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AUTOMATION/RETAIL

The FUTURE of
RETAIL DISTRIBUTION
AUTOMATION/RETAIL

THE FUTURE OF RETAIL DISTRIBUTION


welcome
contents
The future of retail distribution 10 A collection to inspire
Distributed order management, autonomous robots, blockchain and The retail supply
warehousing software are all working together to help retailers more chain is a complex
effectively manage their end-to-end supply chains. animal that has
been affected by
Conveyors & Sortation: Carrying the e-commerce burden 14 everything from
In a case-quantity world, conveyor was king. E-commerce, poly bags the uptick in
and the need for incredible flexibility posed a brief challenge, but e-commerce to
convey and sort technologies have reclaimed the crown. the move to omni-
channel distribu-
Rocky Brands sees the light 20 tion to the so-called “Amazon effect,”
Confronting an aging materials handling system and new channels just to name a few.
of business with new customer expectations, Rocky Brands installed Highly dynamic and customer-
a put-to-light and sortation system to ramp up fulfillment. focused, these end-to-end supply chains
require a high degree of synchronization
Pouch sorter powers Stage 28 and collaboration—both of which are
How a hometown department store chain transformed its being made easier by technology.
e-fulfillment processes with pouch sortation technology. In this Special Digital Issue, the
editors of Modern Materials Handling
Thrive Market’s startup disribution network 36 have curated several feature stories that
How does a fast-growing, e-commerce startup company build out neatly encapsulate the software, auto-
order fulfillment capabilities? Thrive Market answered that question mation, equipment and processes that
with its new facility in Indiana. are helping today’s retail distribution
operations exceed customer demands.
Sign, seal, deliver on customer promises 44 The editorial team of Modern hopes
Packing and shipping—as the final step of fulfillment—are the that this collection will not only give
last chance for an operation to ensure the job is well done. you the clearest snapshot possible of
the innovation and technology that’s
We’re gonna need to see some identification… 50 currently in use, but work to inspire you
To address the AIDC challenges of e-commerce and omni-channel, on your transformational journey.
labeling and marking suppliers are ensuring the information contained
within each printed bar code is read with 100% accuracy every time.

Automation & robotics lead robust outlook 54


Our annual survey reveals a bullish outlook for continued
material handling investments, with enthusiasm extending into
Michael A. Levans, Group Editorial Director
newer technologies such as robotics as well as warehouse control Comments? E-mail me at
system software and the closely related category of warehouse mlevans@peerlessmedia.com
execution systems. Follow me on Twitter: @MikeLeva

Editorial Staff Peerless Media, LLC


Brian Ceraolo
Michael Levans Sara Pearson Specter Wendy DelCampo
President and Group Publisher
Group Editorial Director Editor at Large Art Director MATERIALS
LS HA
HANDLING
LIN
LING
Kenneth Moyes
Bob Trebilcock Roberto Michel Polly Chevalier President and CEO
Executive Editor Editor at Large Art Director EH Publishing, Inc.

Noël P. Bodenburg Bridget McCrea Kelly Jones Editorial Office


Executive Managing Editor Editor at Large Print/Online Production 111 Speen Street, Suite 200
Manager Framingham, MA 01701-2000
Josh Bond Jeff Berman 1-800-375-8015
Senior Editor Group News Editor

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2 AUTOMATION/RETAIL
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transformation needed to increase reliability, improve
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© 2018 Honeywell Intelligrated. All rights reserved. or call 1.866.936.7300.
The Future of Retail Distribution

Future of
THE
Distributed order
management, autonomous

Retail
robots, blockchain and
warehousing software are
all working together to help
retailers more effectively
manage their end-to-end
supply chains.

DISTRIBUTION
BY BRIDGET MCCREA, EDITOR AT LARGE

T
he retail supply chain is a complex animal In lieu of that “traditional approach,” a grow-
that has been affected by everything from ing number of retailers are turning to technolo-
the uptick in e-commerce to the move gies like distributed order management (DOM),
to omni-channel distribution to the so-called warehouse management software, robots and
“Amazon effect,” to name a few. Highly dynamic even blockchain to run their supply chains more
and customer-focused, these end-to-end supply effectively and efficiently. Here are five technolo-
chains require a high degree of synchronization gies that will shape the retail distribution land-
and collaboration—both of which are being made scape in 2018 and beyond.

1
easier by technology.
“As more people made their purchases online Distributed order
versus going to a store, the need for highly flexible management (DOM)
supply chains has grown exponentially,” says Dinesh Facing challenges like the
Dongre, vice president of strategy at Softeon. No proliferation of customer
longer restricted to holding inventory meant for their choice, to demands for
end users, for example, retailers are procuring goods same-day and next-day delivery, to the Amazon
from multiple global sources and often turning to their effect, more retailers are using DOM to manage
suppliers to drop ship orders to their customers. This their omni- and multi-channel operations. As a
strategy helps companies better accommodate their system that brokers orders across various systems
customers’ changing wants and needs. “Consumers and processes that multiple parties use to fulfill
are fickle. They want their orders to arrive within the demand, DOM usage “continues to grow,” accord-
next hour, if possible,” says Dongre. “Because of this, ing to Dwight Klappich, research vice president
the traditional approach no longer works effectively at Gartner, with such systems now being tied into
for retailers that either want to sustain or improve store point-of-sale (POS) systems. “Manhattan
their market share.” has certainly been talking about this tie-in,” says

4 AUTOMATION/RETAIL mmh.com
Klappich, “and other vendors are trying to take POS incorporates high levels of visibility across the entire
and move it up into the DOM layer.” network, including the activities of the various vendors
Defining DOM as the “ability to orchestrate an that drop-ship orders to end users. The solutions will
order lifecycle,” Dongre says these solutions have his- also need to handle inventory rebalancing, or the move-
torically focused on filling orders across multiple dis- ment of inventory to the right locations and according
tribution centers. Fast-forward to 2018 and retailers to demand; dynamic orchestration (which answers
are using a combination of store, vendor-based and the question: Where is the best place for us to fulfill
DC fulfillment—all of which come together to create from?); collaborate across suppliers; and optimize
one big, multi-node facility. inbound freight. “The next generation of DOM will
To support this evolution, Dongre says DOM incorporate these various elements and positively affect
must evolve into a more comprehensive solution that total delivered cost for retailers,” says Dongre.

