Leiner Reshapes Fulfillment Operation (page 3)

-- Logistics Management, 2/1/2006

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The Two-Level Solution

News of the pick-to-conveyor module's efficiencies and cost reductions quickly made its way out West to Leiner's Carson, Calif., DC. During a walk-through of Fort Mill, Carson's distribution manager, Sergio Ruvacalba, and his supervisor, Mario Gaytan, knew they wanted to bring similar benefits to their operations.

But there was a catch: The Carson DC is responsible for fulfilling Costco orders at the same as Sam's Club orders are being processed. The Carson team's challenge would be to not only replicate Fort Mill's system but also to accommodate two customers' concurrent demands without adding people or taking up more floor space in the DC.

The solution was a two-level pick-to-conveyor module. Gard quickly sold his corporate sponsor, Steve Krzeski, on the idea. "Costco on the first level, Sam's on the second level, and you can pick them both at the same time," he explains.

Krzeski gave the go-ahead for the project, and in October 2004 construction began on an automated pick module, with a few modifications to the original. For example, each has an

independently powered conveyor with photo-eye sensors that shut the system down in case of a backup. The upper-level conveyor inducts into a fiberglass slide that allows both lines to work at the same time. A single team operates both the upper and lower lines, and paperwork is generated and attached at the lower-level print station.

Pride of Accomplishment

The Fort Mill and Carson pick-to-conveyor systems have played a crucial role in helping Leiner Health Products improve virtually every aspect of its order fulfillment process. Fort Mill, for example, now completes orders in about three days with four or five people, and the cost per-case-shipped at both DCs is down some 75 percent, from around $1.30 to 35 or 40 cents, depending on demand.

The new system also has allowed the logistics team to collaborate with customer service teams at both DCs to prioritize orders in a way that takes transportation planning into consideration. The result is reduced LTL usage and an increase in cost-effective, multi-stop truckload shipments for Costco and Sam's Club.

Gard beams with pride when he discusses the benefits gained since Leiner installed the new pick modules, and he's downright thrilled with the way the logistics team banded together to complete the projects, especially under less-than-ideal conditions.

"I can't stress enough that this business is about people," he says. "In the distribution world, it's got to be a fluid environment. And if your team is all on the same page and you have good managers who are clear in their direction, you're going to be successful."

Phil Gard's Logistics Soapbox

Corporate Logistics Director Phil Gard of Leiner Health Products LLC strongly believes that none of his company's recent success in speeding order fulfillment would have been possible without all parts of the business—customer service, marketing, transportation, and so forth—executing a clear and concise plan.

In keeping with this emphasis on logistics moving forward in lockstep with overall company goals, Gard has launched The Logistics Summit, an annual meeting that brings together key players from all sides of the business. "The goal is to talk about all things logistics as it relates to customer service and all the way up to accounting," says Gard. "We look at the marketing plans, discuss cycle issues, P&L (profit and loss) for each DC, cost per case, transportation, and RFID to bring everyone up to speed."

Gard has tentatively slated the next Logistics Summit for this June at the company's Fort Mill, S.C., distribution center. Some of the items on the docket for discussion are quality improvements, future plans for third-party logistics partnerships, and automation strategies.

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