Making the decision to shift from a manual warehousing operation to a highly automated facility is one prompted by necessity. Logistics managers and their corporations typically evaluate the pros and cons for years before making a decision to move forward, and then usually act only when process flow becomes threatened. For a manufacturer, there is no change quite as dramatic as shifting from a manual to fully automated warehouse. This significantly increases in complexity when the warehouse is servicing both distribution and manufacturing operations.
Blum first began automating its U.S. warehousing operations in 2000, and completed the last leg of its expansion in early 2006. But, prior to 2000 Blum/USA operated basically a manual warehouse, with 30 ft high racks, and individuals driving forklifts to different locations between manufacturing, warehousing and distribution. Blum’s pallet storage was capable of handling 7,000 pallet locations. Some product was manufactured in Europe and shipped to the U.S. where it was warehoused and distributed, and some items were manufactured in the U.S.
Blum’s article mix consisted of 2,000 item numbers and the storage was split between a receiving warehouse (for components and work-in-process material between production steps) and a shipping warehouse for finished goods. But, as the U.S. market for Blum product grew, they not only were selling and warehousing more product, they also took on additional US based manufacturing. The necessity for automating their warehouse had reached critical mass.
In 1998 Blum began researching how much warehouse space they needed to keep up with their growth, and how much automation would best suit their needs. They conducted studies comparing the efficiencies of manual versus automated systems, and concluded that a fully automated warehouse would provide the best solution and the most optimum financial investment.
To design the warehouse Blum brought in Dematic Corp as systems integrator for the project. Dematic was selected because of their experience designing high-rise, automated warehouses, which Blum had concluded would best fit their needs.
“Dematic designed a complete 12,500-pallet, automated, high-rise warehouse for us,” says Michael R. Geis, vice president of logistics for Blum. “They developed and provided all of the automation, including automated storage and retrieval systems (AS/RS), conveyors and the warehouse management system software (WMS), and handled the integration of the entire pallet racking system for us.”
Blum constructed and handled the project management of the building structural shell, which basically enclosed the entire storage and material handling system of the warehouse. In essence, the racking system not only stored pallets, it provided the structural component for the building itself.
“The pallet storage system, which we call the high-bay, is 85-foot high,” continues Geis. “This was set up in six aisles, each running approximately 350 feet long. Each aisle has double-deep storage capability on each side. Dematic provided six AS/RS, one for handling pallets in each aisle. We also have a low-bay area, which receives pallets coming in from production and from incoming container shipments, which are then fed into the high-bay for storage.”
“All aspects of pallet movement were designed to be controlled by the Dematic WMS using load unit (LU) bar code designation,” says Geis. “This includes pallets moved on the conveyors between the shipment-receiving area and the low-bay; the automated input point which receives pallets from manufacturing for temporary storage into the low-bay; the conveyors moving pallets to the AS/RS for storage in the high-bay; the AS/RS handling of the pallets; and the conveyors for moving pallets out to the staging area for shipment, or to one of the three pick stations.”
“When it is time to build a customer’s order for shipment, the WMS system allows for automated handling of both full and mixed pallets,” Geis continues. “Full pallets can be automatically retrieved from the high-bay and sent directly to the shipping staging area. When a picker requires less than a full pallet to build an order, such as a few cases, the system will automatically bring a pallet to the pick station where the picker removes the desired cases for the order he is building. The WMS will then automatically return the partial pallet to the high-bay for storage, and adjust the inventory accordingly. A typical order could be as low as five pallets, or go as high as 35 pallets, it varies. Considering that we used to move all pallets by forklift back and forth between our storage area, order consolidation and shipping staging area, the reduction in man hours is enormous.”
In 2005, Blum again found it necessary to expand their warehouse capacity, primarily because of the addition of more manufacturing capability to keep pace with increased sales – additional storage for work in progress (WIP) and finished goods. Some 12,500 pallet locations were no longer adequate to accommodate the company’s growth. Again, Dematic was brought in to engineer a solution, which resulted in a 50% increase in pallet location space – to 18,000 pallet locations.
Three more aisles of storage space were added to the high-bay, and three more AS/RS. This expansion required the building shell again to be extended, which was project managed by Blum.
In order to streamline the flow of pallets into and out of the high-bay, Dematic virtually doubled the amount of roller and chain conveyors, providing more input points where pallets could be put into the system, and more channels to retrieve pallets.
Additionally, once a pallet has been labeled for shipment to a customer, in the past it would be sent to the staging area awaiting outbound shipment, and sometimes might sit there for days. This has caused some serious jam-ups in their staging area. Now, the system has been redesigned so that if the ship-ready pallet is not designated for immediate shipment, it is then sent back to the high-bay for storage until later ship staging is required. This, of course, is totally automated through the WMS.
“The biggest challenge with the 2005 upgrade was that Blum had to continue to ship with absolute minimal disruption to the system,” says Mike Perry, from Dematic’s Supply Chain Solutions Group. “All work had to be carefully managed and sequenced since downtime to their on-going operations was not an option.”
“We split the project into three phases,” explains Perry. “The first phase was to re-route some existing conveyor so the system could still operate while we installed the new equipment. We accomplished that over their July 4th shut-down weekend. In the second phase all of the new racking was installed, the new conveyor systems and the building shell construction. A new Dematic WMS system was also put in place, initially only to manage the new systems being put in, then to go system-wide. In essence, we had two separate WMS systems, running parallel to each other, in operation during that period. We were able to do this and it had no effect on Blum’s daily operations.”
“The final phase was implemented between Christmas and New Years of 2005,” continues Perry. “The two formerly independent systems were then tied together into one complete warehouse system.”
Blum’s new automated warehouse system now moves 4,500 pallets inbound to their high-bay, and 4,500 pallets outbound weekly – 9,000 pallets total. These pallets are moved without operational strain, indeed, the system has expanded functionality for future growth. This allows for much better control of their throughput, outbound flow and timely sequencing of all aspects of production and shipping. System throughput has been increased by 50%, with shipment accuracy consistently in the 99th percentile, not to mention a significant reduction in labor hours per order.
Manufacturers who subject their warehouses to diverse, multi-functional operations, yet elect to run them with primarily manual functions, are destined at some point to reach a threshold of inefficient production flow. The question is simply how soon will this happen to your facility? Those manufacturers who do automate, however, stand a better chance of reducing their operational costs, improving their profits, and ultimately capturing more market share.