Peter Bradley is an award-winning career journalist with more than three decades of experience in both newspapers and national business magazines. His credentials include seven years as the transportation and supply chain editor at Purchasing Magazine and six years as the chief editor of Logistics Management.
As sure as potholes will appear in the roadways, automobiles will break down this year. Tires will pop, axles will break, timing belts will wear out, batteries will die. And frustrated drivers will want new parts at a moment's notice.
Whether those parts are for a '79 Mazda, an '86 Ford or an '01 BMW, the cars' owners will want them now. Any auto parts store or garage worth its road salt had better be ready and able to deliver.
Therein lies the challenge for Pep Boys, one of the nation's largest automotive parts dealers. In business since 1921,the company sells parts, accessories, tires and batteries and provides auto repair and maintenance services through 629 stores in 36 states. Its customers arrive at the stores in every sort of car and light truck imaginable, which guarantees an ongoing demand for tens of thousands of different parts.
Taking stock
Market analysis has given Pep Boys a pretty good idea exactly what parts should be in stock at each store. "We know that the sweet spot for us is cars between four and seven years old," explains David Schneider, the company's director of industrial engineering. Those tend to be cars that are no longer covered by manufacturers' warranties, but are still seen by their owners as worth investing in for repairs and maintenance.
In fact, cars in general tend to stay on the road much longer these days than their predecessors did. As a result, the company now carries an unprecedented number of stock-keeping units (SKUs) within its distribution network -more than 40,000 at last count. Some are high-volume items like oil filters or containers of motor oil and windshield washer fluid, with many units sold each day. Others-like fuel pumps and parts for cars of a specific model and year-move across the counter far less frequently. Some are bulky and heavy, some are bulky and light,others are quite small but valuable.
Despite the proliferation of SKUs in recent years, the company is committed to keeping inventory at the store level to a minimum-24,000 to 26,000 SKUs. That means it must depend heavily on a high-performing distribution network for support. That network today consists of five high-through put distribution centers, all approximately 400,000 to 500,000 square feet in size, located in Indianapolis; Chester, N.Y.; Atlanta; Dallas; and Los Angeles.
A few years back, the company launched a pilot program to revamp its DC operations to keep up with the growing demands. Starting with the Indianapolis DC, it began testing initiatives designed to accelerate the picking process, improve put away, enhance asset utilization and boost picking accuracy. Based on what it learned in Indianapolis, it went forward with implementing the design in Chester, N.Y.
Today, the Pep Boys facilities in Georgia and Texas are undergoing retrofitting to take advantage of what the engineers learned at the two test sites.The company, however, is not doing much right now with the remaining DC in Los Angeles. The oldest o f the five DCs, the Los Angeles center is one the company would prefer to replace, says Schneider, but replacement would be hard to cost justify given that the center is fully paid for and depreciated.
Although some capital investment was obviously necessary to revamp the DCs, the company focused on smart design, with special attention to where goods are placed within the facilities and how they are packed for shipment to the stores. In fact, its primary goal in redesigning its distribution logistics system was to enable the stores to put away shipments arriving from the DCs more efficiently.
"One of the biggest expenses in the supply chain process is stocking store shelves," Schneider says. "Before the redesign, SKU growth had gotten to the point that we had product in pick packs, in totes and on pallets. It took a lot of handling at the store." In order to simplify putaway, Pep Boys researched stocking patterns at the stores."We worked from the peg hook backwards," Schneider says, "so that we could figure out how to pack shipments in such a way that goods bound for one area of the store would arrive in the same tote."
Next the Pep Boys design team turned its attention to the parts themselves. "We classified merchandise into categories that are always grouped together," Schneider says, "and then we identified six key areas found in each store. For convenience' sake, we divided the 200-plus products into family stocking groups. We knew that these three or four [groups] were always in this part of the store, these 12 were always behind the parts counter." Shipments into each store are color-coded by the store section, enabling store managers to send them to the right area without opening the totes or cartons.
