KNOLLINC.-NORTHAMERICACustomizedsolutionforconsolidatingoutboundshipmentsyieldshighmarks.KnollSummaryKnollIncorporatedisagloballeaderinofficefurnishings,designandmanufacturing.ThecompanywantedtoconsolidatetheoutboundshipmentsofseveralNorthAmericanmanufacturingplantsintoonenetwork.Thisconsolidationwouldallowcustomerstoreceiveentireorderssimultaneouslyandreduceoveralltransportationcosts.Penske'ssolutiontodevelopconsolidationwarehousesandauniqueloadplanlayoutresultedina10percentreductionintransportationandwarehousingcostsanda45percentincreaseintheiroverallcustomersatisfactionrating.ChallengesToconsolidateoutboundshipmentsofKnoll'sfourNorthAmericanmanufacturingplantsintoasingledistributionnetworkTomaximizeKnoll'sexistinginfrastructureduringaneconomicdownturnwithlittleornointerruptioninbusinessToincreaseon-timedeliveryrates,orderaccuracyandshippingefficiencytoKnoll'scustomersSolutions/ResultsPenskeestablishedcentrallylocatedmixingcenters,resultingina1()percentreductionintransportationandwarehousingcosts.PenskeandKnolldevisedandmetanaggressive60-daytransitionstrategyfortwoexistingcross-dockingandmanufacturingfacilities.Duringthistime,Penskemovedmorethan10,000productsenablingKnolltomaintainproductivitylevels.Penskedeployeditsunique"footprint"loadingapproachtoexpediteloadingandincreaseproductvisibility.Knollrealizeda45percentincreaseincustomersatisfactionGettingStartedWithanexpansivenetworkofmorethan400dealershipsandshowroomsinNorthAmerica,Europe,AsiaandLatinAmerica,Knollhasworkeddiligentlytoensureeverycustomerreceiveseachorderefficiently,ontimeandaccurately.Toaccomplishthis,KnollemployedPenskeLogisticstoconsolidateoutboundshipmentsofitsfourNorthAmericanmanufacturingplantsintoasingledistributionnetwork.Previously,customershipmentswereunconsolidated.AseachofKnoll'smanufacturingplantsareresponsiblefordifferentproductlines,thecompanyhadtomakemultipleshipmentstoeachcustomertofulfillasingleorder.ThisdistributionapproachcreatedacostlygapofinefficiencywithinKnoll'soperations.LookBeforeYouLeap:TakingStockofKnoll'sCurrentDistributionOperationsKnollknewamajorshiftinitstransportationanddistributionstrategywouldbenosmalltask.Theyneededathirdpartylogisticsproviderwhowaswillingtoacquireadeepunderstandingofthecompany'scurrentdistributionoperationsandinfrastructureandcouldprovideflexible,costefficientsolutions."Wecouldnotriskthecostandcustomerimplicationsofablindchangeinourlogisticsstrategy.PenskeLogistics'willingnesstounderstandeverynutandboltofourdistributionprocesseswascrucialtoasuccessfulchangeinouroperations."RichCirulli,VicePresidentofLogistics,Knoll,Inc.Onceselected,PenskeLogisticsmettheseinitialrequirementsandhitthegroundrunning.Thefirststepwastoconductanin-depthanalysisofKnoll'scurrentoperations.Fornearly14months,Penskecloselymonitoredproductvolume,transportationrates,deliverypointsandfreightcombinations.Duringthistime,theunstableeconomyallowedPensketoacquiredatarepresentingtheentirespectrumofproductivity,whileenablingPensketotheorizelogisticsstrategiesinavarietyofeconomicconditions.Penske'snextstepwastohelpKnolldevelopbenchmarkstoallowforthemeasurement.UsingacombinationofKnollandPenskefinancialspecialists,theteamanalyzedpreviousfinancialstatementstodetermineareasofhighcosts.Twokeyareasforcostimprovementquicklysurfaced—transportationandlabor.TheseareaswouldbecloselymeasuredthroughoutthechangeinKnoll'stransportationanddistributionstrategy.MaximizingKnoll'sExistingInfrastructureWithasolidunderstandingofcurrentoperationsandanestablishedsetofbenchmarks,Penskedeterminedthatthemostcost-effectivestrategyforconsolidatingKnoll'scustomershipmentswasatwo-prongedsolutioninvolvingPenske'sexperiencedDistributionCenterandTransportationManagementteams:EstablishtwocentrallylocatedmixingcenterstoconsolidateproductsfromKnoll'sfourmanufacturingplantsRe-engineerwarehouseinfrastructureandloadplanningprocessesInitially,PenskerecommendedestablishingtwonewmixingcentersinHolland,Mich.,andAllentown,Pa.Asplanningprogressed,productivityatKnoll'smanufacturingplantinEastGreenville,Pa.,reachedanall-timelow.ThisprovidedauniqueopportunityforPenske.RatherthanhaveKnollspendanestimated$1millionleasinganewfacilityinAllentown,PenskecouldconverttheexistingfacilityinEastGreenv川efromanunder-utilizedwarehousetooneoftheproposedmixingcenters.DuringtheEastGreenvilleplantconversion,Penskefacedseveralchallenges.Thelayoutofthefacilityconsistedofthreeseparatebuildingsandwasnotoptimizedforthefunctionsofadistributioncenter.Penskere-engineeredeachofthebuildingstotheoptimalfootprint,bulkandbufferlayouttomaximizeefficiencyandtrackinventorylocation.Penskedevisedanaggressive60-daystrategytomoveoutKnoll'smanufacturingoperationsandmoveinPenske'smixingcenteroperations.Thetransitionwasdividedintothirds—asKnollmovedoutofone-thirdofthefacility,Penskemovedinandimmediatelybeganrackingandinstallingsprinklersineachofthebuildings.OnDay61,Penskeprovedtheyhadsuccessfullymettheiraggressiveschedule.Duringthe60-daytransitionschedule,Penskeoperatorshadshippedapproximately10,000unitstocustomers,enablingKnolltomaintainproductivitylevelsandminimizetheimpactofthetransition.ThesecondmixingcenterinHollandalsopresentedachallengingconversionprocess.Theexistingfacilityhadbeenlaidouttosuitacross-dockingapproach.Penskewasrequiredtoconvertthefacilityanditsoperationalprocessestomeetthestorageandlabordemandsofamixingcenter.At165,000squarefeet,thismixingcenterwouldnotonlyberequiredtohandleitshalfofKnoll'soutboundstorageanddistribution,butalsoneededtotemporarilyalleviateasignificantportionofEastGreenville'sdistributionload.Furthermore,Knollhadrecentlyshorteneditsproductiontimefromtwoweekstooneweek.Productsnowhadtobemovedwithinthreedaysofinboundreceipt.ThependingdemandsontheHollandmixingcenterandKnoll'sshortenedproductiontimepromptedPensketocreateauniquewarehouselayoutstrategy.Knollneededawarehouselayoutthatallowedforeasyrackingandstorageofproducts,whileenablingquickmovementoftheproductforoutboundshipment.Penskedismissedconventionalloadingstrategiesanddevelopedafootprintapproach.Loadplans,whichdeterminehowproductsareloadedintoatrailerforcustomerdelivery,aresenttoPenskeoperatorstwoweeksinadvanceofthescheduledoutboundshipmentdate.TheplanisuploadedintoPenske'slogisticssoftwaretodeterminehowproductsshouldberackedandsequencedforexpeditedloading.Thisfootprintisthensetuptomirrorthetrailerload.Incomingcomponentsareconsolidatedandstoredtomatchthefootprintuntiloutboundshipment.Penske'sunprecedentedfootprintapproachworked.Newloadingproceduresrequiredbythisapproachwereimplementedatthetwomixingcenters.PenskeandKnollemployeeswerecross-trainedtofollowthenewracking,storageandloadingprocedures.Inaddition,Penskeestablishedstricterscanningrequirements,enablingKnolltoimproveinventoryandorderaccountability.ReducedCosts,IncreasedProductivity,ImprovedCustomerServiceInlessthan18months,PenskeandKnollreachedtheirgoalwithlittleinterruptiontoKnoll'soverallbusinessoperations.Knollcustomersnowreceivedordersinasingleshipment.AllproductsfromKnoll'smanufacturingplantswereroutedtoaspecifiedmixingcenter.Asaresult,Knollreduceditsoveralldistributioncosts,includinga10percentreductionintransportationandwarehousingcosts.Penske'suniquefootprintmethodalsoenabledKnolltoimproveorderaccuracyandexpediteoutboundshipping.Becauseeachproductreceivedduringaninboundshipmentisplannedforinthefootprint,Penskecaneasilyidentifymissingitemsandquicklyloadtrailers.Bystreamliningitsproductflow,Knollrealizeda45percentincreaseinitscustomersatisfactionratingforshippingandtransportation.Inadditiontoreducedcostsandincreasedcustomersatisfaction,PenskeprovidedKnollwithseveralmoreindirectbenefits.Centralizingshipmentsincreasedordervisibility,providingKnollwithinformationthatwasnotcapturedorunavailableinthepast.ThroughPenske'sOpenOrderReportsystem,Knollcanmeasuretheimpactofproductiondelaysonshippingoperationsandcustomerservicewhiletrackingopenorderissues.Thisinformationisusedtoidentifyandcorrectproblemsduringthe