Speed and efficiency are crucial to every DC operation, of course, but the pressure to achieve ever-higher productivity levels is greater in some industries than in others. The grocery business, with its razor thin margins, is a good example. As Craig Turner, vice president of operations for specialty food supplier KeHe Distributors, puts it, "The ability to reduce time and motion in a low-margin environment is extremely important in order to remain competitive in our market."
So it's no surprise that when the company began planning for a new DC in Allentown, Pa., it made productivity a priority. The project was part of a larger DC consolidation effort aimed at eliminating redundant operations. The distributor had already completed a similar project in the Dallas area, combining several operations into a single DC in Dallas. The Allentown distribution center, in turn, would absorb operations from an Albany, N.Y., facility once construction was finished.
At the same time, KeHe began looking into systems that would boost efficiency and make maximum use of capacity in the facilities it would retain. The mission took on particular urgency late last year as the company prepared to acquire competitor Tree of Life—an acquisition it completed this past February.
Tall order
Founded in 1952, Romeoville, Ill.-based KeHe has grown into a $2 billion company today. As one of the largest suppliers of natural and specialty foods, it distributes dry goods, frozen foods, and perishables—about 60,000 SKUs in total—to some 33,000 retail outlets throughout North America and the Caribbean. Its customers include some of the largest food retailers as well as independently owned natural and organic food stores.
Like its counterpart in Dallas, the consolidated Allentown operation would serve both types of customers—the big mass marketers and the independent retailers. As Gene Carter, KeHe's executive vice president of distribution and supply chain, explains: "We wanted to take two environments and combine them in a sort of hybrid DC that would support both specialty and national channel sales."
That had implications for the order picking end of the Allentown operation. To be precise, it meant the facility would have to be able to handle orders for full pallet and full case quantities as well as orders for individual items, or "eaches." And it would have to do it cost-effectively. "We had to improve our throughput sales per square foot, which are now up 50 percent," says Carter. "Reduction of fixed-cost expenses was a priority for us."
It was clear from the outset that one of the key parts of the project would be revamping the facility's each-picking system. In the past, less-than-case order picking had been a manual operation, with workers selecting items from mezzanines and flow racks with paper pick lists. But a more efficient process would be required at the new DC. It was time to automate.
To design and implement an automated each-picking system in Allentown, KeHe called on two partners: Automation Dynamics, a Wylie, Texas-based material handling systems integrator that had overseen a similar project at KeHe's Dallas DC, and Intelligrated, a Mason, Ohio-based firm that designs and produces automated material handling systems.
Turner set the bar high for the design project. The solution had to boost productivity, assure high levels of order accuracy, and do it all efficiently. The DC has a tight window for processing orders, he explains. "When orders are dropped in our environment, we have less than eight hours before the first truck goes out. We cannot waste time chasing a box through the system in order to get a 99.9-percent accuracy rate."
The solution also had to be compact. Intelligrated and Automation Dynamics would have to take an each-pick operation that had filled 50,000 square feet of space and fit it into 20,000 square feet.
On top of that, the design team would have to devise a system that could efficiently handle both fast- and slow-moving items—that is, the 2,000 SKUs that account for 80 percent of the facility's orders as well as tens of thousands of slower movers. Turner sums up the challenge this way: "How were we going to take these eaches and create a dense pick area that did not have to have levels and levels of pick modules?"
Custom package
The solution the team came up with is a customized design that combines pick-to-light technology (which is used in conjunction with flow racks) and carousels. The setup allows the company to use the optimal picking method for each kind of item, Turner says. "We took the carousel system and used that for what I call the long tail, those C and D items that have minimal movement, and integrated it with a multi-level pick-to-light system that handles [the fast-moving SKUs]," he explains.
As for equipment, the system incorporates photo-eye accumulation conveyor, spiral conveyor, and a two-level pick- and put-to-light mezzanine (to take advantage of vertical space). It also includes a warehouse management system (WMS) and eight eight-foot horizontal carousels.
Turner emphasizes that there was much more to the project than just installing the automated equipment. "We did a lot of due diligence on the application of these two technologies," he says. "We didn't just say, 'Let's take a carousel and let's take a pick to light and slap them together,' because that in itself would not be faster than what we were already dealing with. We had to get into the heart of it and actually retool each pick solution."
