Distribution Center (DC) Automation: Taking the plunge

When it comes to automation, many facilities operators are stuck in neutral. But these three companies jumped right into materials handling technology and kicked productivity into high gear.

By Maida Napolitano, Contributing Editor -- Logistics Management, 1/1/2008

DC conveyor According to our 2007 Warehouse and Distribution Center Operations Survey, about 80% of respondents still say they pick orders the conventional way—with no automation or conveyor systems. In fact, conveyor-based picking hovers at only 14%, while even fewer distribution centers (DCs) are using automated picking devices. Despite the fact that the Internet, voice recognition software, and real-time, wireless, and paperless technologies burst into the market over the past decade, a whopping 60% of U.S. DCs are still paper-based—using paper pick lists or labels to pick an order.

Most logistics managers seem to be satisfied with just “getting by” with what they have or profess not having the deep pockets that they associate with high-tech innovations. However, software has become cheaper and more standardized. Hardware has become more generic and maintenance-free. DC technological upgrades have not only become more powerful, but also more affordable. With increased customer demand and cost control efforts coming down from the C-suite, just “getting by” no longer makes sense.

Logistics managers at JTM Food Group, Victorinox Swiss Army, and Corporate Express Canada

identified their specific productivity problems,
partnered with experts,
observed installations with similar upgrades,
conducted their own detailed analysis,
and successfully made the leap into the realm of materials handling technology.

What they found were productivity gains and labor cost savings that translated into more than satisfactory returns on their investments.

JTM’s automated, ninety-foot freezer

Back in the old days in JTM Food Group’s freezer warehouse, a team of material handlers received, stored, and shipped pallet quantities of food products using standard pallet racks and regular forklifts.

Due to the hostile freezer environment, workers needed to spend about 20 minutes of every hour out of the freezer, compromising productivity. Joe Maas, vice president of manufacturing and production for the Harrison, Ohio-based food processing giant, knew something had to change.

The company enlisted the help of Dematic, an automation and materials handling systems integrator, to build a new freezer to reduce labor requirements and costs; minimize the freezer’s building footprint; reduce energy costs; and increase inventory and order accuracy—some tall orders indeed.

It didn’t take long for the project team to recognize that the installation of an Automated Storage and Retrieval System (AS/RS) freezer would help them accomplish these goals. Working side-by-side with Dematic, the company moved forward with its plans to build a high-bay freezer warehouse with a deep-lane pallet AS/RS with 9,200 pallet storage positions.

“We realized that with an AS/RS the put away and retrieval operations are continuous, and order fulfillment and inventory management are fully automatic,” says Maas. To be sure, the project team performed a financial analysis and toured three other AS/RS installations before they kicked off the project. The entire process—design, planning to installation—took 24 months. When they were finished, they quickly got rid of their lift trucks, and workers stayed in ambient temperature while using walkie pallet jacks to handle the pallets going in and coming out of the AS/RS freezer.

Save space in your DC Productivity improved almost immediately;

Things were done more quickly. With an AS/RS, pallets can be put away and retrieved at a rate of 50 pallets per hour. Compare that to a lift truck driver who moves about 15 pallets per hour in a non-freezer environment, on average.
They saved space. In the old facility, aisles were 12-feet wide with pallets stacked only 20 feet high.

But in the AS/RS facility, aisles were reduced by 60 percent to 5-feet wide with pallets stacked up to 90 feet high. This high-density storage not only reduced the building footprint, but consequently reduced the energy costs involved in running a freezer operation.

The biggest challenge, says Maas, may have been learning how to operate the system once it was up and running. “It was critical that we had a highly trained staff,” he says, adding that the ultimate key to success was paying extremely close attention to the specific details of the project.

Victorinox Swiss Army: Raises picking productivity

Victorinox Swiss Army is famous for their pocket knives, but they also sell professional and retail cutlery, watches, and apparel. Until 2007, the company received and shipped products using antiquated systems that limited productivity.

Jim Cary, vice president of sales administration, recalls how pickers in their old facility took a cart with a paper pick ticket and manually picked a single order all over the warehouse. “What we absolutely knew,” says Cary, “was that our people shouldn’t be wandering all over the warehouse to pick orders.”

