Simplicity rules, okay

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Make it simple. That’s probably one of the most important maxims in devising any order picking process. A simple, straightforward concept can be more readily planned and applied, understood by staff and managed efficiently – complexity can cost, not only in terms of capital outlay, but also in terms of ongoing operational issues that may ultimately result in lost customers. The only problem is, it can take considerable effort finding that elusive simple solution.

However, time spent examining the detail in the planning stage can save plenty of hair pulling later. Looking at how others have tackled similar problems may give some useful pointers for finding that simple approach.

Two different approaches
Here we make an analysis of two organisations that have taken very different approaches to streamlining their order picking processes. One is a well recognised UK high street retailer, WHSmith, which has adopted voice directed picking; the other is Germany’s largest automotive parts distributor, Auto- Teile-Unger (ATU), which recently opened a new 61300 sq m distribution centre in Werl, near Dortmund, featuring automated handling systems designed to bring work directly to the workers and using pick to light technology throughout. We start with the latter.

Established in 1985, ATU is a relatively young company that has enjoyed phenomenal growth. Beginning with just five employees and one store, the company now has 12,000 employees, 465 retail outlets (including stores in Austria and the Czech Republic), and a turnover of $1.1 bn.

Surprisingly, despite the growth rate the company still has only about four per cent of a market estimated at $40 bn, so that leaves plenty more scope for expansion. Overall, ATU sells 4.5 million tyres a year, spurred on by German Insurance companies’ requirement for cars to have their tyres changed between winter and summer driving conditions. This creates peaks in demand for tyres in October and April.

In principle, ATU is up against the big automotive manufacturers selling exhaust systems, brakes, oils, filters, spark plugs, windscreen glass, water pumps and much more. That means a diverse mix of large heavy items and smaller more delicate products that have to be handled, picked and packed for despatch in a considered way.

Consistent principle
Haag Jochen, plant manager for logistics at the $105m Werl site, believes in keeping things simple. Although automation has been used extensively in the facility, the basic picking principle is consistent throughout, centred on pick and place to light technology. The end result is order accuracy of 99.99 per cent. ‘The philosophy here is – inventory accuracy must be high and the numbers must be right, as the best numbers give the best service to the customer,’ professes Jochen. And the pick to light system employed certainly keeps to that remit by constantly updating the stock position in the store through asking the picker to confirm numbers left in the cages or boxes.

ATU opened its first distribution centre in Weiden, Bavaria, in 1996 but soon needed further logistics facilities to accommodate further expansion. Explains Reiner Karl, director of logistics and information technology for ATU, ‘Our facility in Weiden simply ran out of space and would not support additional growth. The cost of same-day delivery was high for distant stores in the North of the country. So, we looked into designs for as many as five new DCs, but decided that one large automated facility in Werl was the best solution.’

The new DC in Werl – designed and implemented by Witron – is highly automated and vast in proportions. It features three automated storage and retrieval systems (AS/RS) that store and pick tyres, wheel rims and large automotive parts. The tyre storage area alone accommodates 600,000 tyres in over 17,000 locations. A fourth, mini-load AS/RS is used to store smaller parts in 110,000 locations. These AS/RS systems optimise storage capacity within a given footprint, minimising the land needed for the DC. They also enable products to be retrieved and delivered directly to the DC’s workers. Pick-to-light systems direct the order picking from pallets or totes into either wire cages or tote boxes. With the design of the operations being highly ergonomic, productivity is extremely high and labour costs are minimised.

Consolidation buffer
In addition to the four AS/RS units, the DC features an order consolidation buffer that automatically accumulates totes after picking has been completed. Totes from various zones of the processing area for small parts from the mini-load are automatically uffered into storage slots where they are held until a store’s orders have been accumulated. Then they are released as a group to dispatch. Two types of orders are fulfilled at the Werl DC – replenishment orders for the store shelves and 24-hour orders of parts for repairs. Each of the main areas of the DC has a section reserved for 24-hour orders and pickto- light is also used to select these time-critical items. A section is also used to prepare e-commerce orders. Some 150 of the top-selling SKUs are currently offered on-line and there are plans to expand this activity.

The materials handling design and integration, warehouse management system, pallet and miniload AS/RS units, pick-to-light systems, controls and palletisers at the Werl facility were all supplied by the German automated handling specialists, Witron. The new DC has dramatically reduced the transport distances to stores in Germany’s North and West, which had previously been serviced from the other DC in Weiden. The combination of the two DCs in the North and South of the country provides a platform for future growth – with new stores planned not only in Germany but also in France, Belgium and The Netherlands.