mmh.com AUTOMATION/RETAIL 5
The Future of Retail Distribution

2 Warehouse management
and execution systems
3 Autonomous robots
The image of the autono-
mous warehouse is coming into
A workhorse of the typical DC clearer focus as more hardware
or warehouse, a warehouse man- and software manufactur-
agement system (WMS) controls ers develop innovations that
the movement and storage of remove much of the “human”
materials within those facilities. Warehouse execution component from the distribution process. According
systems (WES) manage inventory records and materi- to Peerless Research Group’s most recent automation
als handling equipment within the facility. Together, survey, 45% of companies surveyed want to invest in
these two software platforms continue to play a signifi- robotics (palletizing, picking or other solutions) and
cant role in the typical retail supply chain. 43% are interested in conveyor and sortation systems,
“WMS is important to the retail sector, which is automated storage, and automatic guided vehicles.
working with myriad different ways with going to mar- Other warehouse and DC automation that companies
ket with e-fulfillment, omni-channel, multi-channel, are interested in includes shuttle systems, goods-to-
or another method,” says Dongre. “Each requires dif- person picking solutions, and weighing/cubing/dimen-
ferent types of market reach and different behavioral sioning equipment.
expectations.” And while WMS hasn’t historically From his vantage point at Gartner, Klappich says
been able to manage co-mingled inventory, Dongre he’s seeing a “marked increase” in the number of
says next-generation solutions can perform functions retailers that want to invest in various forms of auto-
like the dynamic repositioning of inventory (e.g., item mation. On many of those “must-have” lists right now
availability for each channel and how much inventory are autonomous mobile robots. For example, Deutsche
is available at each point of the fulfillment network). Post AG’s DHL is testing “swarming” robots at one of
Luke Nuber, Fortna’s emerging technology specialist, its facilities, and Quiet Logistics, which fulfills online
points to WES as the “subsystem” that ties distribution orders for retailers like Bonobos and Inditex SA’s Zara,
technology together and sees these solutions playing an is using the same type of mobile robots in one of its
important role in the retail supply chain during the year warehouses, according to The Wall Street Journal.
ahead. “There are a lot of efficiencies and productiv- Expect to see more retailers jumping on the auton-
ity that can be gained by tying and fully integrating an omous robot bandwagon in 2018, says Klappich, as
entire facility together,” Nuber says. “WES really enables vendors like Fetch, Otto, IAM Robotics and Locus
that by putting people, processes, technology and assets find ways to build affordable robots that meet the
into a single control system that has end-to-end visibility needs of small to mid-sized retailers. “These firms may
throughout an entire facility. This allows retailers to pri- not be able to afford a $50 million or $100 million
oritize tasks and optimize those tasks on the fly.” automated warehouse,” Klappich says, “but they can
For retailers, WES also provides insurance for tech- buy robots to supplement their labor forces. As that
nology purchased from vendors that either get acquired technology continues to evolve, I think we’ll see even
by another company or go out of business. “A good WES more interest in robots for this use case and certainly
system provides a lot of flexibility to swap out different more large-scale deployments of this technology.”
systems—or the components—should they become no
longer available,” Nuber adds. “This provides a definite
plus for the retailer that’s looking for long-term solutions
to their key distribution challenges.”

6 AUTOMATION/RETAIL mmh.com
4 Augmented reality
With applications that
5 Blockchain
The hoopla over blockchain
isn’t limited to investors that
range from simple text notifica- want to get their piece of the
tions to instructions on how to Bitcoin pie. Blockchain, which is
perform a life-threatening surgi- the underpinning technology that
cal procedure—and everything maintains the Bitcoin transaction
in between—augmented reality (AR) is coming into ledger, could play a key role in the retail supply chain in
focus in the retail supply chain. Using an existing, the near future. Eric Peters, CEO at SensorThink, sees
natural environment, AR basically overlays virtual this trend developing over the next three years to four
information on top of that environment to help users years. “Particularly on the retail grocery side, blockchain
experience a new and improved world where virtual is going to accelerate from something nobody knew
information is used as a tool to provide assistance in about nine months ago to being in every conversation
everyday activities. you have about supply chain by late 2018,” says Peters.
“In distribution, AR basically translated into the For example, a domestic company that buys blueber-
specialized headsets or glasses that place a glass in ries from a farmer in Chile, and then sells them to a
front of the wearer’s eyes to project data on top of U.S. wholesaler or distributor, will likely ship the fruit
what he or she is looking at,” says Nuber, who notes from Santiago to Atlanta. From there, the blueberries
that in most cases AR can be divided into two catego- will be sent to a DC for eventual sale to a grocer like
ries: smart glass, which projects some type of data into Walmart. Between the time that the fruit is picked and
the corner of the headset or glasses, and the type of when a consumer takes it home and puts it in their
AR that projects a full-view display across the user’s refrigerator, the blueberries will have passed through
full field of vision. multiple countries, changed ownership seven or eight
“There are a couple of interesting applica- times and have been handled by a variety of
tions for this that we see on the near-term supply chains.
horizon, including those that will facilitate Companies The retailer that wants to understand what
DC picking, which tends to consume the mentioned in the cold chain integrity of that product was from
most labor in an operation,” says Nuber. this article start to finish (including handling times, days
Using AR, for example, supervisors will be in transit, etc.) can use blockchain as a single
able to project visual cues and instructions to
• Fortna ledger of activity for every single thing that hap-
workers as they are performing their picking
• Gartner pened to those blueberries between the original
tasks, such as an arrow pointing to the next • SensorThink farmer and the point of sale at Walmart.
location or the next pick, or a specific quan- • Softeon “As an unbreakable, shared ledger that
tity to pick at a certain location. everyone agrees to, blockchain provides all of
“Some of these technologies can even show a veri- the information in one, secure place that everyone can
fication image so that users can do comparisons to access and utilize,” says Peters, who expects more retail-
the item they have in their cases versus what those ers to incorporate blockchain into their supply chain
items are supposed to be,” says Nuber, noting that the strategies in the future. “Walmart is already testing it
same concept can extend into a DC’s receiving and with food safety; it’s definitely one of the most exciting
put-away operations. “This is a user-friendly technol- transformational things that’s going to happen in the
ogy that allows retailers to get seasonal workers up to retail supply chain in the near future.” •
speed quickly, troubleshoot in far-flung corners of the
facility and even perform remote maintenance.”

mmh.com AUTOMATION/RETAIL 7
Equipment Report

Conveyors & sortation:

Carrying the
e-commerce
burden BY JOSH BOND,
SENIOR EDITOR

In a case-quantity world, conveyor was king.


