Williams-Sonoma, Inc. (WSI) is an American consumer retailer specializing in luxury kitchenware and home furnishings. With 625 storefronts internationally and over $5.7 billion in annual revenue, WSI is one of the world’s largest specialty retailers. WSI’s distribution centers provide multiple services, including Direct-to-Store Delivery (DSD) – a service dedicated to both replenishing storefront inventory and fulfilling in-store pickup orders. This project focuses on the DSD unit at WSI’s Southeastern distribution center (SEDC) in Braselton, GA.
Until two years ago UPS managed Direct-to-Store Deliveries for SEDC. However due to rising costs, they chose to not renew their contract. This left SEDC with two weeks to create an in-house DSD unit at the expense of a 175% increase in operating costs. SEDC’s heuristic workforce planning has led to over-hiring – adding avoidable staffing expenses. Such decision making also resulted in the unnecessary contracting of truck drivers, further increasing transportation costs. Additionally, the DSD floor layout changes on an ad-hoc basis – increasing task complexity for associates, which significantly slows the item sorting process. Ultimately, the objective is to enable DSD to perform at a high efficiency rate with decreased operational expenses
Three project opportunities were identified to reduce DSD’s operating costs: labor demand planning, outbound scheduling, and warehouse layout redesigning. Each individual opportunity yields substantial savings, but implementing them concurrently will significantly lower operational expenses.
The project deliverables consist of four tools: (1) a seasonal workforce planner that recommends the ideal full-time associate headcount (2) an ad-hoc workforce planner that recommends a team size based on daily demand (3) a dynamic routing application which identifies opportunities to pool store deliveries and reduce subcontractor usage (4) an interactive graphical interface which enables associates to quickly transition between tasks, according to a specified floor layout. Additionally, WSI will be provided with three recommendations: (1) having two full-time associates given their current demand, (2) a new weekly fixed sorting & delivery schedule to increase pooling opportunities, and (3) an improved fixed layout based on best practices.
Value and Impact
Utilizing the two workforce planning tools will permanently eliminate over-hiring and remove the need for overtime. Staffing adjustments would save $80,000 each year, while contracting fewer delivery trucks would add an additional $15,000 in savings – implementing all proposed solutions would save SEDC $95,000 annually. Piloting these solutions at WSI’s six distribution centers would equate to $570,000 in yearly savings; a plausible scenario given that these distribution centers are similar in size, complexity, and function.