Siren Song

Aug 01, 2001 9:30 PM  By

In May of this year, The New York Times Magazine ran an article about the ruins of the New Economy. Titled “The Day After,” the story mourned the demise of dot-com paraphernalia. Computer monitors, hard drives, and keyboards, brave vanguards of a communications revolution gone wrong, have ended up by the thousands on the auction block. The “giant yard sale” signals the collapse of unrealistic dreams, according to author David Brooks, but more important, “what’s gone is the sense that the people who are using the stuff are on the cutting edge of history and everyone else is road kill.”

That may well stand as the definitive statement on our fascination with technology and the wonders that we believe it can do for us. The 1990s will likely be remembered not as the age of computers but as the age of computer obsession. In those heady times, many companies, online and not, were seduced by the siren call of cyberspace, only to crash on its rocky shores.

Sifting through the debris yields the understanding that technology is less than useless if it fails to solve a business problem, or worse, creates new ones. Does your operation suffer from poor worker productivity? Your reflexive response might be to rush out and buy a pick-to-light system. But it may not address the real problem, which could be anything from low wages to inadequate benefits to a tyrannical supervisor.

If your business is small, investing in unnecessary technology can have disastrous consequences. You probably deal directly with consumers for whom single-line orders are the norm. Automating your facility can be tricky simply because of the logistics involved. Some small to medium-sized marketers opt to limit their warehouse automation severely or dispense with it altogether.

“Unless you’re willing to spend big bucks, there are no technologies out there that work well for single orders,” says Robert Footlik, a warehouse consultant in Evanston, IL. “The only technology that really makes sense for small batches is to make them into larger batches — otherwise 95% of a warehouse worker’s time will be spent at the carousel or walking around the warehouse picking orders. But if you create a batch, and set up a way to organize it, your ratio of dead walking to product picking goes way down.”

No overkill

Material handling experts agree on one point — neither hardware nor software should be integrated into a warehouse operation before the role they will play is carefully defined. Many technologies have the potential to create more problems than they solve. Some require a steep learning curve, while others may even disrupt the life of a business, blockading day-to-day routines. Decommissioning a piece of equipment or software may come with many hazards as well; sometimes they cannot be uninstalled without hampering the entire operation.

“The measure of whether to invest in a given technology will depend on the quantifiable payback achieved as a result of implementation,” says Ron Hounsell, vice president of software solutions at Tom Zosel & Associates, based in Long Grove, IL. “Other drivers may include customer requirements. Some customers insist that distributors print labels in their format, for example.”

But don’t let someone else’s demands direct your business, Hounsell adds. “The point is that one should invest in such technologies only when the payback significantly exceeds the downsides of implementation, whether it be the big money required to purchase the stuff or the negative impact the technology may have on the operation in the short run.”

In recent years many direct fulfillment operations have deployed information technology and hardware solutions to their best advantage, and have done so without exceeding the parameters of their need for such technology. Plow & Hearth, Inc., in Madison, VA, is a case in point. A business-to-customer retailer and catalog merchant specializing in products for country living, Plow & Hearth derives roughly 60% of its mail order business from single-line orders.

Until last year Plow & Hearth still employed manual picking and power takeaway, both calling for several inspections, also conducted manually. Every package received multiple manual scans, needlessly protracting the company’s effort to get the order to the customer in as short a time as possible. The problem was especially acute in the shipping and receiving area, where six docks had been allocated for UPS, FedEx, and other carriers. The layout of the old distribution system made it impossible to use more than three of the docks at any one time. This resulted in a palletizing crisis that was not resolved until a new automated conveyor system was introduced on Oct. 12, 2000.

“We’re unique here in that we pick directly into the shipping carton,” says Caroline Busick, director of warehouse operations. Once an order is complete, it is placed on a takeaway conveyor that runs between the picking lines. The conveyor carries the orders to a labeling center, where workers attach a label to the invoice and affix a carton ID number — which functions as a unique identifier — to the other side. The carton moves to an inline scale that verifies its weight and contents against data in the facility’s WMS. “This has eliminated the need for 100% inspections and put an end to the palletizing nightmare,” says Busick.