E-commerce, poly bags and the need for incredible
flexibility posed a brief challenge, but convey and
sort technologies have reclaimed the crown.

8 AUTOMATION/RETAIL mmh.com
T
he growth of e-commerce is driving pro- a moving target, so they carry that stigma to some
found changes in the way warehouses and extent,” Radcliffe says. “The technology now lends
distribution centers operate, and the effect is itself to more flexibility since it now incorporates the
particularly pronounced in the world of convey- next evolution of communication. In the past, when
ors and sortation systems. Historically, these systems you wanted to modify a sorter, you had to go put
were designed around fulfilling retail, brick-and-mortar physical things on it to tell it to take a certain action
stores with full cases on a conveyor or line sorter. at a certain point. Now, there’s constant communi-
Operating in a singulated flow, these systems cation throughout, and so you can systemically make
ferry one large case after another. This design changes to the sorter on the fly. This is a game-
becomes much more difficult in e-commerce, where changer, and customers are coming to understand
equipment is expected to handle each individual that’s a huge piece of the puzzle.”
item. From small adjustments to wholesale replace-
ment, there is no shortage of options to address the Modifications, modules and
issue. Certainty of what the future will bring and maintenance
how best to design solutions accordingly is in much Materials handling calls for highly configurable
shorter supply. equipment as no two applications are the same. In fact,
“I think of it as a journey,” says Tim Kraus, direc- Kraus says, a single standard conveyor product could
tor of product management for Honeywell Intel- be configured in millions of different ways depending
ligrated. “The entire industry is trying to find better on length, speed, motor size, controls and more. But,
solutions as it shifts to handling individual items. what if you would like to transform the conveyor you
The most critical element right now is that convey- have into one of its millions of other forms?
ors and sorters must be able to adapt.” According to Ken Ruehrdanz, manager of the dis-
Adaptability is not a feature for which con- tribution systems market for Dematic North Amer-
veyors and sortation systems are known. Brad ica, the technology has to be designed, engineered
Radcliffe, vice president of sales, sortation and and implemented so it can be easily reconfigured.
distribution for Beumer Corp., says that thinking “A lot of professionals might think of convey and
has already changed. sort as old technology from the 1990s for case con-
“High end sortation, loop sorters and fixed con- veying, but it has a foundational place in the new,
veyors have always been seen as a fixed solution to modern DC,” Ruehrdanz says. “Methods that are

mmh.com AUTOMATION/RETAIL 9
Equipment Report

nents allow the “Lots of customers want to phase


application of in automation,” Ruehrdanz says. “First
a belt over the they want to get the process right, then
rollers to better use some semi-automation, then phase
handle bags and in more and more automation. A simple
envelopes. These example is an embedded inline scale,
sorts of changes or automated document insertion,
can occur swiftly or label print and apply. Modular
on a weekend or conveyor products make these additions
off shift. so much easier.”
Benjamin Motor-driven roller (MDR) technol-
Thumm, head ogy allows individual conveyor seg-
of product man- ments to operate independently, further
agement for enhancing flexibility. Whereas conven-
Dambach Lager- tional line shaft conveyors run all the
systeme, says time, MDR will only move when a load
The growth of customers justify is present. This conserves energy to
e-commerce has
driven adoption of modular features the point that solar-powered conveyor
goods-to-person not just in finan- is viable, according to Chris Castaldi,
(and goods-to-
cial terms, but to vice president of sales for DMW&H.
robot) systems,
which rely heavily sustain competi- By changing acceleration rates, stop-
on intelligent tiveness. “Cus- ping points and other factors, MDR also
conveyance
tomers require offers opportunities for creativity.
to pickers.
tailor-made “Say a customer has a 90-degree divert:
solutions, while What if they want an early out?” Castaldi
more automated, more space-saving and simultaneously expecting an adaptable asks. “You can do a right or left since you
more productive need to be connected and sustainable system,” Thumm says. can program the conveyor to roll either
somehow, and that’s with conveyor. “Modular architecture means upgrades way. For other conveyors there’s an arrow
Because the new supply chain is so or expansions can be achieved rapidly.” on the side indicating the one direction of
variable, the mechanization also has to Quicker maintenance is another ben- travel. With these options, you don’t build
be able to change with ease. Ten years efit, he says, and is further supported by yourself into a box.”
ago, the distribution environment didn’t efforts to increase the number of identi- Modern conveyor and sorter compo-
change as much as it does today, but if it cal parts within each product family. nents are adaptive and flexible, but they
did have to change, the legacy of convey The “same spare part” concept is based are just pieces of the puzzle. With enough
and sort products was that each divert on working toward a larger proportion of foresight and planning, it is possible to
point, curve or incline is a separate piece interchangeable components. As a conse- design a system so the pieces can be rear-
of equipment hooked together, a ribbon quence, maintenance and service is more ranged to create whatever picture the
of conveyor. Now, we can reset the com- efficient for operators, Thumm says, and customer wants.
ponents in the side channel to reconfig- spare parts inventory is minimized. “We can engineer a solution that will fill
ure one to the other.” Modular features offer benefits even retail wholesale orders four days a week,
For example, an operation might want before the system goes live. Pre-installation then shift and flex its muscles for e-com-
to turn conveyor from a transportation and decentralized controls are increasingly merce direct-to-consumer type orders,”
function to accumulation or vice versa. important for conveyors, Thumm says. Radcliffe says. “That’s something that has
Or, it might be beneficial to make a roller Installation time and the commissioning changed over the last five to 10 years.”
conveyor into a belt conveyor. Instead phase can be dramatically shortened and Of course, the hardest part
of removing the conveyor and installing subsequent changes of the material flow remains convincing customers to
different machinery, modular compo- are a matter of “plug and play.” pay for that flexibility.

