Driving Waste out of the DC

Apria Healthcare is a provider of home healthcare products and services, with more than 500 branches throughout the continental U. S. serviced by eight large distribution centers (DCs)—four in the East and four in the West. As the company has grown, its commitment to exceptional customer service and delivery has been an ever-increasing challenge.

“When you’re dealing with people’s health and well being, having your products there when people need them is priority,” says Peter LaBerge, Apria’s director of distribution on the East Coast. “In recent years, we’ve experienced exceptional growth, both in terms of the volume and quantity of the products we deliver. Our warehousing, distribution and delivery system evolved to meet that demand and our commitment to customer service. Early last year, our management decided it was time to take a step back and review our processes with the purpose of improving safety, productivity and cost efficiency.”

The Kaizen Eventt

The term “Kaizen” refers to a corporate philosophy of continuous improvement practiced by Japanese companies rebuilding after World War II. A key concept behind the lean movement, continuous improvement is now embraced globally and has always played an important role in Apria’s management style and growth strategy.

The Kaizen philosophy recognizes that often people are too busy dealing with day-to-day operations to find the time to consider more effective and efficient ways of doing things. Therefore, it’s important to structure a time for the key workers in a process to get away from day-to-day pressures and review what they are doing, how they are doing it and how they can improve the process.

For Apria, the Kaizen event took place in California in early 2009. It involved executives and associates working in all areas of the warehousing and distribution process, and it would lead to some startling changes that would both improve customer service and save the company millions of dollars in the future.

The first phase of a Kaizen event is to dissect the existing process and examine each phase, looking for existing problems and potential improvements. In Apria’s case, the problem was easily identified, but the solution proved to be more evasive.

While many Apria products, such as medications and medical supplies, were uniformly packaged and easy to transport, other items, such as oxygen cylinders, medical beds, wheelchairs and other equipment, were both heavy and awkward, requiring a lot of space for safe transport. Under the existing system, products were stored on wooden pallets in the DC with counterbalanced lift trucks and loaded onto trailers with hand pallet jacks for delivery to the branches. Because of the different sizes and shapes of the products, the pallets could not be stacked on top of one another, and delivery trucks left the DC filled at only 50% to 60% capacity.

Wasted Time, Effort and Money

“Often, a truck would start out on the highway and pass several branches on its way to a call, but would not be able to deliver to them because they didn’t have the products on board, even though they were traveling half empty,” LaBerge notes. “Then, the truck would have to drive all the way back past them again to the DC to load up again and go out to those calls. It seemed like a lot of wasted time, effort and money.”

The Kaizen group was quick to realize that the problem was irregular-sized products, resulting in half-loaded trucks leaving the DC. The solution began to take form when they investigated ways to better handle their awkward-sized products. What they found is that they could double space utilization by shipping all products in uniform plastic bins that can be stacked two high. Using this method, all the space in the trailer would be used and the savings in fuel, labor and other transportation costs would be significant.

They also discovered that the counterbalanced trucks were unable to do the job, because 1) they didn’t have a 2,000-pound weight capacity; 2) they were not able to fit inside the delivery truck; and 3) they couldn’t easily double stack the plastic pallets on top of one another.

Utilization Improvements

As part of the Apria continuous improvement group, Bonnie Auger, manager of warehouse operations, determined that with more than 500 branches, it would be both expensive and difficult to provide each DC and every branch with specialized stacking equipment to load and off-load the plastic bins from the trailers. Instead, the company decided to look at having the off-loading equipment travel with the delivery truck so it would always be available to unload at every call.