recall/remove hundreds of food brands from their shelves/warehouses, causing a huge financial burden on an industry based on low margins and high volume.

Things have also been less than calm in France of late. The countrys finance minister, Nicolas Sarkozy, has been making his presence felt recently by ordering retailers and manufacturers to agree to the reduction of prices on a range of goods sold through super- and hypermarkets.

In June, Sarkozy ordered a review of the so-called 'loi Galland', a law which places severe restrictions on relations between manufacturers and retailers, particularly in respect of 'marges arrires'sums paid by suppliers to retailers to secure listings, determine shelf space and in-store display opportunities and so on (and which, in English, is probably best translated as 'backhanders' or more acceptably over-riding discounts). The discounts are negotiated separately from the standard supplier terms and conditions imposed by the retailers. So significant have they become that they can account for 35 per cent of a manufacturer's cost.

Further restrictions may be imposed or the practice may be abandoned altogether as the system is seen to restrict competition for the retailer. If this is the case, then retailers will have to look to other areas to reduce their costs and achieve better margins. Operating in a highly competitive arena where the aim has to be to fulfil every order on-time, in-time, every-time and at a competitive rate, food distributors have to strive for a lean supply chain. Add to that, smaller convenience stores have to compete on price and availability with the major supermarkets. For this, they look for cost savings from suppliers; this starts at the front of the supply chainthe warehouse. Here, effective management can lower overheads and operational costs, thus lowering the price of goods to the end-user.

Examine the operational hub
So, how can cost savings be achieved? Lets start by looking at the warehouse. Its the critical hub where goods are placed, picked, packed and distributed from and it is also at this point where cost savings can be made in how the goods are handled through the warehouse or, on the other side of the coin, where things can go wrong and once this happens a spiral effect occurs through costs associated with errors and customer dissatisfaction. To avoid this, warehouses are implementing solutions to improve their operations and service the customer better (whether the customer is regarded as the retail store or the shopperor, as it should be, both).

One technology that has been implemented to great effect in warehouses around the world is voice. Warehouse workers are able to work hands-free and eyes-free by talking directly with the warehouse management system (WMS). Voice is already cutting costs, tracking inventory on each order as it is being picked and, for maximum efficiency, pick locations are flagged up when replenishment is needed in real-time.

Eyes-free functionality allows workers to concentrate on what they are doing.

The WMS reports in real-time with the back office on a pick-by-pick basis. The reporting module, in voice technology, can identify problem areas, such as bottlenecks, within the warehouse. For example, there may be a problem within the warehouse layout that needs addressing.

Also, staff training-time is significantly reduced, enabling warehouse managers to train new staff within a matter of weeks, as opposed to months, as is the case with some other systems. This is key when dealing with seasonal supply where workers are employed to cope with extra work loads over a specific period of time. Add to that, the increase of international workers in the warehouse who speak and understand a multitude of languages between them, but not the local language very well, voice is able to operate on minimal basic commands.

The knock on effect is that the warehouse becomes an easier, safer and more efficient place to work. Staff like the technology, it makes a sometimes boring job more interesting and fun. Many companies use the benefit of real-time reporting information to offer staff incentive programmes in accordance with their pick rate, resulting in a higher retention of staff in an environment that is often blighted by high staff turnover. Workers feel more valued through the investment in them and through earning incentives and naturally develop the ambition to complete their tasks more efficiently and accurately. The staff benefit, the company and its management benefitsand the customer ultimately benefits through a more accurate, efficient and cost effective supply chain.

Early return on investment
When weighing up the cost savings, voice technology delivers a return on investment that is second to none, typically in six to nine months and seldom longer than a year. By lowering the operating cost in the warehouse, food distributors are able to echo these savings down the chain, enabling retailers to offer promotions and guarantee availability.

Its no surprise that the French food distribution sector has been at the forefront of voice technology in its distribution centres, in order to remain competitive.

Greg Tanner is managing director of Vocollect Europe, the global leader in voice technology and the growing range of industrial applications that put voice to work. With more than 60,000 users at hundreds of companies and locations throughout Asia Pacific, Europe and North America, Vocollect has deployed more integrated voice-directed distribution systems than any other company. Together, its market-leading Talkman wearable computer and integrated software suite cut operating costs by eliminating errors and improving worker productivity shift after shift.