Making Your DC Work Harder

Reduce your equipment investment through synchronization

By Tom Coyne, CEO, Diamond Phoenix

When it comes to material handling, what is the one major truth that many distribution companies are not willing to admit? Their material handling equipment, the system they spent millions of dollars on, is under-utilized.

Unlike manufacturing, distribution is influenced by seasonal fluctuations. We use the excuse that capacity must be in place for the holiday season to explain away the fact that our equipment is not functioning at full capacity throughout a large part of the year. However, the true reason for this under-utilization is the fact that the software that controls order execution on the distribution floor does not provide the appropriate functionality. In response, we over-automate.

Sure, there have been a number of advances in automated material handling over the years - high-speed case sorters, high speed piece sorters, automated storage and retrieval systems. But these advances have been focused on the equipment itself – making it faster and more flexible.

Warehouse management systems (WMS) have even jumped on the bandwagon in this quest for improved productivity. But is a WMS really a part of the material handling side of the distribution process? You may have a WMS that allows receiving and directed put-away and a sortation system controlled by controls-level software to ensure that your packages get to a shipping sorter automatically. But material flow control is only a small part of the equation.

In today’s distribution centers, a “wave process” is typically used. A wave is a grouping of orders that may relate to the capacity of a sorter or a number of truck docks. Let’s say, for example, that you are running five waves a day. As the first wave makes its way through your distribution process, work zones begin to starve for work waiting for the next wave to begin. The manager of a 1.2 million square foot distribution center recently observed that his “end-of-wave” dwell time was up to 45 minutes...five times a day! That’s almost four hours a day operating at diminished capacity and efficiency.

We are much closer to our customers in the supply chain than manufacturers; manufacturers are able to think about production costs first. It’s like water flowing through a hose. In manufacturing, materials steadily flow at the maximum rate through the smallest hose possible - like a garden hose. In distribution, we create artificial peaks throughout the day using waves. As a result, we need a fire hose to handle these temporary fluctuations. Occasionally, water flows through the fire hose at full force, but most of the time, it’s just a trickle.

The wave process works from a customer service and truck dock management perspective, but it creates the need for larger conveyor systems, more expensive sortation systems and buffer/accumulation equipment to handle the occasional peak flow rates throughout a day.

So how do we operate at a continuous flow, similar to manufacturing, and therefore reduce our investment in equipment?

Imagine that a WMS downloads multiple waves of work to a floor-level order execution system, called a Warehouse Execution System (WES). The WES is integrated with all the fulfillment zones and material handling systems in the distribution center. Orders are released to processing areas based on their capacity, but the software also limits the work to ensure the material handling systems are not overwhelmed. End-of-wave dwell times are eliminated and work flows continuously through the day. Order pickers are more efficient and conveyor systems are smaller - it’s no longer necessary to design sortation systems to 150% of daily peak to account for artificially created surges.

Can this be done? It has been done! It requires real-time information flow from all fulfillment zones (easily accomplished with light-directed, voice-directed, or RF picking or other paperless picking systems) and integration with conveyor sortation systems.

Green Mountain Coffee Roasters implemented just such a system. Multiple fulfillment zones for case and split case fulfillment are integrated with a Warehouse Execution System. The WES synchronizes order execution with material handling automation; order picking is monitored for picking capacity and is measured against conveyor sortation capacity. Up to 6,500 cases per day are processed through the system and the sorter has a peak rate of 60 cases per minute. Over the course of an 11 hour day, the sorter operates at 90% of capacity.

The optimization of labor and equipment created an efficient material handling design. Without the WES, Green Mountain would not have been able to automate its distribution center. It would have required the construction of a larger building and an additional 40% surge capacity in the conveyor system. The additional conveyor alone would have increased the cost of the project by 50%.

This is a real life example in which a software-managed order execution system opened the door for a relatively small company to take its first steps toward automation. Look for a trend toward more floor-level order execution software in the future. As we begin to design more efficient material handling systems and simultaneously increase fulfillment productivity, we improve both sides of the ROI equation.