10 AUTOMATION/RETAIL mmh.com
“They have a problem in front of them Texas or New York and get a better rate.” For example, say six items of a certain
now, and if I tell them X amount of dol- Those prepared for a more comprehen- stock-keeping unit (SKU) just arrived at
lars will solve today’s problem precisely, sive project can look forward to reaping the the put wall, but there are eight orders
they’re happy,” Radcliffe says. “But benefits of advances in software that help waiting for that SKU. If the system
they can be ready for business change harmonize the flow of goods throughout a knows three of those orders have been
by spending X+Y. They might not use facility. Consider the example of a sorter in the put wall longer and should be pri-
it for the first five years, but they real- destination capable of accumulating 15 oritized to meet service levels, the sorter
ize their world changes every nine to cubic feet of goods bound for a retail store. will disregard what the WMS told it and
12 months. About 90% of the solutions The same space might be dynamically marry the SKU to the optimal order.
we’ve installed in the last three years are reconfigured to process ten 1.5-cubic-foot, “Then it gets even smarter and directs
expandable, modular, and have capacity e-commerce orders. items to chutes where labor is readily
that is not used. They have ‘white space,’ “The question is how to reuse the available so workers don’t have to walk as
so to speak. There is a carrying cost for space from a process perspective,” far to complete orders,” Radcliffe says.
white space, but most companies have Radcliffe says. “You still use 15 cube, “Finally, the smart sorter knows it’s still
stopped being so shortsighted.” but there’s a primary sort to a number short two pieces, so it will make sure
of orders that are then distributed into they are immediately picked. It has now
Kinda sorter a movable put wall. The thing that’s fulfilled its top requirements and rules
Not everyone is working with a blank changed in recent
slate, and many are instead saddled with years is the software is
legacy systems struggling under changing smarter. The same soft-
demands. Kraus says many facilities that ware that does the pri-
automated in the 1980s with a conveyor mary sort is also going
or a sliding shoe sorter are now trying to to do the secondary sort
figure out what makes sense: completely to put walls.”
replace or rebuild? In such a setup, the
“It comes down to whether they sort engine will con-
can withstand the downtime required sider factors like how
to replace,” Kraus says. “It’s a little more to maximize accumula-
expensive to replace, and there are a whole tion, minimize labor
lot of benefits to throughput and re-opti- to complete an order
mizing a system, but most often it’s about and minimize order
that one or two weeks of downtime. A lot completion time. In
of times that answer is no.” the past, or when the
There are some workarounds, like two sort engines are not
conveying in totes instead of installing managed together, the A less expensive take on the traditional tilt-tray
sorter can manage as many as 150 sub-diverts
a conveyor capable of handling both a warehouse management to optimize parcel rates.
sweater and a mini-fridge. system (WMS) pre-
“Other times you get more bang for allocates a pick to an order. From that on utilization of equipment and labor. It’s
your buck by investing in one part of moment forward, the item has only one always thinking upstream and down-
your system, like a stand-alone zone skip possible path through the sorter to its stream. Ten years ago, software was just
sortation system, for example,” Kraus destination. not flexible enough to do this.”
says. “An e-commerce shipping sorter “Here’s what a smart sorter will do In addition to ultra-nimble software,
can sort down to a smaller set of desti- for you,” Radcliffe explains. “It can look sortation hardware has also developed
nations before you hand off to a parcel ahead and behind, take that item and solutions to the e-commerce need for
carrier. Instead of all UPS orders for a make some business decisions based on targeted sorting and sub-sorting. Castaldi
day, you can sort out UPS orders for just the rules you have established.” describes a modern alternative to a tra-

mmh.com AUTOMATION/RETAIL 11
Equipment Report

Sorters and sense goal, like minimizing system downtime.


Once a state-of-the-art “A big contributor can be information
system is up and running, flow. It’s not always a mechanical failure
the next challenge is to that will stop a system,” Kraus says. “It
keep it that way. Kraus could be that you are losing a connection
says maintenance prac- with some source of data somewhere, so
tices have evolved around you want to find out how to react faster
more connected systems or prevent those gaps. Can we monitor
with more sensors, more the speed of the connection and take
data and more predictive action if it slows? Should we monitor the
recommendations on memory capacity of an operation that
Modular and adaptable components mean the same
what to do to maintain stores information and is filling up?”
system can fulfill retail orders in case quantities one day,
then bagged e-commerce orders the next. stable operations. This “super-connectivity,” Ruehrdanz
“It’s more cost-effec- says, further unifies operational intelligence
ditional tilt-tray shipping sorter. Capable tive to collect data, but then it’s about and maintenance intelligence. It is possible
of sorting to more than 150 destinations making data actionable,” Kraus says. “This to prevent wear and tear with something
and often costing less than $1 million, is a learning experience for the entire as simple as allowing the system to slow a
the tilt-tray system moves at a more industry, since there are not many estab- sorter when volume is lighter, for example.
deliberate pace to enable flexibility. lished rules for how to respond to some of The same sensors that monitor the condition
“Optimizing those different shipping this comprehensive, detailed equipment of equipment can alert a warehouse execu-
rates makes a big difference,” Castaldi condition data.” tion system (WES) to reallocate material
says, “and with this sort of solution, Instead, Kraus recommends adding sen- flow from an overactive area to one that still
you are free to slice and dice it any way sors and visibility only around those pieces has capacity.
you like.” of data that are most relevant to a given Learning how to best configure and inter-
act with an intelligent, proactive system is a
dramatic departure from the steadily hum-

D ematic’s Ken Ruehrdanz outlines four key trends impacting the design
and usage of conveyor and sortation equipment.
Trend #1: Increasing use of goods-to-person workstations. Modular
ming conveyors and sorters of the past, and
Castaldi says success in the e-commerce
conveyor is the foundation of goods-to-person workstations. Modular con- world is a matter of sink or swim.
veyor is the structure that indexes the load into a precise position where it’s “We never knew how deep the water was,
accessed by a worker. Modular conveyor can sequence cartons and totes so some stuck their toes in. Others dove in,”
into and out of the goods-to-person workstation and conveyor configura- he says. “At this point you can try to wait
tion accommodates worker ergonomics. and see, but you will be left way behind.
Trend #2: Robotic piece picking for order fulfillment. Modular con- Almost everyone is in the e-commerce world
veyor is the foundation of robotic piece picking cells. The robot is the
now, and if you’re not swimming you’re in a
centerpiece of the cell, but the robot requires a conveyor module that can
tough position now.” •
sequence and position inventory containers and order containers. Modular
conveyor indexes the load into a precise location where it is accessed by
the robot. Companies mentioned
Trend #3: Change creates need to reconfigure. The accelerating rate
of change in operational requirements is driving the need to implement
in this article
conveyor systems that can be reconfigured, and modular conveyor accom-
• Beumer Corp.
modates that need. For example, a steerable wheel sorter module can be
relocated in the existing side frame.
• Dambach Lagersysteme
Trend #4: E-fulfillment centers ship orders in bags. Conveyor systems GmbH & Co. KG
with all-belt conveying surfaces accommodate poly bags for e-fulfillment • Dematic
operations. This trend has increased the application of segmented belt sur- • DMW&H
face conveyor with accumulation zones. • Honeywell Intelligrated

12 AUTOMATION/RETAIL mmh.com
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Rocky Brands

Rocky Brands
Confronting an aging materials handling system and new channels
of business with new customer expectations, Rocky Brands
installed a put-to-light and sortation system to ramp up fulfillment.

