There's high-density storage and there's narrow-aisle storage, but Schenker's gone one better: no-aisle storage. Its ultra-dense system stores pallets 24 deep and requires no human intervention.
David Maloney has been a journalist for more than 35 years and is currently the group editorial director for DC Velocity and Supply Chain Quarterly magazines. In this role, he is responsible for the editorial content of both brands of Agile Business Media. Dave joined DC Velocity in April of 2004. Prior to that, he was a senior editor for Modern Materials Handling magazine. Dave also has extensive experience as a broadcast journalist. Before writing for supply chain publications, he was a journalist, television producer and director in Pittsburgh. Dave combines a background of reporting on logistics with his video production experience to bring new opportunities to DC Velocity readers, including web videos highlighting top distribution and logistics facilities, webcasts and other cross-media projects. He continues to live and work in the Pittsburgh area.
There's no standing in the aisles at Schenker's two Toronto-area DCs. There's no stacking pallets of detergent or cases of tea in the aisles either. In fact, there are no aisles in the storage areas of either of these facilities. The two DCs, through which Schenker distributes Unilever's packaged foods and personal care products across Canada, boast ultra-dense storage systems that store pallets 24 positions deep using sophisticated mechanical devices. And because their operations require no assistance from humans, the systems require no aisles.
These distribution systems—designed jointly by Schenker of Canada and its client, Unilever Canada—were chosen for their ability to accommodate Unilever's need for high-volume order fulfillment while preserving the flexibility required by a third-party logistics service provider (3PL) like Schenker. They incorporate several innovative material handling technologies new to the North American market, which required a substantial investment on Schenker's part. But the 3PL didn't let that stand in its way. "They wanted to take their distribution to the next level," says Jason Cunneyworth, senior director of logistics and general manager of Schenker Distribution in Canada, "so we were willing to spend the money to provide the service levels they desired."
As may have become evident, this is no ordinary third-party partnership. For one thing, its roots run deep. The relationship between the two companies dates back to the early 1990s when Schenker began distributing powdered laundry detergent for one of Unilever's divisions. That wasn't an exclusive arrangement, however. At the time, each of Unilever's divisions made its own deals, which meant the company ended up using an array of vendors. That made it tough for Unilever to optimize its processes and manage its inventory levels.
And it prevented the conglomerate from leveraging its size to reduce distribution and transportation costs.
When it acquired Best Foods brands in 2000, Unilever seized the opportunity to centralize its business. It would contract with just one third party, Schenker, consolidating its Lipton and Best Foods brands in a DC Schenker would build in Brampton, Ontario, and consolidating its consumer goods in an older Schenker facility in Mississauga. This deal, through which Schenker became Unilever Canada's largest logistics service provider, would be a long-term agreement. In contrast to the standard five-year 3PL contract, this arrangement would run for double that term, 10 years.
Cool runnings
Once the contract was signed, the planning could begin. The DCs would require some retrofitting, which would be carried out over several years while the facilities continued to operate.
It's important to note that the goal was not a completely mechanical operation."We did not go with full automation in the facilities," says Leonard Bayard, manager for third-party warehousing at Unilever. "It was more of a 'strategic' automation approach." That strategic automation would include major upgrades to storage systems to create semi-automated storage, installation of a layer picking system capable of selecting layers of products for building mixed pallets, and upgrades to warehouse management software and IT systems.
Today, Schenker distributes everything from Lipton's soups and Red Rose Tea to Ragu sauces through the Brampton DC. The 288,000-square-foot center processes 100 orders per day, amounting to some 17 million cases each year. Though the center has only been open a few years, Schenker has already made some modifications. For example, this past April, it dismantled one of the two-level pick towers used for selecting full cases and replaced it with a more efficient layer picker. This unit, which is basically a rail-guided counter-balanced vehicle, uses four-sided clamps to select layers of cases from product pallets and place those full layers onto an order pallet to create rainbow loads of mixed SKUs. The system, which can pick up to 1,400 cases per man-hour, has cut labor needs and reduced damages and is well on its way to achieving its projected return on investment of two years.
The other facility, the 480,000-square-foot Mississauga DC, handles all of Unilever's personal care consumer products, including the Vaseline, Dove, Sunlight, Pond's, Degree deodorant, Suave, Lever 2000, Q-Tips and Salon Selectives brands. This facility processes 50 orders daily, which translates to 13 million cases annually. Like the Brampton site, the Mississauga DC ships about 45 percent of its items as full pallets and 55 percent as case picks.
