QSR Industry and the concept of quick turn around
The success of the QSR (also known as fast food
industry) is driven by the timeliness with which the products are delivered,
without compromising on the quality. The name itself, Quick service
restaurants, suggests the fact that the delivery of products in this industry
needs to be quick and the lead time involved in minimal. Organizations need to
be ready to fulfill the orders in short notices which can even be a few hours.
Also, given the dynamics and competition in this sector, along with the strict
rules and regulations for any food products, organizations have an ever
increasing pressure of quickening the delivery without any compromise in
quality. Long term sustainment of growth and success are only possible if the
above criteria are not neglected. Some very common QSR names like McDonalds,
Starbucks etc have diligently followed these rules to become what they are
today.
Nature of order placing in QSR industry
Most of the orders in the QSR sector which are placed
to the warehouses comprise food products and preparations which are highly
perishable in nature. Items like burgers, pastries, sandwiches etc which cannot
be prepared and stored in the warehouse like other packaged items. These items
are made to order and arrive in the warehouse only a few hours before the
actual shipment needs to leave from the warehouse to fulfill the orders. Most
of the QSR players have their company owned stores and hence the nature of
orders is very similar for all stores. In ideal cases, these stores place their
orders with the warehouse a day before the actual delivery.
The nature of the items is such that the warehouse
doesn't have these items stocked in the premises beforehand and the order is
passed to the manufacturing unit / supplier only after summing up the
cumulative quantity of each item asked by all stores.
There are certain scenarios, especially during festive
or holiday seasons when the stores place a lot of emergency orders with the
warehouse where the lead time is only a few hours. These are the times when the
warehouse has to ensure that there is quick turnaround of the order and needs
to facilitate quick supply of the items from the vendor and then quick delivery
of the same to the store.
Pain Points: How to Reduce Turn around
Given the nature of business for the QSR Industry, the
efficiency and productivity are dependent on the fact that how quickly the
turnaround is done or the turn around time reduced for the orders to the
stores. However much the regular picking process is expedited, there is a fair
bit of delay expected in the process of picking the items from the receiving
area after they have arrived and bringing them to the shipping area. This can
cause delay in the delivery deadline and business can suffer. Also, there is
high labor cost and transportation cost which distribution centers want to
reduce especially for these items where there is no storage and items are
directly sent out for shipping.
Recommendation: Cross Docking
An optimum solution for this type of situation can be Cross Docking. Cross docking means skipping the receiving and temporary storage part and unloading the goods directly in the cross dock area from where they are loaded into the delivery trucks. This can serve as a good opportunity in case of QSR warehouses as the items themselves don't require storage. Hence they can be sent directly to cross dock area. Also, this will help in quick turnaround of orders from supplier till the actual store and increase the supply chain velocity.
For efficient cross docking, there are a few important points which need a special mention:
·
Physical layout of the warehouse: Cross docking will not make any sense if the
distance between the receiving and the shipping area is very huge. Although in
most warehouses, the layout is such that the receiving and shipping are at two
ends of the warehouse. But that is more suitable to industries where storage
forms a major activity in the warehouse. In case of QSR sector where storage is
minimal, it would be ideal to have the receiving and shipping in close
proximity to facilitate easy cross docking.
·
Carrier routing information: As mentioned earlier, the nature of orders from various
stores in the QSR industry is very similar to each other. More often than not,
the shipments are clubbed based on the carrier's route for the various stores.
If this information is available much ahead of time, the items can be bulk
picked from the cross dock area and put into the respective trucks as per the
routing schedule.
·
Task management can serve as an effective enabler to avoid stock out
situations and facilitate cross docking. Task management when linked to
employee scheduling helps optimize staff requirements, based on sales history
and other factors. This could even be linked to overall employee productivity
and a number of reports could be made available to determine it. RF devices when
paired with a WMS could be used effectively to avoid inventory shortfall
situations for a retailer. What is needed is an inventory source of record,
wireless infrastructure and a WMS with a Task Management engine.
There are a few impediments for the cross docking process as well. These are:
·
Inventory levels in the warehouse system: One major barrier in cross dock process is that
during cross docking, the items are not actually received in the WMS system of
the warehouse and hence the inventory levels are not brought up to show the
entry and exit of the items from the warehouse. Since the orders are sent and
pick / ship documents are created a day prior to the actual transit of items,
the warehouse has to find a way to capture the information of these cross dock
items arriving and leaving the warehouse for auditing and tracking purpose.
One way of doing this is to bolt up the warehouse
inventory with dummy values via receiving screens and then bring them down
through the pick screens.
The other way can be to make the cross dock location a
valid receiving as well as shipping location of the warehouse. So from one
screen, the inventory level in the WMS can be increased by receiving items from
the cross dock location and from the other screen, the inventory can be brought
down by shipping them out from the same location.
·
Merging of cross dock product with products coming out
of picking belts: Though most of the
items from the stores would be the highly perishable, JIT items, there can be
certain items which are non JIT in nature and are stored inside the warehouse.
For ex: packaged foods, liquids, lids, cups etc. These are picked and shipped
via the conventional picking method and are brought to the shipping area via
the conveyor belts or manually. If the warehouse is doing cross dock of some
items which have arrived externally from the supplier and is also picking items
from the shelves for the same order, care needs to be taken to properly pack
all the items of a single shipment of a store together and nothing should get
missed or mixed with other orders. Also timing of the arrival of items from the
two sources becomes important in a way that the shipment doesn't get delayed.
A New Beginning
Cross docking has still not gained its fullest popularity in the world of distribution centers and is still a vast area to explore. Cross docking can greatly reduce the turnaround time of delivery of orders and can act as a trigger to increase the velocity of the logistics system of the QSR industry. No customer likes to hear that the dish or item they have ordered from the menu has still not arrived and will be there in a few minutes. Customer delight in terms of time and taste is the key to the success of this highly competitive QSR world and can only be achieved with the combined efforts of all participants in the supply chain. Cross dock can be once such contribution from the distribution center.