Path of least distance
Working backwards, the next step was to determine where goods should be housed at the DC to make it easy for workers to pick by family group. But the designers had to take much more into account than simply where in the store each item would end up. Because different SKUs sell at different rates and have different handling char acteristics, the optimal pick system would have to take into consideration the item's cube, frequency and number of units picked. "When we talk about velocity," says Schneider, "we talk about cubic and unit velocity and pick frequency. There's some product we're picking every single order, but the daily movement is only half a cubic foot. Another might average a half a cubic foot a day, but we're only picking it once a week. Others are very large."
The Pep Boys engineers decided that a traditional facility design-with slow-moving parts placed in a shelving module, fast-moving but small parts in a carton flow system, fast-moving and conveyable in a pallet flow module, and most other goods in pallet racks-would not meet their needs. Better suited to a warehouse than a high-throughput DC, a traditional design would have created a lot of wasted cube in totes, leaving the company with partially full totes from different parts of the DC each bound for the same destination.
"We decided we didn't need pallet flow except for motor oil," Schneider reports. "We decided to mix carton flow and shelving in the same pick module." But that created the problem of how much of each type of item to stock. "What became obvious is that average pick quantities were one to two units," Schneider says."I could be picking that per pick and that's fine. But out of that each-pick, I have products that move at super-high frequency and products that move at very low frequency. How can I shorten the pick path? The slowest-moving items are shelf items. I don't want order pickers to have to walk by aisles and aisles every time."
The solution was to design pick modules that organized inventory so that fast-moving items were close to the carton flow area, while other goods were shelved in aisles perpendicular to the carton flow aisle. The less frequently a product was picked, the deeper in the aisle it would be shelved. The goods moving in the highest frequency would be on end caps at the end of each aisle. "The goal was to walk by as few locations as possible as you picked an order," Schneider explains. "As you're going down the main aisles, two-thirds of the picks don't hit a walk-back aisle at all. If you have to hit one, you may only have to go four feet back in the aisle."
Although the Pep Boys engineers did use Manhattan Associates' facility optimization software, SlotInfo, to help determine the best location for products within the DC, there was a great deal of manual analysis involved as well. "We wanted heavy items in the right place, bulk items in the right place," Schneider says.
"We were packing to family groups, but now we've gone a step further than that," he adds. "The family groups are separated by vendor." That level of separation makes inbound receiving and putaway more efficient. Schneider explains that the company may receive as many as 400 SKUs from a single vendor. Traditionally, inbound loads might be broken up and reconsolidated. But with the current system, a pallet can be placed in a pick module, with goods positioned to require the least amount of distance for the putaway.
Systems upgrades
After thoroughly vetting the new DC design at the Indianapolis facility, which operates on a paper pick system, the team went ahead and introduced it in the Chester, N.Y., facility, which operates with a pick-tolight system. That pick-to-light system has a beacon at every pick location, which directs workers to the right area, the shelf, and finally the precise location with the right quantity to pick. The system, which is designed so that DC workers can adjust the number of SKUs on a shelf if needed, will be able to support up to 50,000 items without needing further changes to the physical layout.
In contrast to the Indianapolis site, where picks go into carts, the Chester facility uses totes and gravity conveyors. That DC is equipped with 45,000 plastic totes for shipping goods to the retail stores. Called the IPL Flap-Nest series, the nestable 16- by 24-inch plastic containers come in depths of either 9.6 or 14 inches to accommodate products of varying densities. Small but heavy items such as spark plugs go into the smaller totes. Less-dense items such as air filters go into the larger. The result is better utilization of the totes' capacity without making them too heavy.
Once a tote is packed,the order picker applies a label that is color-coded for the product family group and displays the store number. Finished totes are placed on a dolly for transport to a powered takeaway conveyor that runs down the pick module's spine.
Inbound products run down the same spine but are stocked from the back side of the walk-back aisles so goods can be stocked at the same time they are being picked. Schneider says that 80 percent of the replenishment is done without use of power equipment. Instead, workers with an RF gun and goods on a dolly or pushcart handle the putaway without interfering with the picking activities.
