running like clockwork

Though perhaps best known as a purveyor of sausages and cheese, The Swiss Colony might more accurately be described as an empire builder. Since its founding in 1926, the company has grown into one of the nation's largest direct marketers, expanding into areas well beyond specialty foods. The extent of its success became clear when it announced in August that it had acquired what was once one of the premier names in retailing, Montgomery Ward. With the addition of three new catalogs from the Montgomery Ward acquisition, it now has more than a dozen different catalogs or Web sites (see sidebar).

"We've had fantastic growth for the past 10 years," says Jeff Mucks, director of non-food fulfillment for The Swiss Colony. Today, food products, where the company began, account for only about 20 percent of overall sales. "We're a cataloguer of almost everything: home furniture, jewelry, clothing, kitchen supplies, games, electronics," he says. "And we're becoming more global." In its effort to expand its overseas procurement, one of the company's subsidiaries recently opened a global sourcing office in China.

Not surprisingly, accommodating that sort of growth has meant that the privately held company has had to adapt its operations along the way. A good example is its adoption of automation technologies to speed up fulfillment, control costs, and assure accuracy of orders in its Madison, Wis., distribution center, located not far from the company's flagship operations in Monroe.

"In the late '90s, we knew that with the kind of growth we were seeing, we had to move forward with more modern technology," Mucks says. "We knew with our SKU growth and the velocity of our overall growth, there could be problems."

The company's operations had simply not kept pace with its expansion. At the time the automation project was launched, order pickers still worked from paper pick lists and picked to carts, for example. And it wasn't unusual for an order picker to have to visit most or all of the DC's aisles in the process of picking a single order. All shipping labels were printed in Monroe and driven each day to the Madison facility.

A "Big Bang" approach
Once the decision to automate was made, the company jumped in with both feet. "We theorized that we should take the Big Bang approach," Mucks says. That meant adopting and installing a warehouse management system, a manifest system, and a new material handling system all at one time. "It was the right decision," he adds, "although in the early days, we weren't always sure."

The first step was to form a cross-functional team to choose those components (and later, to oversee the system's implementation). As for selection criteria, one of the team's primary concerns was safety (from the start, the project team insisted that forklift operations be physically separated from other operations). In addition, the system had to keep labor costs in check and be easy for employees to learn and use. "We have about 1,100 full-time employees, but we expand by adding an additional 5,000 temporary workers [during peak shipping season] each year," Mucks explains. (That number reflects employees of all of The Swiss Colony's operations.) "As we looked at these systems, we could not make them complicated."

After looking at its options, the team selected RedPrairie as its WMS vendor, Kewill for its manifest system, and Precision Drive & Control, a Wisconsin-based automation and controls systems integrator, to develop and install the material handling system.

"One reason we picked PDC is they were willing to do it on a turnkey basis,"Mucks says."They did every aspect of the job."

PDC, in turn, selected Omni Metalcraft, a Michigan firm, to build the conveyor system. It also chose Mettler Toledo for scales and Accu-Sort for auto ID tools (Swiss Colony uses Accu-Sort's Model 20 optical bar-code scanner on most of its lines and the Axiom scanner on one of its lines).

The system developed and installed by PDC makes use of conveyors that divert cartons, inducted in up to eight separate points on the conveyor, to the appropriate pick stations. "The Accu-Sort scanners read the bar codes and only divert cartons to areas where we have picks," Mucks says. At the stations, workers pick items using paper packing lists.

The typical pick station is about 30 feet long and can include a wide variety of SKUs. (The Madison facility handles about 6,700 SKUs in total.) "We have dynamic slotting going on every day," Mucks says. The slotting is based on anticipated volume based on the season and on catalog drops; it is designed to minimize the time and distance cartons are moving through the conveyor system and to minimize walk time for employees."We want that box in the picker's hands and on the conveyor for the shortest time possible," he says.

Scan and scan again
One of the system's highlights is its use of multiple scans for quality control, which eliminates the need for employees to manually check outgoing orders for accuracy. For example, before an order leaves the building, it undergoes a check weight scan that's used to verify that the order is complete and correct.

"Each carton passes across a scale when the order is completed but before dunnage is added," says Mucks. "At the same time, one of the Accu-Sort Model 20 optical bar-code scanners installed throughout the system reads the bar code. The WMS system has already determined what the weight should be based on the items in the order.

"The Accu-Sort scanner picks up what the package should weigh and compares it to the actual weight as it comes across the scale," Mucks says. The system allows building in a tolerance, and that can vary, for example, by season. Thus, if cartons weigh a bit more during the humid summer months, the system accounts for that.

As long as a carton's weight is within the expected tolerance, it moves off for packing at one of three taping lanes. If a carton's weight is outside the tolerance, it is diverted to another lane, where an employee can check the contents and correct the order. The check weight system can handle up to 45 packages a minute, with cartons varying in length from eight to 26.5 inches.

Mucks reports that the check weight system has resulted in significant labor savings; today, only two employees are needed to audit orders, as opposed to the 18 who would be needed without it. He adds that the system has also proved to be extremely accurate. "We went from 100 percent manual audits to the check weight system with no drop-off in accuracy," he says.

The check weight scan isn't the final scan in the process, however. After a carton is sealed, another scanner reads its bar code to collect final weight and carrier information, which the system uses to ensure that the shipping label and original customer label match. The weight and carrier data are sent to the Kewill manifest system, which triggers the printing of a shipping label. That label is then applied to the package by one of two print-and-apply machines located in the shipping area.

The cartons then merge back into a single lane, where one more scan matches the original bar code and the bar code on the shipping label. "The most important thing we do at this station is the match check," Mucks says. Simply put, if one is wrong, it is likely that every carton behind it is wrong, as well. "If there's a mismatch, we shut down the divert," Mucks says. "That saves a lot of headaches."

Easy to learn, easy to use
To date, The Swiss Colony reports that automation has brought about improvements on a number of fronts. Take safety, for example. Since the system was installed, the DC's accident rate has decreased significantly— by 48 percent in a one-year period. The facility has since continued to reduce its accident rate through its continuous improvement measures.

Another of the company's original goals was to keep labor costs under control. The system has been phenomenally successful in that regard. Total labor has been reduced by about 24 percent at the Madison facility, and what was a three-shift operation is now a single shift, even with a 41percent increase in throughput. The Madison facility currently ships about 2.5 million units a year for all the company's catalogs (including its subsidiaries).

As the company had hoped, the system has also proved easy to use. Mucks reports that the Accu-Sort auto ID system handles much of the decision-making that might otherwise fall to employees. "The system relays information through the interfaces, the employee reads the document, and it tells him what item to pick, the quantity, and what box to put it in," he says. Because the system has taken the guesswork out of carton selection, packaging and shipping costs have dropped. "We're shipping less air," Mucks says.

In addition, the turnover rate for temporary workers has declined 18 percent—a phenomenon Mucks attributes to the new system. "Truthfully, I think that we have created an environment that temporary workers are comfortable in," he says. "The old system was rather chaotic. The worker had to make a ton of decisions with every pick. It was much more physical, pushing carts through a 225,000-square-foot DC." Now that the work is less demanding, he adds, the DC has been able to tap a whole new source of labor—older workers looking for temporary jobs.

As for what lies ahead, Mucks is confident that the operation will continue to become more efficient. "We have a lot more opportunities in Madison," he says. "We get better every year. The systems get better, and we get better as a staff."