Although the facility itself is 30 years old, it houses some of the most up-to-date technology on the continent. When it underwent renovations in the late '90s, Mississauga became the first site in North America to feature a semi-automated storage system known as a Pallet Runner system. This technology, which has been used for several years in Europe, was later replicated in Brampton.
The Pallet Runner system, supplied by Pacific Westeel, provides high-density storage of pallets 10 to 24 positions deep and requires a very small footprint. The system, which offers the density of drive-in racking without the need to drive a vehicle into it, could basically be described as a storage area without aisles—you can't get any denser than that. The system operates using small shuttle carts, known as pallet runners, which carry pallet loads deep into the racking.
In operation, lift trucks carry pallets of incoming products to the end of the storage racks. The driver scans a pallet and receives instructions via an RF device telling him which end row the pallet should enter. He then uses the lift truck to place a pallet runner shuttle (there are six of these shuttles in the Mississauga facility) into the slot at the end of the rack where that SKU will be stored. He next deposits the pallet load on parallel rails just above the pallet runner. The driver then presses the "In" button on a remote control that directs the hydraulic lifts on the pallet runner to lift the load a few inches above the rails. The battery-operated pallet runner then shuttles the load down its row to the next available position and hydraulically lowers the pallet onto the rack rails for storage. Once the load is deposited, the pallet runner returns to the beginning of the row to repeat the process until all positions are filled.
When it comes time to retrieve items to fill orders, the products are extracted from the opposite end of the racking. Once the first pallet of an SKU row is removed, a shuttle is inserted to bring the next pallet to the end position, where a lift truck can gather it as well. The system is also capable of performing a "shuffle." In this function, a shuttle is inserted into the racks to automatically index all pallets forward toward the end positions, keeping products ready to be quickly pulled from the storage area.
Saving space and time
The beauty of this system is that it promotes first in/first out processing while still providing very dense storage. The Mississauga Pallet Runner system is five levels high and stores 8,900 pallets that normally contain about 100 different SKUs (one SKU per storage row). That represents an enormous improvement in space utilization. "Within the same footprint, we can store 4,000 more pallets than we could with floor stacking," says Cunneyworth. That's a big plus in Schenker's eyes. "Real estate is an expensive commodity," he notes. "We have to use our space wisely."
The system has proved productive, too. "We're two pallets per man-hour more productive with this system than we were before," reports Cunneyworth. That's because lift truck drivers no longer spend time in the racks performing putaway and picking duties. The pallet runners now take care of those tasks. Plus the lift trucks don't have to wait around while the shuttles carry products to their storage positions deep within the racks; they can be off retrieving more loads from the docks.
Along with improving productivity, the new system has improved safety and reduced product damage. The pallet runner system is more accurate than lift trucks when it comes to placing pallets into their storage positions, which means products are less likely to bump into the racks' sides when entering and exiting. The system doesn't require the high ceilings typically found in dense storage systems. The clear ceiling height in Mississauga is only 28 feet.
Elsewhere in the building, full cases are selected in the pick towers from racks. These cases are placed directly onto a conveyor belt that feeds a shipping sorter. Using recirculation, the sorter can be programmed to route products down shipping spurs according to a particular sequence, such as delivering a single SKU to a pallet or sorted according to expiration dates. The sequence can also reflect the order in which cases are to be stacked, with heavier items, for instance, sorted first so that they can be manually placed on the bottom of a pallet load.
Only the beginning
Along with boosting productivity and improving both safety and handling, the new systems have increased accuracy. Schenker reports that accuracy has increased to better than 99.5 percent from the low 90s just a few years ago. As a result, returns have dropped to about half the former levels.
The efficiencies have also allowed better labor management. "Our labor force has been where the real reductions have occurred," says Unilever's Bayard. "I can't believe how few people work in our warehouses." Those labor savings have contributed to a reduction in overall costs of as much as 20 percent.
Cunneyworth credits communication for the success. "You have to be very involved with your client to understand their business and make sure the cultures fit," he says. Apparently, the cultures have been a good fit. Both companies hope their 10-year deal will be only the beginning of many years of successful collaboration.
The Boston-based enterprise software vendor Board has acquired the California company Prevedere, a provider of predictive planning technology, saying the move will integrate internal performance metrics with external economic intelligence.
According to Board, the combined technologies will integrate millions of external data points—ranging from macroeconomic indicators to AI-driven predictive models—to help companies build predictive models for critical planning needs, cutting costs by reducing inventory excess and optimizing logistics in response to global trade dynamics.