Small cap
The redesign has made the Pep Boys facilities far more efficient than they've ever been,and at relatively small capital investment. Schneider says that he benchmarked his operations against those of a highly mechanized auto parts supplier in Europe, Auto-Teile-Unger. "Utilizing the technology ATU had, we would have reduced headcount by about 14 people on a base of 230 people," he admits."But we spent $7 million on logistics equipment and systems; ATU spent $26 million. That's how I measure our productivity."
Distribution goes digital
In the notoriously low-tech world of auto parts distribution, high-tech upgrades can go a long way toward revving up a distribution network. But as one company found, automation works best if you do it from the ground up.
Vast Auto Distribution Ltd., an automotive parts distributor based in Montreal, Quebec, has employed a distribution management system called the Automotive Distribution Information System (A-DIS) from CCI Triad Inc. since the mid-1990s. Though that system made great headway in providing inventory visibility, Vast Auto wasn't getting the results it was looking for, partly because it was still receiving orders the old fashioned way-via phone. By switching from telephone dial-up to a high-speed Internet system, the company has accelerated its order entry system.
"We needed to provide a higher level of customer service and also reduce the costs of telephone lines," says Rocco Longo, the company's MIS manager. "Prior to the fall of 2001, we needed one phone line to connect to one customer. We had 10 standard lines and one lease line (an exclusive connection to a single customer), which was not an effective way to receive orders."
The answer was a high-speed Internet connection from CCI called Aftermarket ConneX (AConneX). The cost is comparable to dial-up lines, says Scott Thompson, vice president, automotive at CCITriad, while connection times for customers are much faster. Vast Auto has recently switched to a high-capacity T1 line to ensure that fast connection times remain available as order volume over the system increases. Because it can now receive orders electronically, Vast Auto handles fewer orders manually, resulting in improved order accuracy.
At present, 12 of Vast Auto's 70 retailer and wholesaler clients are using AConneX, which is fully integrated with the company's inventory management system. The distributor, which would like to see others join the system, wants to provide a real-time view of its inventory so that all of its customers can order quickly and efficiently.
Vast Auto receives about 70 percent of its orders through modules of the A-DIS system, with the remaining 30 percent of its orders arriving by phone or fax. "To A-DIS' credit," Longo says, "we had four people at the order desk when I began in 1996, and now we have three with double the order volume."
E-commerce activity remains robust, but a growing number of consumers are reintegrating physical stores into their shopping journeys in 2024, emphasizing the need for retailers to focus on omnichannel business strategies. That’s according to an e-commerce study from Ryder System, Inc., released this week.
Ryder surveyed more than 1,300 consumers for its 2024 E-Commerce Consumer Study and found that 61% of consumers shop in-store “because they enjoy the experience,” a 21% increase compared to results from Ryder’s 2023 survey on the same subject. The current survey also found that 35% shop in-store because they don’t want to wait for online orders in the mail (up 4% from last year), and 15% say they shop in-store to avoid package theft (up 8% from last year).
“Retail and e-commerce continue to evolve,” Jeff Wolpov, Ryder’s senior vice president of e-commerce, said in a statement announcing the survey’s findings. “The emergence of e-commerce and growth of omnichannel fulfillment, particularly over the past four years, has altered consumer expectations and behavior dramatically and will continue to do so as time and technology allow.
“This latest study demonstrates that, while consumers maintain a robust
appetite for e-commerce, they are simultaneously embracing in-person shopping, presenting an impetus for merchants to refine their omnichannel strategies.”
Other findings include:
• Apparel and cosmetics shoppers show growing attraction to buying in-store. When purchasing apparel and cosmetics, shoppers are more inclined to make purchases in a physical location than they were last year, according to Ryder. Forty-one percent of shoppers who buy cosmetics said they prefer to do so either in a brand’s physical retail location or a department/convenience store (+9%). As for apparel shoppers, 54% said they prefer to buy clothing in those same brick-and-mortar locations (+9%).