The inline scales, which can scan up to 30 packages per minute, have a metering belt right next to them. The scans upload all manifest information automatically while the packages remain in motion. After that, each carton is automatically forwarded to one of the six docks for shipping. Thanks to this technology, Plow & Hearth’s throughput has nearly doubled, Busick says. The company also recently installed a new WMS, which has vastly improved the sorting and waving of pick tickets and taken much of the bite out of inventory.

On the fly

The Orvis Company, based in Manchester, VT, also employs an automated conveyer system, currently undergoing a facelift. Orvis specializes in fly-fishing products and accessories. The company is active in five business channels, all of them served by the same distribution center. While the most important of these is the mail-order catalog (of which online transactions form a significant part), the company also operates 26 retail stores and supplies 500 wholesalers around the world.

According to chief operations officer John Moticha, the Orvis facility’s conveyor is tied to an Aristo software program that shops shipping rates and creates manifests. It also matches multiple orders, significantly reducing both postage and carrier costs.

‘We use paper pick tickets because they contain information that allows us to sort at the pack sorter.’
Brad Grimsley, DFS

“The system picks carriers based on rates and shipping times,” Moticha says. “Frequent rate increases make it indispensable. It has been in place for about three years now, and when the upgrades are complete we expect it to do even more for us than it does already.”

Distribution Fulfillment Services (DFS), of Groveport, OH, is a subsidiary of Spiegel, Inc. that handles all retail and direct distribution for some of the biggest shooters in mail order, including Spiegel Catalog, Eddie Bauer, and Spiegel-Hermes General Services. The company has two U.S. warehouses and one in Canada. Combined, the three facilities consume more than six million sq. ft.

The fulfillment technologies that DFS employs are highly sophisticated. Most of them are deployed at the Groveport facility, from which product is shipped to locations throughout the U.S. The Groveport distribution center is equipped with four tilt tray sorters — one in returns, two in packing, and one more in shipping. Each serves a specific purpose and pays a multitude of dividends in terms of cost and labor savings.

The packing sorters, for instance, provide DFS the ability to aggregate merchandise into an order level, allowing the center to use the most efficient pick methodology possible. Two tilt trays process about 30,000 items an hour, then forward the orders to the shipping sorter, which sorts the cartons by ship zones. The system allows the company to control transportation costs by taking advantage of money-saving options such as “zone hopping,” whereby orders are sent to regional shipping points and thereafter forwarded to the individual customer’s mailbox. Return sorters sort out graded merchandise and batch product to be returned to inventory within the warehouse.

“We use a warehouse management system of our own invention,” says Brad Grimsley, vice president of the Groveport operation. “The system batches tickets. We chose to use paper pick tickets versus pick-to-light, because the tickets contain information that allows us to sort at the pack sorter, and they also contain information that’s useful in returns.” All pick tickets are presented to the picker in the most efficient path possible, and the WMS prints messages on the print ticket to alert the picker when the path needs to be altered. “We also employ flow racking for high-velocity SKUs, which create very dense picking areas. The system works extremely well for us, and keeps everything moving right along.”

D. Douglas Graham is a freelance writer based in Columbia, MI. His articles have been published in Warehousing Management, Textile Rental, and Country Business. He can be reached by e-mail at doug@midamerica.net.

The Eagle Has Landed

Staying simple can be highly complex, as American Eagle Outfitters (AEO) discovered when it upgraded its systems to accommodate huge increases in volume.

The Warrendale, PA, apparel retailer operates mall-based stores in 40 states, most of them east of the Mississippi River. In 1994, when the chain had 150 stores, the company installed an automated material handling system from Rapistan. Six years later the number of stores had ballooned to 520, forcing AEO to expand its line of merchandise and venture into electronic data interchange, vendor-managed inventory, and e-commerce. By that time, the size of AEO’s distribution facility had reached 360,000 square feet. Employees were working two eight-hour shifts a day and processing thousands of SKUs.

With so much on its plate, AEO decided to upgrade its distribution system. The company had set extremely high performance standards for itself. Through what it called “velocity distribution,” it hoped to achieve a turnaround time of 48 hours from receipt to shipping, so that it could stock its stores faster than anyone else in the business.

