Real warehousing and distribution center stories: Low Cost Deep Impact
You don’t always need hundreds of feet of conveyor or fancy equipment to achieve real productivity improvement in your warehouse or DC. These managers found significant savings by working with the equipment they already had—and, in some instances, with just a few minor IT tweaks.
By Maida Napolitano, Contributing Editor -- Logistics Management, 1/1/2009
With the holiday rush over, it’s the perfect time to regroup and take stock of your distribution operation. You may want to walk your warehouse, study your layout, watch your workers, and perform an information technology (IT) systems audit. Look for opportunities to increase your picker’s productivity, squeeze more storage space, and ultimately reign in your operating costs.
Of course, it’s easier said than done. So, to help you get started we’re going to take a closer look inside three very different warehouse and distribution center operations that span from thousands of square feet of private warehousing space to millions operated by a third party logistics (3PL) provider.
While all the locations we cover here are geared for very different operations, all share one common theme: The managers who run these operations achieved new efficiencies by working with the equipment they already had—and in some instances, just a few minor IT tweaks. The managers you’re about to meet prove that you don’t always need hundreds of feet of new conveyor or fancy equipment to achieve real productivity benefits.
By making the rows of storage perpendicular to the outside wall, it shortened the aisles,
so JB Prince pickers only have to walk a short distance.
J.B. Prince Cooks Up Low-Cost Improvements
J.B. Prince has been supplying top-tier restaurants, including those located in resorts and cruise ships, with the highest quality, hard-to-find kitchen tools and equipment from around the U.S., Europe, and Japan for over 30 years.
From 1996 to 2006, this family-owned company has occupied the 11th floor of a 12-story building located in midtown Manhattan, housing a showroom, corporate offices, and a 7,000-square foot warehouse. Within this warehouse, they keep stock of about 2,700 SKUs and pick and pack orders from catalog sales from their online store as well as orders from other distributors.
Running a warehouse in the middle of Manhattan may give the heebie-jeebies to any self-respecting DC manager, but to Larry Prince, the company’s vice president, it’s been the key to their business success. “In the world of fine dining, everybody who’s anybody comes to Manhattan at some point or another, and we’re here to provide them with instantaneous service through our showroom.”
Such strategy is obviously working, because over the past decade business has been booming. Two years ago, to keep pace with its success, the company added 5,000 square feet of reserved storage space on the 12th floor. It not only helped open things up, but it also exposed how inefficient their picking operation was on the original 11th floor.
More business from online sales also meant that storage was again creeping to near-capacity. Prince decided to recruit TranSystems|Gross & Associates, a Woodbridge, NJ-based firm specializing in material handling and design, to rationalize the operation. Geoff Sisko, the senior consultant for this project, quickly found a few more problems.
“The storage racks had been laid out in very long rows, running parallel to the outside wall,” says Sisko. “Pickers were putting a cart at the end of the aisle and walking a long distance to get the items.” By making the rows of storage perpendicular to the outside wall, it shortened the aisles, so pickers only have to walk a short distance.
As an added benefit, outside windows, that were previously blocked by storage, now threw light into the area for a better working environment. Aisles were made narrower and shelves were adjusted so that pick positions could be more appropriately sized to the item it occupied creating additional space. So much space was created by changing the layout that there is still space for storage on both the 11th and 12th floors.
To reduce pick time, pallets of popular, fast-moving SKUs were set up by the shipping area. A low-cost, gravity conveyor was added to the packing area to allow for accumulation and eliminate having people carry boxes in a congested area.
With these new layout and equipment strategies, picking efficiency has greatly improved. Overtime has been reduced significantly and they have consistently been shipping orders out in one business day. It’s also become a safer, cleaner place to work.
“Knowing what I know now, I should have done this sooner,” adds Prince.
JB Prince’s 11th-floor showroom of kitchen tools and equipment in midtown Manhattan.
United Facilities Skates To Benefit
Headquartered in East Peoria, Ill., United Facilities operates seven facilities totaling 4.5 million square feet in California, Colorado, Illinois, and Florida. The 3PL has been providing warehousing and distribution services to Fortune 100 companies for over 50 years. “Our customers are like every consumer out there,” says Larry Yocum, vice president of operations. “They want high quality at low cost—and that’s exactly how we do it.”
Over the past six years, United has seen a surge of customers taking advantage of their flexible labor pool to meet post-production product packaging and assembly needs, such as the building of custom grocery displays and creation of warehouse club packs—commonly known as value-added services (VAS).
Dan Altorfer, vice president and a third generation member of the family that started the company, says VAS is now a daily occurrence in their business. “Every day we have anywhere from a dozen to a hundred people doing some form of VAS.”