The Werl facility picks over 32,000 order lines each day with only 110 workers and in just one shift. The four AS/RS minimise walking distances and optimise picking efficiency. Comments Reiner Karl, ‘We had positive results using AS/RS in Weiden, so it was natural to utilize them again in Werl. Our aim in selecting technology is to achieve accuracy, safety and flexibility. Using the cages and totes also provides for store-friendly shipping.’

The DC in Werl is currently supplying over 150 stores, each of which typically carries 15,000 SKUs. Initial expectations were for the facility to serve about 200 stores but ATU soon found that the systems were so efficient that it is anticipated that Werlwill in fact service some 300 stores.

The building has been designed to accommodate expansion of the four main areas handling tyres, rims, large parts and small parts. When this expansion takes place, the DC is expected to supply some 400 stores.

Goods are received at docks sited close to their storage areas. Tyres are removed by hand from stacks in arriving vehicles and loaded into wire racks which are loaded onto a conveyor using a powered pallet truck. The racks are then raised by a vertical lift up to the conveyor system, where they are transferred into the tyre AS/RS. Wheel rims arrive on one-way Euro pallets. Each pallet load is lifted onto a slave pallet so that it can be handled by the automated systems. These are then loaded onto a conveyor that transports them to the lift and the third level where they enter the AS/RS in which wheel rims are stored.

The other goods-in docks receive the other products including large and small parts, hazardous goods and bulky items. Most large parts arrive in cartons on Euro pallets but some arrive in metal boxes that have the same footprint as a Euro pallet. Half of all large part receipts are a single SKU and are given a licence plate that is scanned into the WMS. The other half of pallets comprise mixed SKUs that have to be re-palletised by hand to create loads with only one SKU. The pallets then follow the same route to the upper floor where they are stored in the large parts AS/RS.

Small parts pallets are placed on conveyors upon arrival and sent to a repacking area where items are removed from suppliers’ cartons and placed into two sizes of plastic tote that are designed to work with order picking the automated equipment. These totes are then conveyed to the mini-load AS/RS for small parts. Hazardous materials handling is not automated; these goods are taken by fork-lift truck to pallet racking as directed by on-board RF terminals. Similarly, bulky items that are too large to be transported by conveyor are taken by lift truck to floor level storage.

Picking is performed in waves, with items for 20 stores collated within each wave. Cages holding tyres are removed automatically from the AS/RS as directed by the WMS. These are delivered to picking stations on the second level. Twenty product cages arrive on one side of the picking platform and contain the first 20 SKUs of products for the 20 stores in the wave. Pick-to-light is used to direct the number of tyres to be removed from each cage. These are then placed into the assigned order cages staged on the opposite side of the platform. Once all tyres from the product cages have been removed, the cage is automatically released and returned to the AS/RS. Another cage is then brought out to take its place. Picking continues until all tyres for a store have been collected, at which point the order cage is released and conveyed to dispatch.

Put-to-light system
Pick-to-light is also used to gather items for orders in the rim picking area, while large parts are picked in their own processing area. Each of these areas follows the same picking procedures employed in the tyre picking area.

In the small parts picking operation totes holding product are removed automatically from the miniload and directed to the picking stations. Each station has 20 totes, one for each store in the wave, staged along the two sides of the work area. There are 10 of these workstations utilising put-to-light to collect items into order totes for the 20 stores in the wave. Completed and full totes are conveyed to an order consolidation buffer on the second floor. This unit, which is similar to a small mini-load in its design, accumulates all of the totes required for each individual store. Once gathered, the totes are released together and conveyed to the third level where they are automatically palletised and then transferred to dispatch..

The company uses its own fleet of 62 lorries for deliveries to its store network. The DC has 21 shipping doors, 20 of which are used to load items for the stores in the current wave. Three conveyor lanes per door are used to accumulate items delivered from each of the picking areas. These are gathered by powered pallet trucks and loaded onto tandem trailers, with tyres loaded first. Each store normally receives one trailer but larger stores are sent both of the trailers in the tandem.

In our second case study, WHSmith took a simple approach too by using voice technology.

Anyone with an eye on the news will have an insight into the struggles of the high street retailer in the face of increasing competition from supermarket chains and online retailers. WHSmith is no exception. Almost a British institution, WHSmith’s high street branches have been striving to hold onto their ground at the forefront of high street shopping in recent times. Maintaining high shelf availability is a key issue and is, no doubt, a significant point of focus for new chief executive, Kate Swann, who has been brought in to spearhead initiatives for revitalising the business.

Performing well
One area that has performed well throughout and continues to thrive is the travel group. WHSmith’s travel group comprises 210 outlets in airports, train stations, bus stations and hospitals throughout the UK, stocking everything from books and stationery, magazines and confectionary, to travel essentials and high-ticket items such as cigarettes. It is essential to deliver the right merchandise in the right quantities to ensure shelf availability at the retail outlets and that places a heavy emphasis on having a highly efficient picking operation.