That is particularly valuable in today’s rapidly changing markets, where companies face evolving customer preferences and economic shifts, the company said. “Our customers spend significant time analyzing internal data but often lack visibility into how external factors might impact their planning,” Jeff Casale, CEO of Board, said in a release. “By integrating Prevedere, we eliminate those blind spots, equipping executives with a complete view of their operating environment. This empowers them to respond dynamically to market changes and make informed decisions that drive competitive advantage.”
Material handling automation provider Vecna Robotics today named Karl Iagnemma as its new CEO and announced $14.5 million in additional funding from existing investors, the Waltham, Massachusetts firm said.
The fresh funding is earmarked to accelerate technology and product enhancements to address the automation needs of operators in automotive, general manufacturing, and high-volume warehousing.
Iagnemma comes to the company after roles as an MIT researcher and inventor, and with leadership titles including co-founder and CEO of autonomous vehicle technology company nuTonomy. The tier 1 supplier Aptiv acquired Aptiv in 2017 for $450 million, and named Iagnemma as founding CEO of Motional, its $4 billion robotaxi joint venture with automaker Hyundai Motor Group.
“Automation in logistics today is similar to the current state of robotaxis, in that there is a massive market opportunity but little market penetration,” Iagnemma said in a release. “I join Vecna Robotics at an inflection point in the material handling market, where operators are poised to adopt automation at scale. Vecna is uniquely positioned to shape the market with state-of-the-art technology and products that are easy to purchase, deploy, and operate reliably across many different workflows.”
Third-party logistics (3PL) providers’ share of large real estate leases across the U.S. rose significantly through the third quarter of 2024 compared to the same time last year, as more retailers and wholesalers have been outsourcing their warehouse and distribution operations to 3PLs, according to a report from real estate firm CBRE.
Specifically, 3PLs’ share of bulk industrial leasing activity—covering leases of 100,000 square feet or more—rose to 34.1% through Q3 of this year from 30.6% through Q3 last year. By raw numbers, 3PLs have accounted for 498 bulk leases so far this year, up by 9% from the 457 at this time last year.
By category, 3PLs’ share of 34.1% ranked above other occupier types such as: general retail and wholesale (26.6), food and beverage (9.0), automobiles, tires, and parts (7.9), manufacturing (6.2), building materials and construction (5.6), e-commerce only (5.6), medical (2.7), and undisclosed (2.3).
On a quarterly basis, bulk leasing by 3PLs has steadily increased this year, reversing the steadily decreasing trend of 2023. CBRE pointed to three main reasons for that resurgence:
Import Flexibility. Labor disruptions, extreme weather patterns, and geopolitical uncertainty have led many companies to diversify their import locations. Using 3PLs allows for more inventory flexibility, a key component to retailer success in times of uncertainty.
Capital Allocation/Preservation. Warehousing and distribution of goods is expensive, draining capital resources for transportation costs, rent, or labor. But outsourcing to 3PLs provides companies with more flexibility to increase or decrease their inventories without any risk of signing their own lease commitments. And using a 3PL also allows companies to switch supply chain costs from capital to operational expenses.
Focus on Core Competency. Outsourcing their logistics operations to 3PLs allows companies to focus on core business competencies that drive revenue, such as product development, sales, and customer service.
Looking into the future, these same trends will continue to drive 3PL warehouse demand, CBRE said. Economic, geopolitical and supply chain uncertainty will remain prevalent in the coming quarters but will not diminish the need to effectively manage inventory levels.
In a push to automate manufacturing processes, businesses around the world have turned to robots—the latest figures from the Germany-based International Federation of Robotics (IFR) indicate that there are now 4,281,585 robot units operating in factories worldwide, a 10% jump over the previous year. And the pace of robotic adoption isn’t slowing: Annual installations in 2023 exceeded half a million units for the third consecutive year, the IFR said in its “World Robotics 2024 Report.”
As for where those robotic adoptions took place, the IFR says 70% of all newly deployed robots in 2023 were installed in Asia (with China alone accounting for over half of all global installations), 17% in Europe, and 10% in the Americas. Here’s a look at the numbers for several countries profiled in the report (along with the percentage change from 2022).
Sean Webb’s background is in finance, not package engineering, but he sees that as a plus—particularly when it comes to explaining the financial benefits of automated packaging to clients. Webb is currently vice president of national accounts at Sparck Technologies, a company that manufactures automated solutions that produce right-sized packaging, where he is responsible for the sales and operational teams. Prior to joining Sparck, he worked in the financial sector for PEAK6, E*Trade, and ATD, including experience as an equity trader.
