Competing to service the needs of the building and plumbing industry requires a fast and efficient distribution network, but complexity and cost issues weigh heavily on a sector that commands high SKUs and a legacy of fragmented supply chains.
Market leader, Wolseley UK, supplies more than 400,000 products via its 1,850 branches – distributing tomainly trade and professional customers through brands such as Plumb Center, Build Center, Climate Center and Parts Center. The product range is extensive and varied, to say the least, encompassing heavy building materialssuch as bricks, block, timber cement and paving, to central heating components, plumbing materials, ventilation products and spare parts. The breadth of the range presents a significant challenge. So too, does the eclectic nature of its legacy supply chain, arrived at through the company’s acquisitive history.
‘The supply chain is absolutely fundamental to the Wolseley philosophy… Our business model is built around offering our customers a service better than all others’,says Mark Harrison, supply chain director, Wolseley UK.
And to this end, Wolseley has embarked on a €150 million investment programme to streamline its supply chain – a change process that is in mid flow, but which has already resulted in the construction of a €62 million National Distribution Centre (NDC) in RoyalLeamington Spa. This highly automated, state-of-theart, distribution centre – project managed by automated materials handling specialists, FKI Logistex – is the keystone to a realigned national network of five RDCs. ‘This is just a piece of the jigsaw. The NDC, North West RDC (Chorley) and one [RDC] for the South East is a €150m investment – the return on capital employed achieves well in excess of the group’s cost of capital requirements,’ explains Harrison.
Neil Jones, general manager, logistics development at Wolseley, outlined the strategic thinking behind the network redesign. ‘We embarked on a UK strategy review in 2004. At that time we had 25 – 30 distribution centres ranging from large to small. The business has always been a multitude of different brands and there have been a number of acquisitions. We wanted to look at better vehicle utilisation, cost reductions and inventory reductions – these were key drivers for the move.’
Wolseley used consultants, IBM, on the network assessment. Noel Moriarty, alliances leader, IBM Global Business Services explained, ‘It was a cost reduction exercise, the network operation grew throughacquisitions resulting in excess inventory and transport movements. So we were looking at rationalising the number of warehouses and stock. They had approaching 30 warehouses operating on a national basis for a number of brands.
‘We looked at one national distribution centre for the slower moving parts for distribution overnight within a regional distribution structure. The idea was to make a scientific estimation of the minimum stockholding for the branch and then top up from the regional DC, with the national one used for slower moving products and smaller items.’
Fifty per cent of goods are supplied directly to branches, mainly heavy bulk items such as cement and building blocks. But with plumbing products, 80 per cent goes via RDCs and the NDC. ‘When the project is complete, 82 per cent of centrally distributed product will be delivered via RDC’s and 18 per cent via the NDC’, estimates Jones.
‘The rationale is that we wanted to clear space for fast moving stock at the RDC level. By moving to an NDC we were able to cut inventory on the slow moving items. The trick is to determine what is slow moving – there are over 400,000 skus on the company’s data base!’ exclaims Jones.
There will still be direct distribution from suppliers to the branches but where there are price advantages, the aim is to bring them through the DC. ‘We want more product to go through the DC – from 45 per cent at the start of the project, we would like to exceed 65 per cent,’ says supply chain director, Mark Harrison.
IBM’s Moriarty highlights the visibility issue, ‘Of about half a million skus only 100,000 lines were being used at any one time. There were an awful lot of specials generated, and this was due to a lack of visibility of where items were at the DC level. The guys who ran the DCs were king of their area, but the dynamics of the industry are such that imposing discipline was crucial.’
So, looking at the NDC, what was the thinking behind going for automation? ‘We would have needed a much larger facility if we went manual and then there is the labour availability issue,’ explains Harrison. ‘The nature of goods going through here, with high numbers of SKUs, it’s far more efficient on bringing ‘goods to man’ –reconfiguring pick faces is hard work, but with an automated facility this is far easier.’
Ahead of schedule
An unusual aspect of the NDC project was the assignment of an automated materials handling specialist, FKI Logistex, to the overall management of the build project, including managing Bowmer andKirkland, the company handling the build and construction of the facility. The project, the first of such a comprehensive nature for FKI Logistex, was delivered ahead of schedule.
Wolseley’s highly automated NDC in Royal Leamington Spa is split between two buildings, prosaically designated Building ‘A’ and Building ‘B’. The 220,000 sq ft Building ‘A’ receives goods, has a bulk storage facility of 18,000 narrow aisle rack locations, 5,000 narrow aisle shelf locations, 4,000 wide aisle locations, and houses a decanting operation, situated on a mezzanine area,where incoming goods are placed into totes and moved by conveyor over a bridge to Building ‘B’. Operations in this building are predominantly manual.