Orders by the batch
Because the orders handled in Allentown are relatively small, the system designers opted for a batch processing approach. For example, instead of sending a worker with a single order tote through the whole pick-to-light setup, the system is programmed to process multiple orders simultaneously. "We'll go into a zone and scan 12 boxes at a time, and lights will light up for all 12," Turner says. "We'll pick to light, then put to light. A light bar under the conveyor tells the worker which box to drop it into. So we're able to batch pick 12 orders at a time through the entire system."
He adds that the pick-to-light zones are designed with multiple entry and exit points for containers. "If a box is completed, it can exit early, which gets it quickly through the system. It also lets us introduce new boxes with different start points. The selectors can maximize their batches at all times to maintain efficiencies."
KeHe's WMS monitors the picking activity to ensure operations stay on track. For instance, the system is able to recognize immediately if a container is moved out of a zone before picks in that zone for that order have been completed. "It returns the tote back into the zone before it exits the pick-to-light environment so we don't waste time allowing a tote to travel through the whole system before we recognize something is missing," Turner says.
To assure order accuracy, each container automatically undergoes inspection as it leaves the each-pick area. A check-weight system determines if the box is within a small tolerance based on the goods ordered. If it determines a box is out of tolerance, the system diverts it to a control area for further examination. While the box is being weighed, a digital camera snaps a photo of the open container—the average box has about a dozen items—and archives the photo for future reference. "We've seen tremendous improvements in our order accuracy thanks to the various controls installed on this system," Turner says. "It has allowed us to produce nearly perfect orders."
Productivity gains have been substantial as well. "When we were in traditional flow rack with manual picking, [employees] who had been there for 10 years averaged about 110 lines an hour. Now, we're [averaging] three to four times that," Turner says. He adds that another advantage of the pick-to-light system is that minimal training is required. "New employees can now reach this level of productivity and accuracy within a few weeks," he says.
Riding along on a carousel
Orders filled from Allentown's carousel units are also handled in batches, with workers picking into as many as 16 totes at a time. When a container is completed, they move it across cantilevered racks onto the conveyor system for movement through the check-weight system and on to shipping. (In both the pick-to-light and carousel operations, workers pick directly into the shipping containers.)
To avoid having workers wait around while a carousel's bins rotate into position, the system designers programmed the WMS to automatically track how quickly goods are moving and assign the fastest movers to multiple bins. "We balance [the faster-moving items] out among a number of carousels so we're never waiting for a carousel to spin," Turner explains. The result has been a significant uptick in speed. "We are getting 400 lines per hour in an environment where in the past, the best we could do was 110," he says.
In another bid to boost efficiency, the system designers engineered a way to replenish the carousels from the rear. Restocking through the back assures that replenishment operations won't interfere with the picking process. For all their benefits, the carousels do have one minor drawback. Replenishment requires workers to remove goods from cases before depositing them in the carousel bins, rather than just opening the cases as they did with the flow racks. But that appears to have had a minimal effect on productivity. All in all, the Allentown site has been able to reduce labor by 35 to 40 percent.
Room for expansion
While the carousel and pick-to-light systems deserve most of the credit for the productivity gains at the Allentown DC, the operation has benefited from some minor changes as well. A case in point is a relatively simple change made to the labels that are printed when the WMS "drops" an order. Each label is now color coded by customer via a colored band at the bottom. "We may print customer A in red and customer B in green, so when you go to apply a label, you can quickly match colors rather than having to look at the customer ID number," Turner says. "If you watch someone picking and see a red label on a box on a green pallet, you know there's a mistake. It has helped our quality control."
Now that the new systems are in place, Allentown is ramping up to take on more work. The facility, which ships out about 2,000 totes a day on average, will soon absorb operations from a nearby third-party DC. As business expands, the facility should have no trouble accommodating additional volume. All it has to do is install more levels of carousels and pick-to-light racks.
Asked how the new picking system is working out to date, Carter, Turner, and other company officials say they're delighted with the results. Carter says, "Being able to take an old bit of technology and retool it to a design that is very applicable and very efficient for us, we couldn't be more excited." The gains have been impressive enough, in fact, that KeHe may soon go a step further. The company is considering launching a similar project at its 1 million-square-foot DC in Romeoville, Ill.
Gartner, Inc.