• More customers prefer returning online purchases in physical stores. Fifty-five percent of shoppers (+15%) now say they would rather return online purchases in-store–the first time since early 2020 the preference to Buy Online Return In-Store (BORIS) has outweighed returning via mail, according to the survey. Forty percent of shoppers said they often make additional purchases when picking up or returning online purchases in-store (+2%).
• Consumers are extremely reliant on mobile devices when shopping in-store. This year’s survey reveals that 77% of consumers search for items on their mobile devices while in a store, Ryder said. Sixty-nine percent said they compare prices with items in nearby stores, 58% check availability at other stores, 31% want to learn more about a product, and 17% want to see other items frequently purchased with a product they’re considering.
Ryder said the findings also underscore the importance of investing in technology solutions that allow companies to provide customers with flexible purchasing options.
“Omnichannel strength is not a fad; it is a strategic necessity for e-commerce and retail businesses to stay competitive and achieve sustainable success in 2024 and beyond,” Wolpov also said. “The findings from this year’s study underscore what we know our customers are experiencing, which is the positive impact of integrating supply chain technology solutions across their sales channels, enabling them to provide their customers with flexible, convenient options to personalize their experience and heighten customer satisfaction.”
Transportation industry veteran Anne Reinke will become president & CEO of trade group the Intermodal Association of North America (IANA) at the end of the year, stepping into the position from her previous post leading third party logistics (3PL) trade group the Transportation Intermediaries Association (TIA), both organizations said today.
Meanwhile, TIA today announced that insider Christopher Burroughs would fill Reinke’s shoes as president & CEO. Burroughs has been with TIA for 13 years, most recently as its vice president of Government Affairs for the past six years, during which time he oversaw all legislative and regulatory efforts before Congress and the federal agencies.
Before her four years leading TIA, Reinke spent two years as Deputy Assistant Secretary with the U.S. Department of Transportation and 16 years with CSX Corporation.
National nonprofit Wreaths Across America (WAA) kicked off its 2024 season this week with a call for volunteers. The group, which honors U.S. military veterans through a range of civic outreach programs, is seeking trucking companies and professional drivers to help deliver wreaths to cemeteries across the country for its annual wreath-laying ceremony, December 14.
“Wreaths Across America relies on the transportation industry to move the mission. The Honor Fleet, composed of dedicated carriers, professional drivers, and other transportation partners, guarantees the delivery of millions of sponsored veterans’ wreaths to their destination each year,” Courtney George, WAA’s director of trucking and industry relations, said in a statement Tuesday. “Transportation partners benefit from driver retention and recruitment, employee engagement, positive brand exposure, and the opportunity to give back to their community’s veterans and military families.”
WAA delivers wreaths to more than 4,500 locations nationwide, and as of this week had added more than 20 loads to be delivered this season. The wreaths are donated by sponsors from across the country, delivered by truckers, and laid at the graves of veterans by WAA volunteers.
Wreaths Across America
Transportation companies interested in joining the Honor Fleet can visit the WAA website to find an open lane or contact the WAA transportation team at trucking@wreathsacrossamerica.org for more information.
Krish Nathan is the Americas CEO for SDI Element Logic, a provider of turnkey automation solutions and sortation systems. Nathan joined SDI Industries in 2000 and honed his project management and engineering expertise in developing and delivering complex material handling solutions. In 2014, he was appointed CEO, and in 2022, he led the search for a strategic partner that could expand SDI’s capabilities. This culminated in the acquisition of SDI by Element Logic, with SDI becoming the Americas branch of the company.
A native of the U.K., Nathan received his bachelor’s degree in manufacturing engineering from Coventry University and has studied executive leadership at Cranfield University.
Q: How would you describe the current state of the supply chain industry?
A: We see the supply chain industry as very dynamic and exciting, both from a growth perspective and from an innovation perspective. The pandemic hangover is still impacting decisions to nearshore, and that has resulted in a spike in business for us in both the USA and Mexico. Adding new technology to our portfolio has been a significant contributor to our continued expansion.
Q: Distributors were making huge tech investments during the pandemic simply to keep up with soaring consumer demand. How have things changed since then?
