Tour de Force

Jan 01, 2003 10:30 PM  By

Whether your taste runs to scarves based on Frank Lloyd Wright’s designs or to Peter Hewitt’s ribbon vases, chances are you’ll find just what you’re looking for among The Museum of Modern Art’s famed retail offerings. From tea kettles to glass ornaments, from picture frames to paper clips, MoMA’s sleekly beautiful collectibles have graced many a home since the 1950s.

Few consumers of those iconic items, however, know that behind the scenes is a distribution operation that is a work of art in itself. The 52,500-sq.-ft. South River Distribution Center (SRDC) in South River, NJ, ships all retail, catalog, e-commerce, and wholesale orders for its exclusive customer, the Museum of Modern Art. Of the total warehouse space, 2,000 sq. ft. go to customer service functions and 1,000 sq. ft. to administrative offices.

In dealing with a variety of channels, picking processes, and products, Charles P. Inman Jr., the facility’s fulfillment operations director, brings the finesse of an Old Master to the operation of a modern fulfillment business. “We use pallets, carts, stock chasers, and cherry pickers for the items in all the different channels,” he says. “Some of the orders are 800 boxes big, and need several pickers working several hours. Some customers send orders broken down by small, medium, and large for retail stores. That means making part of the DC into a mini warehouse for small orders, then for medium, then for large. And how do you pick a 150-lb. table? In our batch picking, the big stuff is shipped separately.” To show us how he keeps his multifaceted operation under control, Inman took Operations & Fulfillment on an exclusive tour of the South River DC.

With a total of 10,000-plus SKUs, the facility processes more than 70,000 mail, e-commerce, and wholesale orders a year. Orders average 2.8 boxes and 3.2 items each. Five days a week, a 28-ft. straight truck that averages 80% full travels to MoMA’s three retail locations in New York City: the QNS Bookstore at 33rd St. and Queens Boulevard, the SoHo Design Store at Spring and Crosby streets, and the 53rd St. Design Store. (The interim facility in Queens comprises 25,000 sq. ft. of gallery space and 1,500 sq. ft. in the QNS Bookstore.) SRDC has an option on an extra 26,000 sq. ft. in the existing DC building in case of future growth.

Order volume increases five-fold from off-peak volume following MoMA’s catalog drop after Labor Day. “The day before Christmas, the business runs into a wall,” says Inman. “It contracts dramatically.”

On the trucking runs, Inman serves as the second backup driver. Since New York City introduced security checks after the World Trade Center attacks last year, the truck must stop whenever it enters the city so police can check its manifest and open the back. That procedure has added an hour to each inbound trip, although initial delays after 9/11 took as long as four or five hours. For the first month or so after the attacks, orders slowed down, but by the end of the 2001 holiday season, shipments at the South River DC had met expectations.

Over the past several years, the trend has been for business activity to move closer and closer to Christmas. Wholesale orders are at their peak in August, with restocks shipped in November. Retail orders come in daily; combined wholesale, retail, and catalog/e-commerce orders make Monday the busiest day of the week.

The full-time DC staff, which totaled 14 in the DC’s early days, now consists of 32 people: twelve in administrative and customer service and 20 DC staff. During peak the number of employees rises to 50, including temps. “Permanent workers are willing to work overtime, and they are cross-trained, so that helps reduce seasonal staff requirements,” says Inman. He expects a continued increase in head count in the next five years.

Facility personnel engage in close camaraderie and teamwork (Inman says he tries to run “a family-oriented business”), and benefit from various incentives: for instance, an extra two hours’ pay plus a pizza party for winners of a daily contest to fill an entire delivery truck in a day, or entry in a drawing for a TV set for workers with perfect attendance records. But it’s not all play and no work. Productivity — for which supervisors receive bonuses — is monitored meticulously. Weekly managers’ meetings include both full-time and seasonal workers. Workload is balanced based on staffing; employees receive assignments at daily meetings, and managers write up manual reports.

Compensation methods vary. For instance, some part-time workers receive salaries rather than hourly wages. The two truck drivers are both salaried: One works full-time five days a week and the other half-time three days a week.

LAYING THE TABLE

Pick tickets are printed in the facility and scanned with a bar code scanner. The warehouse is laid out in a numeric sequence, and the scanner screen tells the picker where to go from the lowest number in the sequence to the highest. An RF transmitter transmits order numbers and feeds information to a scanner (pickers could pick from paper tickets, which have the same information, but scanners are more accurate) in a batch-pick process. (Picking individual orders is too time-consuming, says Inman.) Batched orders are delivered to a sort table where they are sorted into individual orders. Adding the step of scanning the table to transfer the batch from the stock chaser or cherry picker provides better inventory control. Inventory is relieved as orders go across the scale. The DC verifies inventory with ongoing cycle counts.

The facility layout features narrow 8’6″ aisles and a 14’6″ main aisle. For each bay in the rack system, the lower two levels are for primary picking (mail order/e-commerce), and the upper three levels are used to fulfill wholesale and retail orders. Each bay has four pallet positions for faster-moving items at each of 44 locations. These high-volume pallet locations represent at least $50,000 a year in business. Approximately 160 items are located in the main aisle’s fast-moving positions. The fastest movers are stored closest to the picking area.

Batches consist of 25 to 100 orders, which are delivered to tables where they are sorted into individual orders. Sorters then take orders to packing stations across the main aisle. Posters are currently hand-rolled individually (photo 2), but a planned new system will allow them to be picked, packed, and shipped separately.

