17 June, 2009

No, The Major Online Retailer's Fulfillment Center Managers Are NOT Systems Thinkers.

A Brief Analysis of My Previous Case Study About The Major Online Retailer

If you said the core problem in this case study is that the packers aren't getting cartons fast enough during periods of high order volume, you have done what fulfillment center management did: you have identified the symptom, not the root cause of the symptom. Management's job is to identify and cure the disease, not just treat symptoms. These managers are lousy diagnosticians.

The root cause of the packers' shortage of cartons is that, during peak order periods, the Meta farm cannot make boxes fast enough. Using temp workers to set up a parallel carton distribution system would make sense if the color-coded trolleys were filled with cartons but simply arriving too infrequently. Such is not the case. The trolleys are speeding past the packers empty.

A Goldratt disciple would say it this way: "The constraint on the number of boxes available to the packers is in the Meta farm where the cartons are made, not in the conveyor system that distributes the finished cartons. Specifically , the constraint on carton distribution is the downtimes in the Meta farm when no cartons are being produced.

Please note that the actions taken by the fulfillment center's management do not result in the production of even one additional carton and do not, therefore, address the root cause of the packers' carton shortage during periods of high order volume. The fulfillment center's response to the shortage of cartons is like pointing more water hoses at a fire when there is insufficient water pressure or writing more checks when the root problem is that there isn't enough money in the checking account.

If the major online retailer's management were systems thinkers they would do two things:
1. Use the existing , variable speed carton conveyor system as it was designed to be used. Turn up the speed when order volumes are high, turn down the speed when volumes are low.

2. Deploy their temp workers to the Meta farm where these temps would help the Meta machine operators keep the machines filled with corrugate and where they would help the machine operators clear the machines when they jam.

Setting up a parallel means of distributing cartons to the packers does not result in the production of more cartons but assigning additional hands to the Meta farm would mean less downtime and more cartons.

If this online retailer hired systems thinkers instead of symptom treaters, they could sell us books and DVDs at lower prices and still make bigger profits.

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