Webb holds a bachelor’s degree from Michigan State and an MBA in finance from Western Michigan University.
Q: How would you describe the current state of the packaging industry?
A: The packaging and e-commerce industries are rapidly evolving, driven by shifting consumer preferences, technological advancements, and a heightened focus on sustainability. The packaging sector is increasingly prioritizing eco-friendly materials to reduce waste, while integrating smart technologies and customizable solutions to enhance brand engagement.
The e-commerce industry continues to expand, fueled by the convenience of online shopping and accelerated by the pandemic. Advances in artificial intelligence and augmented reality are enhancing the online shopping experience, while consumer expectations for fast delivery and seamless transactions are reshaping logistics and operations.
In addition, with the growth in environmental and sustainability regulatory initiatives—like Extended Producer Responsibility (EPR) laws and a New Jersey bill that would require retailers to use right-sized shipping boxes—right-sized packaging is playing a crucial role in reducing packaging waste and box volume.
Q: You came from the financial and equity markets. How has that been an advantage in your work as an executive at Sparck?
A: My background has allowed me to effectively communicate the incredible ROI [return on investment] and value that right-size automated packaging provides in a way that financial teams understand. Investment in this technology provides significant labor, transportation, and material savings that typically deliver a positive ROI in six to 18 months.
Q: What are the advantages to using automated right-sized packaging equipment?
A: By automating the packaging process to create right-sized boxes, facilities can boost productivity by streamlining operations and reducing manual handling. This leads to greater operational efficiency as automated systems handle tasks with precision and speed, minimizing downtime.
The use of right-sized packaging also results in substantial labor savings, as less labor is required for packaging tasks. In addition, these systems support scalability, allowing facilities to easily adapt to increased order volumes and evolving needs without compromising performance.
Q: How can automation help ease the labor problems associated with time-consuming pack-out operations?
A: Not only has the cost of labor increased dramatically, but finding a consistent labor force to keep up with the constant fluctuations around peak seasons is very challenging. Typically, one manual laborer can pack at a rate of 20 to 35 packages per hour. Our CVP automated packaging solution can pack up to 1,100 orders per hour utilizing a fully integrated system. This system not only creates a right-sized box, but also accurately weighs it, captures its dimensions, and adds the necessary carrier information.
Q: Beyond material savings, are there other advantages for transportation and warehouse functions in using right-sized packaging?
A: Yes. By creating smaller boxes, right-sizing enables more parcels to fit on a truck, leading to significant shipping and transportation savings. This also results in reduced CO2 emissions, as fewer truckloads are required. In addition, parcels with right-sized packaging are less prone to damage, and automation helps minimize errors.
In a warehouse setting, smaller packages are easier to convey and sort. Using a fully integrated system that combines multiple functions into a smaller footprint can also lead to operational space savings.
Q: Can you share any details on the typical ROI and the savings associated with packaging automation?
A: Three-dimensional right-sized packaging automation boosts productivity significantly, leading to increased overall revenue. Labor savings average 88%, and transportation savings accrue with each right-sized box. In addition, material savings from less wasteful use of corrugated packaging enhance the return on investment for companies. Together, these typically deliver returns in under 18 months, with some projects achieving ROI in as little as six months. These savings can total millions of dollars for businesses.
Q: How can facility managers convince corporate executives that automated packaging technology is a good investment for their operation?
A: We like to take a data-driven approach and utilize the actual data from the customer to understand the right fit. Using those results, we utilize our ROI tool to accurately project the savings, ROI, IRR (internal rate of return), and NPV (net present value) that facility managers can then use to [elicit] the support needed to make a good investment for their operation.
Q: Could you talk a little about the enhancements you’ve recently made to your automated solutions?
A: Sparck has introduced a number of enhancements to its packaging solutions, including fluting corrugate that supports packages of various weights and sizes, allowing the production of ultra-slim boxes with a minimum height of 28mm (1.1 inches). This innovation revolutionizes e-commerce packaging by enabling smaller parcels to fit through most European mailboxes, optimizing space in transit and increasing throughput rates for automated orders.
In addition, Sparck’s new real-time data monitoring tools provide detailed machine performance insights through various software solutions, allowing businesses to manage and optimize their packaging operations. These developments offer significant delivery performance improvements and cost savings globally.