Improving productivity through a new operating model design for Kuehne + Nagel.

Increased cost pressure

Kuehne + Nagel were experiencing increasingly aggressive price competition, which created pressure on margins. To remain competitive, it was seen as essential to make significant cuts in operational costs but without impacting customer service or quality.

Initial scoping of two key operational sites and head office functions indicated that significant cost-saving opportunities were available, and could be delivered with equal or better customer service & quality through a new operating model design. Business cases were duly developed to support the proposed operations improvement projects.

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Planning tool & work place organisation

Congestion in the supermarket regional distribution centre (RDC) was impacting operational effectiveness. To address this layout, changes were made to the marshalling lanes in three main sections of the warehouse.  These improved flow of product, reduced walking and congestion, and improved productivity. A new planning tool was developed to improve work allocation and to optimise layout of storage areas.

Loading bay congestion created multiple movements of both returned equipment and filled cages that were assembled ready for despatch. A designated drop-off area and ‘replenishment on demand’ system delivered equipment to the picking areas as required.  This eliminated congestion and provided noticeable productivity benefits.

In the retail media distribution centre, product labelling machines were analysed.  This showed that the team needed to reduce set-up time, improve work-flow and introduce standard work procedures. ‘5S’ and Work Organisation techniques helped to redesign and identify improvements to the product dispersal and scan-and-pack workstations.

The client reporting process was standardised and simplified to focus on numerical and graphical data and reducing commentary text.  This eliminated much of the customer spreadsheet work carried out for each individual contract. Routines were developed to better utilise data from the central business system, eliminating much of the manual data manipulation and reformatting previously undertaken.

A new operating model design of the central finance department’s organisational structure provided more focus and effort on value-adding activity and improvement work rather than the routine report work that was the previous focus. Roles and responsibilities were redefined and standardised.

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Significant productivity gains

Savings in the finance department allowed new contracts to be taken on without additional staff.