To this end WHSmith Travel’s warehouse in Holford, Birmingham recently became the test bed for voice directed distribution.

Completed roll-out
In late March 2004 voice reseller VoiteQ completed a rollout of the Vocollect Talkman T2(tm) voice-directed distribution system for 50 WHSmith users on the warehouse floor. The voice system integrates seamlessly with WHSmith’s existing Dataware WMS (warehouse management system) via VoiteQ’s proprietary VoiceMan software.

‘The entire migration was surprisingly smooth,’ commented Eddie McGrotty, supply chain finance director, WHSmith. ‘You would imagine an implementation of this kind to be a complex, time-consuming project, however we were up and running in almost no time at all, as there was no requirement for a complete overhaul of the systems and processes we were used to.’

The belt worn voice system, which replaces previous paper lists, allows order pickers to receive picking instructions via their headsets, confirming picks as they go by reading back the last three digits of the product EAN code to ensure accuracy. The result is asmooth, continuous warehouse operation.

‘The Talkman system can understand users’ commands, regardless of accent or inflection, so is easy to use,’ explained David Stanhope, CEO, VoiteQ. ‘We pre-agreed a series of words with WHSmith that would help them to work with maximum ease. Users were then required to record a template of those words, once only, before starting to work with the voice system. This took only 20 to 25 minutes per user.’

While only a handful of standard commands, such as ‘ready’ and ‘location’, cover 95 per cent of the required functions for picking, the flexibility of the system allows for any number of additional words to be recorded, for contingency. WHSmith especially relies upon the ‘description’ command for clarification within the book section, where several different titles share the same pickface location. This simple call for additional details prevents a mis-pick that might formerly have easily occurred.

‘In just one month of using voice, even the selfconfessed ‘technophobes’ within the organisation can’t imagine life without it,’ recounted site manager Jim McCafferty. ‘We were able to fully train each user in a matter of a couple of hours.’

Although it is early days for WHSmith, the move to voice is already reaping considerable rewards. Because the Talkman T2 terminals enable pickers to move around the warehouse ‘hands-free, eyes-free’ they can proceed without interruption, at all times. As a result the general pace of work has stepped up, with the users themselves controlling the speed of the flow of instructions from their systems.

This new method of picking eliminates the need to  return to base to collect a new list between jobs – a simple ‘new job’ command being sufficient to load a new order. There are also valuable knock on benefits to other areas. Should a picker arrive at an empty location, the ‘short’ command advises the system that the shelves need to be replenished.

This information is picked up by the WMS and  passed on to the replenishment team for action. By the time the picker returns to this station at the end of the job, the problem is rectified.

Accuracy is up
Most notably, accuracy is up to around 99.9 per cent with voice picking. ‘It is physically impossible to pick the wrong item,’ said McCafferty. ‘If a user provides an incorrect barcode the system will not progress until the correct code is given. It also asks for quantity verification, to ensure the correct amount has been collected.’

Importantly, improved pick accuracy means that far less resources are spent on tracking down and verifying system and delivery errors. Add to that the overall increase in profitability due to productivity levels going up and the financial case for voice is compelling. During the first month of operation at WHSmith, estimated daily pick levels rose from 561 to 701.

Dispensing with quality control
Moreover, since accuracy levels at WHSmith are much higher, the retailer has been able to completely dispense with quality control staff within the Holford warehouse. Those previously employed with on-thespot order checks have been reintegrated into the picking team, providing valuable reinforcement in that area. There is also a lesser requirement for data processing staff than with manual picking methods, and the stores themselves no longer need to allocate resources to checking in their deliveries.

Equally, safety is key. Voice was chosen above handhelds on the basis that users wouldn’t need to constantly look down at a screen. ‘With forklifts and employees moving around together, it’s crucial to stay focussed,’ said McCafferty. ‘With voice technology pickers can remain aware of their surroundings at all times.’ Similarly McCafferty perceives that it would be hard to damage the voice kit, as it doesn’t have to suffer being constantly picked up and put down, as with handheld devices.

Better equipped
Back in the office, staff have found themselves better equipped to deal with telephone enquiries from regional outlets since being able to track the progress of picks in real time via the Voiceman screens. Furthermore, owing to improved accuracy, incoming reports of delivery errors have fallen from around 100 per week to less than twenty; even those relating to matters other than mis-picks. ‘We are delighted with this, as this project has always been about us finding a way to provide a better quality of service to the stores,’ stated McCafferty.

For the future WHSmith Travel plans to take a look at introducing a higher degree of automation into the replenishment and dispatch processes, of which voice will undoubtedly have a role.

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