Building ‘B’ is the highly mechanised heart of the operation, designed to pick 30,000 order lines per day. Here seven FKI Logistics miniload cranes serving 80,000 tote locations work in tandem with six high speed cranes serving 10,000 locations to bring fast moving goods to the picking stations. Above on a mezzanine level 21 conveyor fed picking spurs service the slower moving items area. The majority of orders are then transported back via the bridge to Building ‘A’ for despatch from the 10 bay despatch area.
Running through the system: Goods are received through Building ‘A’ between the hours of 4am – 10am and are checked off against orders. The demand planning group sets the parameters for deliveries – at the moment this is about 200 pallets a day but when ramp up is complete this will be closer to 800. The advanced shipment notification from the supplier is matched against the order and this is checked against the pallet load as it arrives. All incoming goods will be booked in and reconciled before 2pm.
Depending on the product’s parameters, it will be allocated to the bulk store in Building ‘A’ (to the narrow aisle pallet racks, the narrow aisle shelving area or the wide aisle racks) or forwarded to the decanting area for breakdown into totes and forward movement on to Building ‘B’. Large products such as boilers, water heaters and long pipes (up to 6m long for air conditioning systems) are stored here or cross docked for despatch to the RDCs. A fleet of Jungheinrich trucks serve the aisles, consisting of a mix of man-up order pickers, reach trucks, counterbalanced trucks and powered pallet trucks.
In the decanting area – situated on a mezzanine – nine stations are available for spliting down palletised goods into totes. The operative scans the tote’s bar code, followed by the bar code on the goods received sheet and loads the container with the number of items indicated by the system. A weigh scale checks the tote (25 kg max) before it is inducted onto the FKI Logistex conveyor system which transports the tote across the bridge to Building ‘B’.
According to Nigel Molloy, National Distribution Manager for Wolseley UK, they are in the process of talking with suppliers about receiving goods in totes where appropriate. This will obviously reduce the pressure on the decanting operation and smooth the flow of goods into the picking area.
Totes arriving in Building ‘B’ descend via a spiral section to the ground floor level and are conveyed to the mini load storage aisles or are forwarded on for replenishing pick faces on the mezzanine level.
Replenishment takes place overnight (the facility runs a three shift operation) and so ‘It’s important for us to have enough material in the pick area for a days work without having to replenish’, says Molloy. All product islocated to a storage environment that matches its onhand quantity and expected speed of despatch. Picking operations in Building ‘B’ run from 2pm – 10pm.
Automation technology from FKI Logistex is at the heart of the picking operation in this building and centres around bringing ‘goods to man’ and circulating totes to the faster moving picking spurs on the mezzanine. Eight goods to man (GTM) picking stations are fed by totes from a seven aisle automated tote crane system – a store offering 80,000 tote locations. Also alongside the GTM stations is a high speed crane system (six automated high speed cranes) with 10,000 tote locations for faster moving products.
Driving the picking operation is a High Jump warehouse management system (WMS). Totes from the mini-load systems are called out in accordance to instructions from the WMS and are conveyed to an operative at one of the eight GTM picking stations. Here the operative scans the bar code on the tote and the RF terminal gives instructions as to how many items to pick. The system also specifies the type of box the item is to be picked into – this may be a short carton, medium carton, or a tote (single items direct to customer are placed in a tote and sent for manual packing into a jiffy bag. This operation is expected to grow to about 20 per cent of the volume of goods despatched.)
On completion of the pick, the operative places the carton or tote onto a take-away conveyor which routes the container through the various manual picking areas on the mezzanine. If further items are to be added to an order, the carton/tote is routed to the relevant spur on the mezzanine level, where operatives pick from live storage racks, shelves, or pallets depending on the dynamics of the sku.
The RF system used throughout is from Psion Teklogix and is capable of accomodating voice picking. ‘We may well look at voice picking in future, but the decision will be based on cost and cost benefit’, says Molloy.
Goods to man
In addition to the 21 conveyor fed picking spurs, two Logimat automated shelf systems are used to bring goods to man. The building has also been designed to take an extra level of mezzanine to cope will future needs.
Cartons move from the mezzanine area down a spiral section to the ground floor where they pass to the automated sealing area designed to handle 600 cartons per hour. Here their weight is checked, documents inserted (delivery note and/or invoice), before being automatically closed. This piece of kit is particularly clever as it senses the level of the goods in the carton and then automatically cuts the carton down and folds the sides to suit. A lid is then glued to the top. Finally, a manifesting label is applied and the carton is routed off for despatch by carrier (DHL or Parceline). The software running the carrier manifesting and routing is Kewill.
Totes for internal distribution to RDCs are routed across the bridge for dispatch from building ‘A’.
All in all, Wolseley UK’s €150 million investment programme is well on the way to realigning the company’s distribution network, so enabling the company to cope with a planned doubling of the business over the next five years. With a turnover of €4.6 bn in the UK that’s a major task. But then the new NDC and network is, in the words of Mark Harrison, ‘a significant competitive advantage’.
Perhaps Harrision should consider entering for this year’s European Supply Chain Excellence Awards. There is much here to impress the judges.