BY BOB TREBILCOCK, EXECUTIVE EDITOR

“WE’RE DEALING WITH SMALLER ORDERS.


E-commerce is becoming a bigger part of our
business. Turnaround times have to be quicker.
We need more throughput. Order fulfillment
is too labor intensive. It’s a challenge just to
get replacement parts for our aging materials
handling system, let alone keep it running.”
Those challenges will sound familiar to anyone managing
a distribution center today. Rocky Brands, a manufacturer
and distributor of work, western and outdoor footwear and
apparel brands such as Rocky, Durango, Michelin, Georgia
Boot and Mossy Oak, was dealing with all of them at its more
than 200,000-square-foot facility in Logan, Ohio, southeast
of Columbus. Modern Materials Handling featured the facil-
ity in the summer of 2011, following a project to upgrade the
warehouse management and control systems. Then, Rocky
Kevin Koster, director of distribution services Brands was focused on improving its case-handling capabili-
ties, since most orders were wholesale shipments to retailers.
In the ensuing years, that model changed. “We’re doing
more just-in-time shipments from customers who are
ordering more often and in smaller quantities,” says Kevin
Chris Cone/Verbatim

Koster, director of distribution services. “Instead of send-


ing three or four thousand pairs of shoes to a distribution
center, we’re doing more for the stores and everything
needs to be shipped in a day or two.”

14 AUTOMATION/RETAIL mmh.com
With a growing e-commerce business, Rocky Brands added a light-
directed putwall (above) to optimize packing. Items are sorted down
chutes, where an associate loads them into the putwall (left).

Add to that list a growing e-commerce business with orders that


need to be turned around even quicker than wholesale orders—
including drop shipments to fulfill some its retail customers’ Web
orders, and an aging conveyor and sortation system that had been
designed for 10 years and was entering its 15th year of service.
The solution was DC 2020. Designed to take the facility into
the next phase of business, the project included a new conveyor
and sortation system, and new order picking and packing capa-
bilities. Both were intended to enable quicker turnarounds while
controlling the cost of labor associated with piece picking for
e-commerce orders. A key technology: A putwall enabled by put-
to-light technology (Lightning Pick, lightningpick.com) in the sort-
ing and packing area. Along with putwalls and lights, the redesign
also included:

mmh.com AUTOMATION/RETAIL 15
Rocky Brands

• a sliding shoe sorter that sorts pick


totes to the putwall area for multi-line
orders using 17 chutes,
• a new shipping sorter, and
• a heat shrink tunnel that automatically
seals single line orders as they travel
from induction to shipping.
The new system has delivered a num-
ber of measurable results. By speeding
up the conveyor and by swapping out
a pop-up divert sortation system for a
sliding shoe sorter, the facility was able
to simultaneously reduce the amount of
conveyor required for its operations and
increase throughput. “Our max for an
eight-hour shift used to be 8,000 units
per shift,” says Koster. “Today, we can do
more than 14,000 units in the same eight
hours.” What’s more, the facility freed up
8,000 square feet of floor space by relo- In addition to lights and a putwall, Rocky Brands upgraded its conveyor and sortation
cating the sortation system from the floor system, including a new sliding shoe sorter.
to the mezzanine.
The old system used 19 packing not running all 17 chutes,” Koster says. New design for new opportunities
chutes, each handling three cartons at a “We can handle all of our volume and Headquartered in Nelsonville, Ohio, pub-
time; in the new system, the 17 chutes have room for future growth.” What’s licly traded Rocky Brands Inc. designs,
that feed the putwall use carton flow more, the facility is realizing a 37% develops, manufactures and markets
rack to handle 16 cartons at a time. “I’m increase in packing capabilities. premium-quality rugged outdoor, occu-
pational and casual footwear, as well as
branded apparel and accessories.
Originally founded in 1932 as the
Wm. Brooks Shoe Company by the
grandfather of Rocky’s current chair-
man, Mike Brooks, the Rocky name was
established in 1975. With manufacturing
operations in Puerto Rico, the Domini-
can Republic and sourcing in Asia, to
name a few, the company’s footwear,
apparel and accessories are marketed
through multiple distribution channels
under a number of brands, including
Rocky, Georgia Boot, Lehigh, Durango
and the licensed brand Michelin.
Rocky has also been focused on
growing its business. In early 2005, the
company acquired one of its major com-
Inventory is stored on shelving at the case, rather than pallet, level in the SKU reserve
petitors, EJ Footwear, an acquisition that
area. Full cases are also picked from this area. added a number of brands and more than