But velocity distribution turned out to be a tall order, so to speak. AEO’s distribution system worked on the principle of “post-receipt,” meaning that inventory was not accounted for until it actually arrived at the warehouse. Eighty percent of all the company’s SKUs were imported by then, but the old system’s limitations were slowing the inventory’s journey to the stores and putting the brakes on other parts of the operation as well.

AEO upgraded its Rapistan material handling solution in installments, with the aim of transforming its distribution system from post-receipt to pre-receipt. Such a system was bound to maximize efficiency, as it would alert AEO to the ultimate destination of merchandise before it arrived at the distribution center. The company’s suppliers and employees assisted in the process. Buyers, vendors, and allocators coordinated their efforts to ensure that products were received at the distribution center in a manner that would guarantee speedy delivery to retail stores. AEO buyers encouraged vendors to ship merchandise to the distribution center ticketed, sized, and packaged in bunches of the same styles and colors. This gave AEO allocators advance notice of incoming product, which in turn helped ensure that each store received only the materials intended for it. Vendors also cooperated by pre-packing boxes for cross-docking or grouping clothing items for broken-case fulfillment.

The system in action

The final phase of the company’s new distribution system went on line a little more than a year ago. These days, garments arrive at the center in full containers or trailer loads. Before an order is received, an advance shipping notice is faxed or e-mailed to AEO, indicating the number of cartons in the shipment, along with each carton’s identification number and a list of the items it contains. After the allocations department documents this information, the merchandise is forwarded to individual stores. The DC’s warehouse management system maximizes throughput, allotting each carton a place in the distribution facility and forwarding location data to the receiving controller.

When the trailer arrives at the dock, its number is entered into the receiving system and the cartons are conveyed to the receiving sorter. There they are scanned by bar code readers and forwarded to one of six destinations within the facility: no-read, cross-dock, full case, break case, pallet build, or test extract.

No-reads have misplaced, damaged, or unidentifiable barcodes. Once the correct barcode is applied to a no-read carton, it is reintroduced into the sortation system. Cross-dock cartons are rescanned. They then receive a shipping label with a destination bar code, along with an address label in plain language. After that the carton is scanned a second time and returned to the shipping sorter.

Full-case cartons go directly to a full-case line, where they are passed through a pop-up wheel sorter to route the product to the assigned wheel packing system sorter. Broken-case cartons go to a conveyor loop that diverts them to a series of gravity holding lanes, where an employee scans the ID labels with a radio frequency reader instructing him how to process the box’s contents. Next, the product is distributed to totes, and an operator scans the tote bar codes to match the totes’ distribution instructions. The totes are carried to an accumulation conveyor, where they join the full-case cartons for forwarding to the packing station.

Pallet-build cartons are sidetracked by a pop-up wheel and organized by their purchase order numbers. All cartons designated pallet-build are marked as early receipt or reserve stock for replenishment. The palletized boxes arrive at an active picking location within the warehouse, or are put into elevated storage. The cartons are scanned to a pallet ID, which itself is scanned, and the information is entered into the locator system. Cartons designated “test and extract” arrive at that station for the purpose of quality control. Some contain new product designs earmarked for test marketing in select stores.

Augmenting the system are pick-to-light and put-to-light systems, guided by the WMS, and information acquired at the store level through RF scanning. Shipping is also highly automated. Packages are scanned and sent through one of 10 shipment doors, a new store-hold pallet-build area, or two “pack and build” pallet-build areas. Some receive a pallet ID and are held for future shipping. Cartons bound for one of the 10 portals are scanned at the trailer door before loading. The final carton receives a manual scan, from which a shipping manifest is cut.

AEO vice president of distribution Michael Fostyk reported to Rapistan management that the new system had enabled the apparel merchant to “achieve a very significant increase in productivity, based on the cost per unit shipped,” and that AEO had been able to exceed its goal of a 10% increase in productivity. “We’ve been able to move from three eight-hour shifts to two, doubled our receiving volume, and achieved significant improvements in flow-through operations. Previously it could take anywhere from 12 to 24 hours to process a cross-dock shipment. Using the new system it can take only an hour or two.”

With the installation of Rapistan’s pack-and-hold solution, AEO achieved velocity distribution with time to spare. The system turned out to be just the ticket for this rapidly expanding operation, partly because AEO upgraded with a purpose and practical use in mind — not something that can be said for everyone who opted for such technology in the recent past.
DDG