If you had walked into Dave Zuern's office last fall, chances are you would have found Zuern and his team huddled around a computer screen. But this wasn't about a quick game of Everquest II or Texas Hold 'Em during lunch break. What the staffers at Briggs & Stratton were watching so intently was not doom-defying warriors, but tiny engine parts whizzing down virtual conveyor belts.
They may look like videogames with their 3D simulation and flashy graphics, but today's DC simulation software programs have nothing to do with entertainment. Like ERP or WMS systems, these programs are all business. The software Zuern used, for example, took the reams of data he entered and spit back highly detailed distribution profiles of some new product lines that will move through his company's new DC when it opens this fall, including their velocity, seasonality, expected order sizes and destinations. But perhaps more importantly, the program helped Zuern and his staff simulate the distribution center's operations under a variety of conditions and answer all the inevitable "what if" questions.
As for how all this came about, the story goes back to engine-maker Briggs & Stratton's decision to build a new 300,000-square-foot distribution center that will open this October. As the company's director of distribution operations, Zuern was put in charge of the project. Anxious for reassurance that the facility (and its rack and conveyor equipment) would be able to absorb the added volume, Zuern decided to run his data through FortnaDCmodeler, a simulation tool developed by Fortna, a consulting firm that offers design-integration services. "Your job is basically on the line here," says Zuern. When it comes to building or leasing a sizeable DC, he says, "it's good to have a tool like this to help you. I didn't want to build a brand new building and then figure out that it's full before it's even done."
In fact, that nearly happened. Within weeks of the time he started entering data into the program, Zuern had the results of the simulation in hand. And although they confirmed many of his assumptions about the new DC's operations, he also learned something that came as a distinct shock: he needed more building. To be precise, he learned that Briggs & Stratton would have to expand the facility's footprint by about 50,000 square feet if the company wanted to remain in the DC for at least 10 years as planned.
Those weren't exactly the results he was looking for, of course, but Zuern was grateful to have the simulation's findings all the same. For one thing, having hard data in hand made it that much easier to pitch the proposed expansion to management. "It's nice to be able to go back to our board and say we didn't just guess at this," says Zuern. "It may have cost us a few bucks, but we're confident that the amount we're asking the company to invest for this project is justified."
Quick fixes
It used to be that the typical simulation project ran pretty much along the lines of Briggs & Stratton's, but that's starting to change. Today, applications are no longer limited to large-scale projects like new DC design and construction. Falling prices and technological advances have made simulation affordable for smaller projects too—say, determining the best combination of material handling equipment, identifying potential bottlenecks in an expansion, or designing the optimal pick path.
"The software is definitely getting better," says Bob Silverman, president of Gross & Associates, a consultancy specializing in material handling logistics, "and [it's getting] easier to use." That's not to imply that the software has evolved to the stage where it runs itself. "There's still a significant training component," Silverman concedes, "but for people already trained in it, it's much faster to do the simulations."
In fact, Silverman reports that his firm is receiving more and more requests for quick-fix simulation projects that can suggest a solution to an individual problem within a couple of days. Gross & Associates, for example, recently conducted a "quick hit" simulation for a client that analyzed the transfer stations and interfaces between the manual and automated parts of its operation. The existing operation uses an automated guided vehicle (AGV) to feed and take pallets away from an automated storage/retrieval system (AS/RS). The AGV system is old and prone to breakdowns, so Gross & Associates designed a pallet conveyor-based replacement for the AGVs. The company then solicited quotes for the pallet conveyor system from three systems integrators, each of which came back with a different suggestion for modifications to the initial design.
To help it decide which approach to choose, the client asked Gross & Associates to run a simulation of each solution. That quick simulation of each of the proposed designs revealed that two of the three consistently achieved the required speeds based on different combinations of inputs. But the analysis also showed that the third was likely to fail with particular mixes. That was valuable information, says Silverman. "Without the simulation, we might have selected an option that would work fine on typical high-volume days, but not accommodate the required rate when out-of-the-ordinary conditions were experienced."
Endless opportunities
It may be best known for helping companies like Briggs & Stratton or Silverman's client avoid costly mistakes, but simulation software can also help uncover opportunities for savings. Take the case of Genesco, a retailer that specializes in footwear and accessories.
When Genesco designed its new DC several years ago, the original blueprint called for more than a half million square feet of space. But after running simulations of its operations at both current levels and with the higher volumes projected for the future, the company found it could cut back the square footage to 320,000 square feet, representing a substantial savings in real estate and capital equipment costs.
In addition, the simulation helped Genesco to consolidate three separate divisions (its retail store operations, its catalog operation and its direct delivery business) under one roof, while balancing the movement of highly seasonal goods and yearly growth of 20 percent. Aside from improving the center's ability to handle seasonal peaks, a new flow design for fast-moving stock-keeping units (SKUs) eliminated the need for replenishment for 50 percent of the company's product lines.
"Internet or direct-to-consumer orders are small one- or two-line orders and your operational costs can eat you alive because of the cost of picking those items," says David Farmer, vice president of sales at Fortna. "There are so many companies out there with multiple distribution channels, whether it's wholesale, retail or direct to consumer. Those orders alone all represent different businesses inside a DC, but simulation will allow you to create a virtual DC with each of those. We run the simulation model several times to capture exactly how the direct-to-consumer goods impact the DC layout, and the same for wholesale and retail. This helps to justify various storage media and layout options. The 'what if' games you can build with this are endless."
