The beat goes on at Musikhaus Thomann

Multi-channel retailing has created unprecedented challenges for retailers that want one system to replenish stores, fill online orders and also accommodate in-store pick up.

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Musikhaus Thomann is one retailer that has discovered a way to meet the multi-channel challenge. On any given Saturday, as many as 2,500 musicians and music lovers visit Thomann’s 59,201-square-foot music superstore in the tiny village of Treppendorf, Germany, population 150, where the company was founded in 1954. There, Thomann stocks as many as 65,000 different musical instruments, accessories and pieces of sheet music. Meanwhile, the company also serves an estimated four million online customers who are located throughout Europe, generating about $522 million in combined sales annually. In fact, online sales are the fastest-growing segment of Thomann’s business.

Both the store and online customers are served from the same highly automated 215,300-square-foot distribution center (TGW Systems, tgw-group.com). The facility features:

To serve its customers, Thomann also implemented four different types of picking processes, including:

  • Cartons are picked from pallets at a goods-to-person pick station at the unit-load AS/RS.

  • Fast-moving items are picked from carton flow rack located at the mini-load AS/RS.

  • Slow-moving items are picked from four goods-to-person workstations at the mini-load AS/RS.

  • Large or bulky items, such as guitars, are manually picked from conventional racking.

All told, the system regularly processes about 12,000 packages per day; the facility scales to handle as many as 20,000 packages per day during peak periods. More importantly, it is a highly responsive system capable of picking and delivering an order to a delivery truck in 28 minutes. Meanwhile, customers who would rather pick up their orders in the store can choose their pick up time from monitors located in the store.

“The investment we made in this new distribution center was exactly right,” says Hans Thomann, whose father founded the business. “It has allowed us to better serve our traditional customers and to meet the needs of the Internet, which is increasingly important to our future growth.”

Singing a new tune
Growing up in the retail music business, Thomann says he envisioned expanding his father’s business beyond the shop in Treppendorf. “When I was a boy, I was angered when customers complained that another store offered products which we didn’t sell or offered our products at cheaper prices,” he says. “I swore to myself that one day I would build a store that would make other shop owners envious of our prices and selection.”

Today, Musikhaus Thomann offers a selection of German musical instruments and accessories, a line of distinctive premium brands, and exclusive imports that are not available elsewhere in Europe. Along with selling more than $500 million a year worth of music-related products, the company employs 40 people who focus on quality control. Every guitar, stringed and wind instrument is examined, checked and tuned before shipping. “The customer can just unpack and play,” says Thomann.

The combination of selection and customer service led to a booming e-commerce business and the need for a new distribution center. “We were stretched to our limit with the old system,” says Thomann. “We knew that to keep pace with our Internet growth, we needed a facility that was capable of 40% to 50% more output.”

Beyond output, however, Thomann also wanted a responsive system that could provide the same level of service to customers wherever they wanted to pick up their order. “We stock our warehouse for a 94% service level,” says Thomann, meaning that an item will be in stock and available for purchase 94% of the time. “However, stock availability will get you only so far if it takes two days to get the gear out of storage after a customer places an order.” The new warehouse can quickly fill an online order or deliver it to the store. That is especially important on Saturdays, when many musicians make the trek to Treppendorf to pick up new gear.

Automation in concert
Flexibility was another important attribute. Thomann not only stocks thousands of SKUs, they vary widely in terms of size, weight and value. For that reason, the distribution center relies on several different storage and picking technologies and strategies.

The unit-load handling AS/RS was installed with 11,000 storage positions for reserve storage, but has since been expanded by another 7,000 storage positions. In all, five cranes service the AS/RS.

The mini-load warehouse consists of four aisles with two stacker cranes in each aisle. More importantly, the mini-load replenishes fast moving items in a flow rack picking area and delivers slow moving items to goods-to-person picking workstations. Picking in both of these areas is light directed. Lights also indicate which tote a worker should place picked items into when picking several orders at one time.

Larger goods, such as guitars and drum kits, are stored and picked in their original cartons from a conventional storage area. Picking in the conventional storage area is directed by mobile computers. Picked goods are then fed into the sorter loop from nine induct stations.

Finally, the DC features two packing areas. Large orders with oversized products, a large number of items, more than one shipping container, or items coming from multiple storage areas are routed to one of 32 workstations equipped with two target lanes each. There, the items are packed in appropriate shipping cartons and sent to the shipping area. Smaller orders that can be packed in one tote and from one area of the warehouse are packed in a separate area.

Software orchestrates operations
In addition to flexible storage, picking and packing technologies, it was important to Thomann that all the items for an order arrive at the packing stations in close proximity to one another. That allows an order to be quickly assembled for shipment.

“We don’t write a receipt or charge a credit card until everything is packed and on its way to the customer,” Thomann says.

At the same time, Thomann did not install a buffering system in the facility that could hold the different pieces of an order until they are all picked. Instead, the warehouse control system is programmed to coordinate the start times for each picking process so that items that are manually picked in the conventional storage item arrive at the sorter about the same time as items from the unit-load or mini-load AS/RS.

In addition, the sorter can operate at one pace for typical order fulfilment needs or be used as a high-speed transfer. This feature allows the system to adapt to peak order fulfilment requirements during the holidays.

As the company continues to grow its Web-based sales, Thomann says he is already looking to the future. “We are planning the next steps to enhance the building or to put up a second facility,” he says. 

System suppliers
Systems integrator, mini-load AS/RS, conveyor/sortation, WMS, WCS: TGW Systems, tgw-group.com
Unit-load AS/RS: Dambach Lagersysteme, dambach-lagersysteme.de/en
Racking: Schaefer Systems International, ssi-schaefer.us
Lift trucks: Still, still.co.uk

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About the Author

Bob Trebilcock
Bob Trebilcock, editorial director, has covered materials handling, technology, logistics and supply chain topics for nearly 30 years. In addition to Supply Chain Management Review, he is also Executive Editor of Modern Materials Handling. A graduate of Bowling Green State University, Trebilcock lives in Keene, NH. He can be reached at 603-357-0484.

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