NOTE: This document is provided for historical purposes only.
Mike Jenkins from WAREHOUSING
MR. LeGRANDE: Our next presentation will be by Mike Jenkins of the American Warehouse Association. He will present as chair of the Warehousing panel. Mike.
MR. JENKINS: Thank you, Dave.
It's my opportunity to report on the Warehouse ergonomics session. I am Mike Jenkins, President and Chief Executive of the American and Canadian Warehouse Associations.
We started by setting the stage of the logistics industry, which in the United States today is a $700 billion enterprise, representing 10.3 percent of the gross domestic product. Most people think of warehouses as being a cost center or an expense stream of their business, but in the last few years, warehousing and in particular all of logistics, have become a board room topic.
Also, we talked about warehousing being the heart opportunity today's logistics industry, and many warehouses being used not just as a storage facility but also as a product transformation center where the product reaches its final form. Whether it would be final assembly, pricing, bagging, crating, whatever final work might be done associated with the product before it's shipped to its ultimate destination.
Today's warehouses are bright, clean environments, and they are information technology driven. The three speakers shared different perspectives on ergonomics position in their businesses. Chuck Swanderski represented Lowe's, a large building materials retailer; David Forte represented J.C. Penny; and Richard Murphy, Jr. represented Murphy Warehouse, which is a public warehouse company that serves a variety of customers.
Having the three speakers offered the opportunity to contrast the large company, which has the opportunity to influence the size and characteristics of the products they handle. For instance, having impact on manufacturers to reduce the size of a case or unit of a product. While the small company, the public warehouse company who serves multiple customers is really required to adapt to the product that the customer offers, and has relatively little influence over the size, weight or shape of the product.
I would summarize the observations into six general areas. First and foremost, from all three speakers, people are the most valuable assets in their businesses today. They also agreed that ergonomics is money, and that translated not only to lost productivity of those valuable resources, their people, but also expense. Next, they all want to do the right thing; and that translated to a variety of reasons for wanting to do the right thing. They all agreed that it was essential to have employee involvement at all levels of the program. There was an observation by two of the three that swift and decisive corrective action was required. I'll cite one example of a reason for that in a moment.
They all indicated that they had improved not only their safety performance but had reduced their costs associated with their performance, or with their programs.
Dave Forte of J.C. Penny operates six large warehouse distribution centers, totaling 12 million square feet of space and 5500 employees. They started their program in 1991 with a phased approach, with a systematic time line. They broke even on the program in 1994, and now after five years of implementation they have reached a point where they are experiencing a $1 million annual savings after the cost of the ergonomics program.
They're using a standard four-point program based on training, work site analysis, medical management and communications. One of the differences in their program is the corrective action is used typically through the state of the art materials handling equipment; and as they replace materials handling equipment, they always tried to upgrade to the most current state-of-the-art capability based on employee input, and not only what is the most ergonomically correct but also what the employees are the most comfortable with.
Chuck Swanderski of Lowe's represents 380 retail stores in four major distribution centers of roughly a million square feet each. Since they started their program, their accidents are down 20 percent annually, while they've added one new 100,000 square foot retail store every five days. So accident rate is down by 20 percent annually, but their employee volume and space volume is increasing dramatically.
Chuck talked about swift and decisive action to remedy problems not just because of the impact on employees, but when you have a new store coming out of the ground every 3.2 days, by the time you implement a change, 15 stores have been started or built. So they have to make corrective action very quickly to make sure that it's implemented in the stores as they're brought on line.
A little bit different than the J.C. Penny example, Lowe's utilizes many in-house fixes, many in-house job AIDS. He cited a couple of examples with people on pick lines where they're selecting product for customer orders. They have narrowed the aisles so people are turning rather than carrying the product; they've placed box racks at a waist to chest level instead on the floor.
And a 45 cent fix turned out to be one of great note; they had a problem with people tripping over brooms that are used in cleanup of various work areas. They added a 45 cent clip to hang the brooms on the wall, got them off the floor. Not only did they reduce the accidents, which is obvious, but they also extended the life of brooms measurably so they could count the cost that way.
Both were large companies. Both cited great examples, both clearly have effective programs.
The third speaker, Richard Murphy, Jr. of Murphy Warehouse, again represents a public or contract warehouse company. They operate about 1.3 million square feet of distribution space in Minneapolis, and they have roughly 200 employees. They are different in that instead of being a private warehouse like Penny's or Lowe's, serving their internal needs, Murphy warehouse serves the needs of literally hundreds of customers, and may have as many as 150,000 to 200,000 different product items in their warehouses at any given time.
They started their ergonomics program in 1986, 11 years ago, probably long before many companies even heard the term. They did it because it was the right thing to do for their employees. They talked about the program being not just for their employees but for their friends and neighbors as well, because they're a fourth generation business. Many of the employees have been with them for many years, and so they're really trying to protect their friends and neighbors who happen to be employees.
The results for their company are also significant; they have done things like add mechanical clamps to their lift trucks to reduce manual intervention on product activity; they've replaced the seats in most of their lift trucks to be ergonomically designed seats; they've replaced office chairs, keyboard trays and all of their activity is employee-driven.
In measuring the results, they measured one item, principally; the cost of worker's compensation insurance. They drove the cost of worker's compensation insurance down from $2.35 per employee per hour down to $1.00 an hour, and their accident rate is currently 50 percent below the industry norm.
Again, if I were to summarize, employee-driven, employee-motivated, focusing on people, their most valuable asset and they're trying to do the right thing. Thank you.
MR. LeGRANDE: Thank you.