16 AUTOMATION/RETAIL mmh.com
from kiosks installed system designed to handle growth and
An associate picks items to
a cart. Once the picks are in industrial and work requirements over the next five years—a
complete, the cart is wheeled facilities to name three. typical retail horizon. “We looked at our
to an induction area. Rocky also provides changing order profile and knew that we
third-party distribution had to be quicker and that we had to keep
for other manufacturer’s our labor costs down,” Koster says. “We
footwear. Finally, but did not consider an automated goods-to-
perhaps most impor- person solution, but stuck with what we
tant, is the growing knew would work, which was improving
e-commerce business. our sortation system and adding to our
In retrospect, Koster packing capabilities. Lights were pretty
says the push for much always on the table.”
e-commerce began in
2011, after Modern’s Bring in lights
last look at Rocky. By According to Koster, the new design
2014, the combina- had to accomplish several things to
tion of a changing take Rocky into the next phase of
business model and a its business. They could be summed
mechanical system that up as: throughput volume, accuracy,
doubled its size. That acquisition led was past its sell-by date required a new quality and ease of use. They were
the company to rethink its distribution approach. “Our old sortation system had inter-related: “Accuracy was important
strategy as well as the technology that pop-up wheel diverts and actuator arms,” because it doesn’t do any good to do
supports its order fulfillment operations. Koster says. “Over time, the system had twice the throughput volume if half of
One of the first steps was to consolidate
distribution processes into the Logan DC.
Back then, the company redesigned its
processes to accommodate all of the new
business and provide one face to a cus-
tomer that might be ordering from mul-
tiple brands. The central Ohio location
also had geography on its side: Back then,
the facility could service 50% of the U.S.
population within five days.
Those were good numbers at the time.
Of course, in the years since, the com-
pany has continued to grow organically
and through acquisition, as have customer
expectations and requirements. In 2014,
Picked items are inducted onto the conveyor system. Some will be conveyed directly
Rocky acquired Creative Recreation, the to shipping, while others will be sorted to the putwall area.
company’s foray into a casual, lifestyle
brand. Today, Rocky’s brands are available slowed down and obtaining parts like the the orders are wrong,” he says. “That
in some 10,000 retail locations, includ- right photo eyes was a challenge.” What’s was a primary reason it had to be easy
ing major accounts such as Bass Pro more, customer service expectations had to learn, since we supplement our staff
Shops, Cabela’s, Dick’s Sporting Goods, changed. “In e-commerce, getting orders for peak season, and we don’t have the
Tractor Supply Company and Gander out the door quickly is the difference luxury of a month to get temporary help
Mountain; military products are sold on between success and failure,” he says. up to speed.”
base exchanges; and safety shoes are sold Enter DC 2020, which included a The new sortation system accom-

mmh.com AUTOMATION/RETAIL 17
Rocky Brands

Lights identify the put location (above).


Single line orders pass through a shrink
tunnel (right) before traveling to shipping.

plished at least two things. First, by chutes, each station can accommo-
replacing the old pop-up and actuator date 16 cartons at a time, for a total
Lift trucks and pallet jacks move
arm diverts with a sliding shoe sorter, of 272 cartons at a time, a nearly five-
palletized material through the facility.
Rocky would no longer have an issue fold increase in packing capacity. All
with replacement parts. Second was those extra cartons have delivered a
speed: The new conveyor operates 37% increase in throughput at packing orders. In the past, those orders went
at 140 feet per minute, compared to because associates are no longer wait- down the chutes to packing stations,
65 feet per minute in the old system, ing for cartons to come down to the just like multi-line orders. Now, single
and the sortation runs at 302 feet per pack station. Last, but not least, was line orders are touched when they’re
minute. The faster speeds not only the implementation of an automated picked and inducted onto the conveyor
contribute to better throughput, they heat shrink tunnel to handle single line line and are then automatically sorted to
also fit in a smaller footprint than the the shrink tunnel, eliminating any fur-
old system. “The old sorter was on ther touches until they get to shipping.
the shipping floor,” says Koster. “We The put-to-light and putwall system
re-organized the flow of material by ties it all together and checks off at least
putting the sorter on the mezzanine, three of the priority boxes: It is faster
which freed up 8,000 square feet of than the old system; more accurate; and
warehouse space.” easy to use. When the warehouse man-
The redesign also alleviated a bottle- agement system (WMS) creates a batch
neck at packing. In the old system, or wave of orders, it determines what
the packing area was fed by 19 chutes. items can go directly to shipping; which
Each station had room for three cartons, items can go to the heat shrink tunnel;
or 57 cartons at a time. That worked and which will go through the sorter to
well when a full carton had an average the packing chutes.
of six items to an order. But with the The put-to-light system receives
change in order profiles, Rocky’s aver- information about the customer, the
age order is now about three and a half items in the order and the shipping
items to a carton. “I needed room for carton in advance for multi-line orders.
more cartons at packing and with our Once those items are inducted onto
old equipment, we just didn’t have the the conveyor, the system knows which
capacity,” Koster says. chute and which carton at the station it
While the new design has only 17 needs to go in.

18 AUTOMATION/RETAIL mmh.com
When items arrive at the putwall, an wall that the order is complete. The
associate on one side scans the UPS documentation also tells the packer
code of each. A light indicates the right what size box to use. Once the item
slot in the putwall for the put. Once has been packed and sealed, a take-
all the items for a slot are complete, away conveyor delivers it to the ship-
the system prints out the shipping ping sorter.
documentation. The associate scans a All told, Koster says, the new
bar code on the documentation, which equipment and new design have led to
alerts a packer on the other side of the a reduction in footsteps and touches
that has delivered an overall
productivity gain of 10% across
picking, replenishment and put- Narrow aisle storage optimizes floor
away. More importantly, it has and storage space in the facility.
positioned Rocky Brands for
the future. we’ve been able to do this without
“For one, we no longer worry adding to our permanent head count
about potential downtime and reducing our temporary labor
because we can’t get a part,” requirements at peak.”
Orders ready for shipping pass through the
print-and-apply station for shipping labels.
Koster says. “For another, we are For a shoe distribution company,
positioned for the growth, and that’s a perfect fit. •

Upgrade with lights


Putaway: Product is stored in the
high-bay, narrow-aisle reserve and active
storage area (2) on shelving at the case
level, rather than on pallets. The lower
Put-to-light, a putwall and sortation is taking Rocky area of the storage area is designated
Brands to the next level. for active picking. Storage areas above 7
feet are used for reserve storage. Pallets