Because of the “episodic” nature of these labor-intensive projects, the operations team had to set up stations that were highly flexible. The team initially set up tables with workers manually carrying trays and cartons between tables and pallets. “The tables did not give us any accumulation line,” says Jody Hunt, an industrial engineer for the company. “By using an inexpensive flexible conveyor, we were able to stretch the line as far as we wanted to create accumulation, yet put it aside when we didn’t need it.”
They bought a skate pallet, which is a four-sided piece of aluminum with wheels, so that workers can quickly move a pallet of one SKU down the line when assembling multi-SKU pallets. With these low-cost equipment additions, United has seen over a 9 percent increase in productivity improvement over the past two years. “I was able to pull workers out of an existing line and create a new line for a new project,” says Hunt.
For the picking of full pallet and full case grocery items, the team noticed that travel time was very high—lift truck operators were traveling from one end of the warehouse to the other. Because there was no logic as to how products were slotted, full case pickers needed to stop and rearrange cartons to keep heavy items on the bottom and lighter items on top.
“By using our WMS, and with a little help from our customers on sales trends, we were able to zone our warehouse, rank products according to weight, movement, and hits, which in turn increased our picking output by 20 percent,” reports Yocum.
More agile, double-pallet jacks replaced the cumbersome 5,000-pound lift trucks that were used to pick full case orders. With the 96-inch long forks, these jacks could pick two orders at a time in one trip around the pick area doubling productivity. In addition, the cost per hour for operating each pallet jack was 50 percent lower than the cost for operating the lift truck. “Implementing these low-cost alternatives has kept us competitive in the 3PL marketplace and allowed us to share the savings with our customers,” concludes Altorfer.
By using inexpressive, flexible conveyor, United Facilities can pull workers
out of an existing line and create a new line for a new project.
AcuSport Hits Picking Productivity Targets
Consumer spending may be at an all-time low, but don’t tell that to gun store owners across the country. Guns and ammunitions are selling at a record pace amid reports of stricter gun control with the incoming administration.
Such news bodes well for AcuSport Corporation, recognized nationwide as one of the leading distributors of shooting and sporting products and services. The company operates a 100,000-square-foot distribution facility in Bellefontaine, Ohio. Mary Grim, director of operations, explains that the AcuSport distribution team strives to make its warehouse an extension of each customer’s business through guaranteed timely shipping—same day if required—and through reliability that ordered products are available to ship. Maintaining extremely accurate inventory is given high priority, so customers can order with total confidence.
AcuSport’s unique distribution network, reconfigured following a 2006 project with consulting and systems integration company TranSystems|ESYNC, supports two-day shipping regardless of customer location with reduced overall logistics costs.
During the implementation of this network reconfiguration, Grim and the distribution team recognized opportunities to improve their Ohio facility. So, in May of 2008, AcuSport turned to the consulting firm again to assess options to utilize space more effectively, reduce the pick zone footprint, and to improve process efficiency.
Working with the AcuSport distribution staff, TranSystems|ESYNC uncovered opportunities to reduce pick zone size, thus reducing the travel distances between picks. According to Senior Consultant Jeff Ross, “We sampled multiple pick tours and found the time spent traveling between picks to be longer than expected.”
Based on this information, the consulting team analyzed the impact of reducing the inventory levels in pick locations and optimizing the mix of pick location types. Using this approach, Senior Consultant Howard Turner estimates that the pick zone should shrink by about 60 percent. To identify the optimal pick location for each item, the dimensions of the products needed to be captured.
Accordingly, AcuSport purchased a dimensional data collection system called Cubiscan (from Quantronix) that automates the process of obtaining product dimensions using ultrasonic technology. To keep costs low, this equipment can be rented on an as-needed basis. According to Clark Skeen, Quantronix president, “The dimensions and weights are stored and transferred electronically, so there’s no lost time, no lost data, or expensive and error-prone data entry.” The collection of this essential information is nearly complete.
The project team also found an IT issue that previously restricted the ability to replenish inventory from overstock to pick locations and make other material moves. To support AcuSport’s commitment for availability of the right products at the right time, inventory is allocated when the order is placed.
The issue effecting the ability to move inventory within the warehouse stemmed from the manner in which inventory was allocated. Previously, the quantity ordered was allocated to a specific location in the warehouse, 'freezing’ its movement. Fortunately, AcuSport’s in-house IT staff was able to quickly deploy an enhancement enabling not only the strict allocation of inventory for customer orders, but also delaying the commitment to a specific location until picking begins.
As a result of this and other low-cost, high-brainpower IT recommendations, including creation of a 'hot replenishment’ report and enhancements to the cycle count discrepancy report, replenishment and other material moves are completed more effectively with improved overall warehouse performance.
Armed with the data collected through the Cubiscan, AcuSport’s next step along the path of operational excellence is to kick-off the pick zone optimization project late this year—significantly reducing travel distances of pickers and thereby doing wonders to their picking productivity.
AcuSport’s 100,000-square-foot distribution center in Bellefontaine, Ohio,
is designed to guarantee timely shipping, same-day if required.
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