In 2004, with continued growth in their apparel business, they recognized the need for a new, larger facility.

The company procured the services of Gross & Associates, a logistics consulting company to help them design a new high-tech DC. The team aimed to create a DC that would accelerate order picking throughputs, provide cubic space to accommodate projected increases in storage requirements—all while minimizing the new building’s footprint to reduce building costs.

In September 2007, with the additional partnership of The Beacon Group, a materials handling systems integrator, the company opened a new distribution center (DC) in Monroe, Conn., equipped with state-of-the-art picking technology. The order-picking hub of this new facility was a three-level pick tower for picking medium to fast moving items. Pick towers are typically composed of case flow racks and shelving flanking powered and non-powered conveyors.

For picking slow to medium movers, the project team opted for six vertical lift modules (VLMs) called Shuttles by Remstar. Each VLM has a footprint of only 9 feet by 10 feet but go up to 32 feet in height. Picture, if you will, a mini-AS/RS for piece picks; the shelf containing the product comes to the picker. Each module can hold 4,000 SKUs and allow workers to pick up to 300 lines per hour.

A cost and productivity analysis of the proposed pick tower/VLM combination showed a payback period of less than 2.5 years.

According to Don Derewecki, president of Gross & Associates, “An analysis of alternatives showed that without the VLMs, they would have needed a second pick tower to provide the necessary facings—and a larger building.”

Both of these picking systems not only shrunk the pick path, but also brought the product, picking tote, and the order to the picker, making it significantly quicker to pick an order and, implementation of the new picking system was devoid of major issues and obstacles.

Tip From Jim Cary: Keep a stock of spare parts in a small storeroom. “If something breaks, you can’t wait 3 or 4 days,” says Cary. “You should have that part in stock.”

Corporate Express Canada takes voice lessons

Corporate Express Canada is a leading business-to-business (B2B) supplier of office and computer products, furniture, and facility supplies with a network of eight distribution centers. Until 2006, these distribution centeres (DCs) operated different picking systems that ranged from low-tech, manual, pick-to-paper systems to the high-tech use of pick-to-light technology through a network of conveyors. However, continuous double-digit growth in their business prompted management to determine ways to increase productivity and capacity across all of these DCs.

Their parent company, Corpac Canada Limited, had just implemented a voice directed order picking system across 28 facilities with impressive results; and financial analysis showed that the same technology offered a quick payback period for the Canadian operation.

Ed Meyer, now vice president of operations for Canada who was also part of the U.S.-based pick-to-voice overhaul, was tasked to implement the overhaul in all of the Canadian DCs in partnership with Dematic. But before moving forward and implementing voice, the company literally took a step back.

While everyone else may be putting in conveyors to improve productivity, the company was ripping them out. Meyer explains: “We found that the conveyors restricted growth, so we removed almost all the conveyors out of every site.” Pulling out the conveyors opened up more locations and space, widening pick aisles and improving access to pick facings.
They went back to picking with specialized batch-picking carts that allowed a picker to simultaneously pick from 30 to 72 orders through one pass in a pick path.

Vocollect headset voice directed system in DC It was, however, the combination of a voice-directed system and a wrist-mounted scanner that propelled each DC to new heights in picking accuracy and productivity. With voice, reading is eliminated as pickers are directed in real time where to pick and how much to pick via voice commands transmitted over an RF network into a wearable computer equipped with a Vocollect headset. A scan of the product location by a wrist-mounted scanner confirms that the correct item is picked.

Installation started in one of the smallest DCs with the least amount of physical renovations. Before the actual install, detailed plans were developed and picking carts were built and delivered.

“We would go to a facility on Thursday the week before,” recalls Meyer. “Over the weekend, we would do whatever physical changes were required.” By Monday, they would go live, laying voice tracks to identify pickers to the system. By Wednesday, pickers were picking well over 70 lines per hour.

“We’ve seen over 300 percent productivity improvements from the manual operation,” reports Meyer. Supervisors can also better track a worker’s productivity and picking accuracy.

How to take the plunge and integrate automation into your distribution center: