Another Roadside Attraction

Mar 01, 2004 10:30 PM  By

Once upon a time, in the early sixties of the last century, a young fighter pilot named Sam Cutting III came home to Vermont from the U.S. Air Force and decided to settle his family in the town of Ferrisburgh. He purchased a 130-acre farm that had originally been settled in 1792 by Timothy Dakin and remained in agricultural production from its earliest days.

Sam threw his energies into farming and raising his children, and began his long and respected association with the maple sugar industry in Vermont. One corner of his real estate housed a roadside stand from which the previous owners of Dakin Farm had sold genuine maple syrup to tourists as they passed along on busy Route 7. Receipts from the stand amounted to $14,000 in Sam’s first year of operation, and he recognized the germ of a respectable business lurking under the hoods of all those tourist vehicles pulling onto his property.

By the time Sam IV was back from college, it was clear that there was an opportunity to offer the same fine products to customers through the mail, especially as holiday gifts. “Junior” had developed a keen eye for marketing, and was brimming with enthusiasm for a new business channel known as the “Internet.” He immediately embarked upon the process required to bring Dakin Farm into the e-commerce forefront. Today, the company’s Web site (www.dakinfarm.com) reveals a sophistication and reliability usually found only in the sites of much larger retailers.

I first met Sam IV five years ago, long since I had become a repeat customer of his retail stand in Ferrisburgh. By then, he had assumed the day-to-day operational authority of the business, although his father was then (and is still) spending eight to ten hours a day “minding the store.” By then, his business had grown to include a second retail location and an active catalog business, producing gross revenue approaching $5 million a year.

However, the growth curve of the business, after years of reliable expansion, had flattened. The fulfillment strategies that had served Dakin Farm well for years had reached the point where no more volume could be squeezed through the facility, and Sam was clearly determined to “pull the cork out of the bottle.” To find an affordable solution, Sam agreed to let me work a few shifts with his fulfillment crew during the critical busy season. From the perspective of a beleaguered worker, the dimensions of the logistical challenge were very quickly, and repeatedly, obvious.

Dakin Farm’s original syrup stand had morphed into a combination retail store, corporate headquarters, and fulfillment center through no fewer than 14 renovations conducted over nearly fifty years. It had grown out to (and in at least one surprising instance, across) setback lines and up to three stories in some places, with the seasonal storage requirements of refrigerated and dry goods storage provided by rental truck trailers parked on site. At various times over the most recent seasons, up to fifteen 53-foot trailers had been sprinkled around the store and the farm across the road. Barns, sheds, and garages were filled with back stock, and replenishers (known to Dakin Farm as “runners”) had to be provided with keys, flashlights, and maps of the neighborhood before setting off for another case of jam, skid of pancake mix, or gaylord of smoked hams.

Logistics included climbing into the back doors of unlit, refrigerated trailers to find items that were “supposed to be there” in weather conditions that frequently made the trailer the warm zone. The one loading dock available for shipping sloped down to a basement door, making the loading of a UPS trailer an uphill exercise, and its removal a real spectacle.

Packers were jammed into seven stations requiring liberal applications of overtime. Frequent logjams of corporate orders (40 to 50 identical gift parcels) would be packed on top of whatever horizontal surface made itself available. Add to this mix narrow stairs, counterintuitive ramps, and short doors, and Ralph Nader would have refused to work a shift in a flak jacket.

But thanks to great élan, a New England work ethic, and 18-to-20-hour days for Sam, his staff, and his family, the work would somehow get out the door, on time, to happy customers. And those customers all seemed to want more of the same next year.

But Sam had seen enough. For more than ten years, he had not spent any of the holiday season with his family and was getting worn out by the annual marathon. Years of work and worry had left the company almost debt-free, and with interest rates at a 40-year-low, it was clearly time to take the next step.

The property allowed a maximum width of only 50′ (setback requirements) and a maximum length of 120′ (parking requirements), which yielded a footprint of 6,000 sq. ft. Our repeated efforts at budgeting and programming had convinced us we needed 13,000 sq. ft., so it was clear that we were “going up” and building vertically. We looked to the Dakin logo for a solution — and there it was, right in front of us: a gambrel-roofed barn.

Other early designs called for a separate building used to conceal genuine loading docks and employee parking from customers and passers-by on Route 7. The building was divided into three levels. A warehouse took up the first level. Offices and fulfillment occupied the second, with a storage mezzanine for packing materials above.

Estimates of how much storage of various types was necessary and how to balance the three areas of cooler, freezer, and dry storage were based on peak inventory assessments from previous years. Almost everything had a home, with the exception of reserve packing materials, which continue to overflow into adjacent buildings.

“Ferrisburgh’s only elevator” was sized to allow retrieval equipment to move between floors and to replenish a second-level fulfillment area. Fulfillment starts on the second level, where pickers select from glass-fronted refrigeration units on one side of a conveyor, and from flow racks on the other. After going through a checker’s station, the open boxes flow into the packer stations on a lower level. The sealed boxes are placed on an elevated conveyor, which takes them toward the manifesting equipment.

One important innovation to the fulfillment process was the inclusion of a “corporate” line that allows mass assembly of orders with large numbers of identical parcels. Once manifested, the parcels are immediately conveyed down a level and directly onto an accumulation conveyor inside a refrigerated cooler on the first level. From there, they can be palletized to stay in the cooler until shipped, or moved directly to trailers by means of flex conveyors.

Offices and call center were moved to what turned out to be a quiet, attractive, and light-filled and air-conditioned “cathedral” space, with private offices behind relights, manager’s stations out on the floor, and call-center stations in the foreground.

Deliveries are now made to a sheltered dock and off-loaded with pallet jacks or the walkie reach stacker that we used to set the clearances for all storage media. Truckers no longer have to help reconfigure their loads and get their loads shifted from their own trailer into another stationary box. In keeping with best practices, product is stored once, retrieved once, and shipped once.

Pushback racking is used in the cooler and freezer to maximize product storage density, and palletized thinking is evident everywhere. Adequate packing materials and dunnage are an elevator ride away, and except for the value-added smoked meats, produced next door, the distribution center is self-sufficient for up to three or four days at a time. Inventory management is now truly possible, and 25 padlock keys have given way to two door keys and a simple security system.

As a special holiday treat, Sam approved of me working a shift during the inaugural year’s busiest day (Dec. 15), which allowed me to experience first-hand things that were working as intended, and things that still need attention. Eliyahu Goldratt’s “Constraint Theory” is absolutely correct when it suggests that as you solve one bottleneck, three more will appear. My notes from that day led us to the following conclusions:

  1. Labor savings will come gradually, in little bunches, from many different locations. Employees used to many years of familiar patterns need coaxing to try new things.

  2. A roller conveyor is a definite improvement over the original “skate-wheel” type. It reduces damage to parcels. And it is quieter!

  3. Increasing the seven pack stations to twelve was still not enough. Packing continues to require overtime when busy.

  4. Slotting will expand to fill available flow rack space. We quadrupled capacity over the last rack without expanding SKU count, and the whole rack is full.

  5. We knew we were cheating on staging area on the docks because of the limited footprint, but even with three times the room, man, is it crowded down here!

  6. Extender conveyors are creating jams of smaller parcels because of the distance between skate wheels. It looks like we should consider using totes for the smallest packages at the manifest station before sending product down the inclined conveyor.

Sam offers three final tips:

  1. Understand your financial limits before you start to design your dream building. It is time-consuming enough without having to do it all over again.

  2. Don’t try to do it yourself. Get good advice from reliable professionals and listen to them. Build a team you trust and make sure they appreciate all key objectives. I used an accountant, a banker, an attorney, a logistics consultant, a designer/builder, a data and communications vendor, a network administrator, and my father.

  3. Don’t be afraid to shop. By taking the time to look around, we found some impressive deals. Much of our storage equipment, including the reach stacker, was reconditioned, covered by warranty, and half the price of new.

Stephen Harris is a principal of Harris & Harris Consulting, a facility design and construction firm in Lincoln, VT. He can be reached at (802) 453-6384 and at harris@harrisandharrisvt.com.

How Much Improvement Can You Stand?

Sam and I spent three years dreaming up solutions for his storage, retrieval, and fulfillment challenges. But none of them survived the initial “pencil test” put to Sam by his accounting firm: How much volume would the business need to process to afford improvements, and how much more volume would the new facility need to process to increase profitability? To solve this tricky algorithm, Sam and his father put their heads together. They concluded that the project needed to consolidate offices (four officers, four managers, and a 10-seat call center), install refrigerated storage, and create an efficient fulfillment operation. The business had to be on the same roadside property as the original Dakin Farm stand and “enhance the brand.” Furthermore, it could not burden Dakin Farm with more debt than a 10% increase in gross sales could offset. Such a thoughtful approach to the project made an informed design effort possible, though not without complications.
SH

Hard Sell

Dakin Farm products are a challenge to distribute because:

  • The product is highly perishable. Meat and cheese don’t get a “little” stale, like candy or crackers. Stock needs to be rotated and tracked until it gets into the hands of the customer.

  • Packaging is expensive. In the food business, presentation is very important. It can’t just taste good, it’s got to look like a delicious gift!

  • Demand is seasonal. Wicked seasonal. Dakin Farm does over one half of its annual mail order volume in the 28 days between Thanksgiving and Christmas. The work force swells from about 25 full-timers to a collection of no less than 90 FTEs — and a maze of training and scheduling complexities. With more than 3,500 parcels shipped on peak days, the challenge to profitability becomes obvious.
    SH

Shipment Growth

Year No. of Packages
1999 18,767
2000 23,287
2001 21,295
2002 19,599
2003 25,242
Throughput increase = 20%

Thrice Wrong

Whenever considering a new storage and fulfillment facility, three basic rules can prevent problems, minimize costs, and maximize efficiency. On this project, we broke or ignored every one before we even started:

  • Build on one level. Stairs, ramps and elevators cost money, swallow precious space, and create bottlenecks.

  • Build a square “footprint.” Long, thin buildings are very hard to heat and to configure efficiently, and force long walks between areas.

  • Never consider a sloped roof. Low eaves create annoying drip lines, dangerous icicles, and persistent leaks and operational problems.
    SH

SUPPLIERS

Project Management/Facility Design, Harris & Harris Consulting Inc., Lincoln, VT

Building Construction, Bread Loaf Corp., Middlebury, VT

Systems Integration, Kinematic Technologies Inc., Schenectady, NY

Material Handling Equipment, Capitoland Material Handling, Altamont, NY