T
he combination of put-to-light tech- are delivered to a cherry picker servicing
Rocky Brands Inc. nology and new conveyor and sorta- the aisle selected for storage. Cartons
Logan, Ohio tion has allowed Rocky Brands to are scanned, then putaway, updating the
SIZE: 200,000 square feet, plus a
increase throughput and meet new customer warehouse management system (WMS).
35,000-square-foot mezzanine
PRODUCTS: Footwear and apparel service requirements as it expands its e-com- In addition to the reserve and active stor-
STOCK KEEPING UNITS: 43,000 merce business. age area, some slow-moving items are
THROUGHPUT: From 18,000 to
Receiving: In 2012, the facility was stored in the mezzanine area (3), where a
20,000 units per shift
SHIFTS: 2 shifts per day; 5 days a designated a Foreign Trade Zone, which new sortation system is also located (4).
week allows Rocky Brands to delay paying duties Picking: The facility manages several
EMPLOYEES: 54 full-time
until product is shipped out of the facility. different picking processes that are system
employees plus seasonal
fluctuations. Inbound trailers arriving at receiving (1) are directed by the WMS.
floor-loaded to maximize the cube of the Full case to shipping: The system
trailer or container. Once receivers verify directs an associate to a storage location
the load against an advance ship notification (2), where a full case of product is picked
(ASN), pre-labeled cartons are manually to a pallet. Once all of the items assigned
unloaded and scanned to pallets. Once a pal- to that associate have been picked, the
let is complete, it’s staged and a license plate pallet is delivered straight to a staging area
bar code label is applied. The product is now (5) for shipping (6).
ready for putaway into the high-bay reserve Case to sortation: This process is
and active storage area (2). designed for processing a large batch of

mmh.com AUTOMATION/RETAIL 19
Rocky Brands

3 Mezzanine
1 Receiving

12 Shipping sorter

6 Shipping
11 Shrink wrap tunnel

4 Packing sorter
Putwall 9 5 Staging for shipping
stations
8 Conveyor
2
Reserve and
active storage
7
Induction 10
conveyor
SKU
reserve

orders. Full cases are pulled from reserve like size 7 or 15 men’s shoes, are stored in
storage (2) and delivered to the induc-
tion area (7), either on pallets or carts.
a separate area of the warehouse referred
to as SKU reserve (10). These are picked
System supplier
Processing a wave at a time, the WMS to a cart, just like the process described PUT-TO-LIGHT SYSTEM: Lightning Pick

identifies the carts and pallets it needs to above, and taken to the induction area (7). CONSULTING: Exceed Consulting

fulfill that wave. The cases are inducted They are then sorted (4) to the putwall area SYSTEM DESIGN, INTEGRATION AND
WAREHOUSE CONTROL SYSTEM:
(7) on to the conveyor (8) and then (9) for processing. KMH Equipment & Services
sorted to a chute (4) that leads to one Packing/shipping: Single line orders WMS: Manhattan Associates
of the putwalls (9). Once in that area, can be conveyed directly to a shrink wrap CONVEYOR/SORTATION: Hytrol
the associate on one side of the putwall tunnel (11), where they are wrapped and RACKING: Unarco Material Handling
scans a bar code label on a carton, and then conveyed to the shipping sorter (12). PUTWALL: Unex
the put-to-light system tells the associate From there, they are delivered to the right LIFT TRUCKS: Crown
how many items to pull from the carton shipping lane (6) for that order. Multiple BAR CODE SCANNING AND
and then indicates the area for the put. line orders are processed at the putwall PRINTING: Zebra Technologies
DOCUMENT PRINTING: Brother
Cartons are then returned to storage (2). (9). As described earlier, the system directs
STRETCH WRAP: Lantech; Wulftec;
Pick to cart: This is similar to case associates on one side of the wall to put
Robopac
to sortation, except that it is designed for items into a location representing an order.
SHRINK WRAP TUNNEL: Conflex
individual picks. The system directs an Once all of the items for that order are in a
PRINT AND APPLY: Fox IV Technologies
associate to a location in the active pick location, a packer on the other side of the
zone. Once there, the associate is directed wall is directed to pack the items for ship-
to pick a specific number of items to a ping. Once packed, orders are conveyed to
location on the cart. When all of the picks the shipping sorter (12), and sorted to the
are complete, the associate stages the totes right lane (6) for shipment. Depending on
at the induction line (7), where they’ll be the size of the order, product will be pallet-
placed on the conveyor (8) and sorted to a ized and staged (5) until it is loaded onto a
chute to be delivered to packing (4). truck. Or, it will be automatically conveyed
SKU reserve pick: Shoe and apparel into a truck for delivery. •
sizes that are ordered in lower volumes,

20 AUTOMATION/RETAIL mmh.com
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System Report

James Grundy (left), vice


president of distribution,
and James Deal, director
of e-commerce fulfillment.

22 AUTOMATION/RETAIL mmh.com
POWERS
STAGE
How a hometown department store chain
transformed its e-fulfillment processes with
pouch sortation technology.

Stage, a department store chain


serving small town America,
found itself in an all-too-familiar situation. Its conventional
piece picking and packing operations were being overwhelmed
by the growth of e-commerce, especially the growth of multi-
line orders. The solution: pouch sortation technology, as the
technology is referred to by the system integrator (SDI Systems,
sdi.systems) that designed and implemented the project.
“As our e-commerce business increased, we added more SKUs to our site
which led to more multi-line orders,” explains Steven Hunter, executive vice
president and chief operating officer. “We needed to replace our manual pick-
ing process with a solution that would automatically bring together all the
items in a multi-line order at the packing station.”
The pouch sorter, he adds, not only made an efficient use of space in the
warehouse since it was installed overhead in an area that was otherwise inac-
cessible to automation, it has “given us a material decrease in the time it takes
to get merchandise picked and packed inside the four walls of the DC.” Con-
PHOTO: Brandon Wade/Verbatim

versely, it also allows Stage to increase the number of units picked and packed
in the same amount of time.
What’s more, he adds, the system requires little maintenance and was
designed with room to add more buffer space as e-commerce continues to grow.

BY BOB TREBILCOCK, EXECUTIVE EDITOR

mmh.com AUTOMATION/RETAIL 23
System Report

Associates load items into the pouch sorter for


multi-line e-commerce orders. There are a total
of 10 induction stations.

