Implementation of Lean Warehousing to Reduce the Level of Returns in a Distribution Company

Abstract

In this study, the problem of high levels of returns of orders to be dispatched, affecting distribution companies of the mass consumption sector, was analyzed. For this reason, the study was carried out for the company AT, which presents an index of 12.10% returns, equivalent to $ 158,061.69 in lost sales (rejected products), due to the following causes: orders arriving outside the established reception time window (50.71%), incomplete orders (30.57%) and orders arriving in poor condition (18.72 %). Lean Warehousing techniques were used as a practical tool to introduce good and efficient practices in the company. As a standardized framework, the company introduced three stages for the implementation of Lean Warehousing: “create stability,” “create flow,” and ‘make flow,” in the warehouse. The implementation was carried out for the three stages by means of a pilot, taking as a baseline the following indicators identified by the VSM tool: picking time (5 hours), percentage of orders left unattended due to lack of stock (28.64%) and the percentage of non-conforming orders due to expiration (25.5%). At the end of the implementation, the picking time was reduced to three hours, the percentage of orders left unattended due to lack of stock to 22%, and the percentage of non-conforming orders due to expiration fell to 20%. In this way, the level of rejections was reduced to 5.5% by improving the gross margin of the company. The result will be used as a baseline and example for future implementations to the rest of the distributors of the sector.