A: The consumer demand for e-commerce certainly appears to have cooled since the pandemic high, but our clients continue to see steady growth. Growth, combined with low unemployment and high labor costs, continues to make automation a good investment for many companies.
Q: Robotics are still in high demand for material handling applications. What are some of the benefits of these systems?
A: As an organization, we are investing heavily in software that will allow Element Logic to offer solutions for robotic picking that are hardware-agnostic. We have had success deploying unit picking for order fulfillment solutions and unit placing of items onto tray-based sorters.
From a benefit point of view, we’ve seen the consistency of a given operation improve. For example, the placement accuracy of a product onto a tray is far higher from a robotic arm than from a person. In order fulfillment applications, two of the biggest benefits are reliability and hours of operation. The robots don't call in sick, and they are happy to work 22 hours a day!
Q: SDI Element Logic offers a wide range of automated solutions, including automated storage and sortation equipment. What criteria should distributors use to determine what type of system is right for them?
A: There are a significant number of factors to consider when thinking about automation. In my experience, automation pays for itself in three key ways: It saves space, it increases the efficiency of labor, and it improves accuracy. So evaluating which of these will be [most] beneficial and quantifying the associated savings will lead to a “right sized” investment in technology.
Another important factor to consider is product mix. With a small SKU (stock-keeping unit) base, often automation doesn’t make sense. And with a huge SKU base, there will be products that don’t lend themselves to automation.
With any significant investment, you need to partner with an organization that has deep experience with the technologies that are being considered and … in-depth knowledge of the process that is being automated.
Q: How can a goods-to-person system reduce the amount of labor needed to fill orders?
A: In most order picking operations, there is a considerable amount of walking between pick faces to find the SKUs associated with a given order or set of orders. Goods-to-person eliminates the walking and allows the operator to just pick. I have seen studies that [show] that 75% of the time [required] to assemble an order in a manual picking environment is walking or “non-picking” time. So eliminating walking will reduce the amount of labor needed.
The goods-to-person approach also fits perfectly with robotic picking, so even the actual picking aspect of order assembly can be automated in some instances. For these reasons, [automation offers] a significant opportunity to reduce the labor needed to fulfill a customer order.
Q: If you could pick one thing a company should do to improve its distribution center operations, what would it be?
A: Evaluate. Evaluate the opportunities for improving by considering automation. In my experience, the challenge most companies have is recognizing that automation is an alternative. The barrier to entry is far lower than most people think!
Toyota Material Handling and its nationwide network of dealers showcased their commitment to improving their local communities during the company’s annual “Lift the Community Day.” Since 2021, Toyota associates have participated in an annual day-long philanthropic event held near Toyota’s Columbus, Indiana, headquarters. This year, the initiative expanded to include participation from Toyota’s dealers, increasing the impact on communities throughout the U.S. A total of 324 Toyota associates completed 2,300 hours of community service during this year’s event.
The PMMI Foundation, the charitable arm of PMMI, The Association for Packaging and Processing Technologies, awarded nearly $200,000 in scholarships to students pursuing careers in the packaging and processing industry. Each year, the PMMI Foundation provides academic scholarships to students studying packaging, food processing, and engineering to underscore its commitment to the future of the packaging and processing industry.
Truck leasing and fleet management services provider Fleet Advantage hosted its “Kids Around the Corner Foundation” back-to-school backpack drive in July. During the event, company associates assembled 200 backpacks filled with essential school supplies for high school-age students. The backpacks were then delivered to Henderson Behavioral Health’s Youth & Family Services location in Tamarac, Florida.
For the past seven years, third-party logistics service specialist ODW Logistics has provided logistics support for the Pelotonia Ride Weekend, a campaign to raise funds for cancer research at The Ohio State University’s Comprehensive Cancer Center–Arthur G. James Cancer Hospital and Richard J. Solove Research Institute. As in the past, ODW provided inventory management services and transportation for the riders’ bicycles at this year’s event. In all, some 7,000 riders and 3,000 volunteers participated in the ride weekend.