MOVING FAST

Using the WMS and RF technology, the workers turn around more than 95% of orders within 24 hours. Faster-moving items are kept on pallets instead of in racks, and there is a special Christmas and specialty goods aisle. The warehouse locations are identified by row, bin, level, and the product’s individual location on that level (photo 4). Five cherry pickers enable picking from higher levels. For primary shelves, the facility uses seven stock-chasers with ladders; according to Inman, one person on a stock-chaser equals four people walking, and although each machine costs $5,000, it pays for itself in three months. Every stock-chaser features a 5′ × 36″ platform to help carry orders (photo 1). Cherry pickers have 5′ × 40″ steel platforms — designed and manufactured locally — anchored to the forks, with a safety rim around the edge to keep loads from sliding off.

All shelves have adjustable bars and wire mesh decking (at a cost of $30 per piece) on the bottom to prevent items from falling through. Each of the warehouse’s 6,000 storage locations is designed to accommodate products of different sizes. Posters, for example, are stacked on various levels by size.

“Since we can’t put everything onto pallets, we designed ‘shorty’ locations, which are four levels with four items per level,” says Inman. “The locations allow us to get more intensity of location within a smaller space.” The DC’s shorty locations are designed to hold up to one week’s worth of inventory, making picking easier and faster.

A 1,600-sq.-ft., 80′ × 20′ mezzanine with a plywood floor was installed in 2001, giving the facility space for an additional 200 pallets. The mezzanine is used primarily for 30 SKUs, including large furniture pieces, and has 2,000-lb. test-rated safety netting. At the same time, the DC converted part of its security cage area to add approximately 150 more storage locations, for a total increase of 350 pallet storage locations.

By Thanksgiving, four people are gift-wrapping orders nonstop; 60% of all items are gift-wrapped for Christmas (photo 3). Some of the more popular items are pre-wrapped. During packing, slappers are shipped in manufacturers’ boxes if possible. Packers hand-write the order and box number for each box that is part of a larger order (“No. 1 of 2,” for instance), but a new version of the warehouse management system includes the information on labels that are automatically generated. Packers pack 12-15 orders (40-45 boxes) an hour, using biodegradable fill peanuts, of which 4,400 cubic ft. are delivered at a time and vacuumed into bladders (photos 5 and 6). Eight hundred boxes are on the line at once during peak season. The facility has one mechanized, seven-part conveyor and one manual conveyor; of the former, parts six and seven function as the takeaway conveyor. It is designed to handle 2,000 orders per eight-hour shift. A scale at the end of the conveyor feeds information to the WMS, which transmits a record of all processed orders hourly to MoMA’s New York City offices.

Customers receive shipment confirmations and tracking numbers by e-mail. Ninety-five percent of the facility’s mail orders go by UPS; FedEx handles international shipments. Several LTL carriers handle larger items, and Aero Transportation Services provides white-glove service. Once packed, orders are separated into UPS, FedEx, and USPS categories (USPS shipments consist of only poster tubes and orders sent to P.O. box numbers). A ten-day delivery time is the standard, but most orders arrive within five to six business days.

EVERYTHING IN ITS PLACE

Items that go through receiving are entered into the system and put away within four hours. Putaway has two workers assigned to it. A smaller receiving dock handles as much product as can be processed in a day for scheduled daily retail appointments. Operators use manual logs for receipts. They verify product counts against the packing slip and perform QC audits before entering receipts into a scanning gun that tells the worker the product’s cube and weight and where to put it. A security cage holds jewelry and small items.

SRDC used to pay $400 every other week to have cardboard waste hauled away. After the DC bought a trash compacter and a baler and sold the cardboard bales to a recycling operation, the facility not only got back the space that had been used to store cardboard, but also cut waste-stream costs in half. The equipment paid for itself within eight months.

BACK AGAIN

The facility keeps store returns as part of inventory. Damaged goods go back to the vendor, are sold at employee sales, or are discarded. Customer returns are reboxed when possible. About 3% of orders are returned. Returns are processed within two days and credits issued to 75% of customers within that time. It costs approximately $35 to process and ship customer returns again. Inman says that there were only 200 shipping-related errors in 2001, accounting for one-tenth of 1% of total orders.

STORE BOUGHT

Requisitions from the three retail stores can reach 1,500 pieces. Two dedicated pickers are assigned to pick store orders; packers apply price tags to each item in an order, box the items with the order number and box number on the outside of the box, put the boxes on a pallet (which can be up to seven feet tall), and then write the box and pallet numbers for each SKU on the order packing slip. The stores conduct random checks. “It’s a very manual process,” says Inman. “The only way to improve it would be to give up the retail price tickets, and long-term, we’re trying to wean the stores off them.”

The O+F staff wrote this report.

SRDC Equipment and Systems Suppliers

Forklifts and cherry pickers: Hyster (South River Distribution is an “all-Hyster shop,” Inman says), (800) HYSTER-1, www.hyster.com

WMS: QSSI Powerhouse, (732) 885-1919, www.qssi-wms.com

Retail system: Lawson, handles credit approval and order processing; (651) 767-7000, www.lawson.com

Stock-chasers: Taylor-Dunn, (714) 956-4040, www.taylor-dunn.com

Cubing machine: Cubiscan, by Quantronix, (800) 488-CUBE, www.cubiscan.com

Bar code scanners: Symbol 3100, (800) 722-6234, www.symbol.com

Biodegradable peanuts: Unisource, (770) 447-9000, www.unisourcelink.com

Bubble wrap: Sealed Air, (201) 703-4205, www.sealedair.com

Scale and label printers: Pitney Bowes, (800) 322-8000, www.pb.com

Mezzanine: W.A. Schmidt, (800) 523-6719, www.waschmidt.com

Mechanized and manual conveyors: Century Conveyor, (732) 248-4900, www.centuryconveyor.com