Big stores, small towns tion center, which services most of From the induction stations, pouches are staged
overhead in primary and secondary buffer areas
Stage began operations in the 1920s the stores, was originally designed as before being released to a pack station.
with the founding of the family- a crossdock and flow-through facil-
owned Palais Royal and Bealls depart- ity, according to James Grundy, vice
ment stores in Texas. Fast forward president of distribution, and James
more than 60 years, and in 1988 the Deal, the director of e-commerce
two chains merged to form Specialty fulfillment.
Retailers Inc. (SRI), a privately held Up until about 2010, when the
company based in Houston. company launched its e-commerce
The merger also set in motion site, most of the activity in the
nearly 30 years of acquisitions and 437,000-square-foot facility involved
expansion, as SRI acquired other retail either crossdocking upon receipt or
chains outside its home turf. In 1996, sending items ordered and received
it went public under the name Stage, in bulk to a value-added processing
and by 2004 had exceeded $1 billion center, where items were ticketed,
in sales, reaching $1.4 billion in sales put on hangers and prepared for the
in 2016. store, and then built into mixed car-
Today, the company operates six ton shipments that flowed through
brands in 42 states with approximately the facility. Warehousing was an
800 specialty Bealls, Goody’s, Palais afterthought.
Royal, Peebles and Stage specialty “We had a small replenishment
department stores and 58 Gordmans storage area where we held basic
off-price stores. The company brings stock items that turned over quickly,”
to market department stores that aver- says Deal. “Beyond that, there was
age 18,200 square feet and off-price very little warehousing inside the
stores of 55,000 square feet. building and no outside storage.”
That, of course, is a brick-and- To make that happen, the facil-
At one of the 25 packing stations, an associate
mortar distribution strategy. To that ity used a combination of automated removes items from the pouch and is system
end, the Jacksonville, Texas, distribu- equipment, including tilt tray sorters, directed on how to pack orders for delivery.

24 AUTOMATION/RETAIL mmh.com
them together at the putwall,” says
Grundy. All of that took time.
By Christmas 2015, the manual
process had reached its limit. “You
get more multi-line orders during the
holiday season than at other times of
the year,” says Hunter. “No matter how
many people we hired for the season,
we still couldn’t fill all of the orders
efficiently.”
Something had to change by the
2016 holiday season. “Our goal was to
increase our fulfillment capacity with-
out expanding our physical footprint
and to do so in a cost-effective manner
that also allowed us to add capacity for
Stage’s conveyor system crossdocks cartons from receiving to shipping and also future growth,” says Deal.
handles flow through items from the value-add or reserve storage areas. It was a big order, and the question was:
What technology can make that happen?
bomb bay sorters, a hang sorter and a ronment. “We handle brick-and-mortar
conventional conveyor and shipping stores; e-commerce fulfillment; and In the pouch
sorter system. we’re storing our fastest movers in the By all accounts, pouch sortation, which
That all began to change in 2010, main facility while using a system with is more common in Europe, was not the
when Stage stuck its toes into the trucks to bring slower movers from the first choice, and probably wasn’t on the
e-fulfillment space during the holiday auxiliary buildings,” Hunter explains. initial list of potential technologies to
season. Orders from its new Website When it came to e-commerce fulfill- solve the problem.
were filled manually from stock in the ment, order selectors picked in batches Instead, the team looked at more
replenishment area. Associates wheeled to pallet baskets that were brought on conventional automation used to aggre-
carts through the area to pick to totes. rolling carts to a putwall for packing. gate multi-line orders, like tilt tray
“After the first year, it became evident “If you had a five-item order, the items sortation and goods-to-person solutions.
that if we were going to compete, we might get picked by five different peo- The problem, according to Grundy, is
had to have a lot more stock on hand ple, some of whom were operating in that all of those technologies required
and more storage space,” says Deal. an annex building, before we brought floor space and that just wasn’t an
The strategy, according to Hunter,
was to add more SKUs online so that
e-commerce was essentially Stage’s
largest store, with the kind of selection
and variety that a shopper would find
in a big, urban department store. After
all, if a customer couldn’t find what
they wanted on a Stage site, they would
just go to another site. That led to the
addition of what are now three annex
facilities located about half a mile from
the DC totaling 170,000 square feet
and the addition of a 48,000-square-
foot, e-commerce mezzanine inside the
four walls. All told, the facility was now
offering as many as 133,000 SKUs.
The result was a complex DC envi- Associates pick from shelves to fill store replenishment orders.

mmh.com AUTOMATION/RETAIL 25
System Report

option in a facility that was already


maxed out. What the facility did have
was air. They wondered: Maybe there’s
a solution that could take advantage of
overhead space?
“We have a 38-foot clear height in
the facility, and there is an area above
the cafeteria and control room with
nothing there at all,” says Grundy. “It
was the only clear air space left in the
facility. When we walked through the
facility, our system integrator told us
about the pouch sortation technology
he had seen in Europe.”
Cases are processed on a tilt tray sortation system.
Expandability was engineered into
the design. “He thought we could hang
the pouch sorter from the ceiling up Going live a primary and secondary buffer. Pouches
there, and wind it in a way that was Operation of the basic pouch sortation wait in the primary buffer area until the
expandable if we needed more capacity system is straightforward. It consists of 10 system has determined that all of the items
and space in the future,” Grundy adds. induction stations and 25 packing stations, required for a multi-line order are present
As they familiarized themselves and is capable of handling 1,000 order and available for packing, from wherever
with how the technology worked, the sorts per hour. they were picked—including slow-movers
pouch sorter also was more flexible When items are delivered to one of the from one of the annex buildings. At that
than some of the competing technolo- induction stations, an associate scans an point, the warehouse execution system
gies under consideration. “We carry item with a camera-based imaging system, (WES) releases complete orders to the
a broad selection of merchandise, places it in a pouch and scans the license secondary buffer area. Once those pouches
everything from towels and sheets to plate bar code on the pouch, marrying the are in the secondary area, the WES
fine jewelry,” says Hunter. “The pouch item to the pouch just like marrying an looks for pack stations that are ready for
sorter is so flexible that it allows us to item to a storage location during a putaway work and releases up to 25 pouches in a
handle merchandise of all different process. The pouch is then taken overhead single line to a packer. The packer is then
sizes. Competing technologies were on a powered track to the sortation area. directed by the system on how to pack the
more costly and took up too much That consists of two sortation buffers: orders for delivery.
space that we just didn’t have.”
The final criteria: They wanted it up
and running in time for the 2016 holi-
day season, which called for a rapid
implementation time.
If there was a concern beyond
implementation time, it was that
Stage would be an early adopter of
the technology in the United States.
“Our system integrator has been a
good partner for us for a long time, so
there was already a trust factor,” says
Hunter. “We went to see the technol-
ogy in operation at a DC in Canada
and left there cautiously optimistic.
We decided to go ahead.” On the upper level, items are managed by a hanging garment sortation system.

26 AUTOMATION/RETAIL mmh.com
One of the ways the system integra- Stage’s e-commerce fulfillment challenges. tomer expectation today is low-cost or free
tor adapted a new technology to a facil- The system is easy to operate and easy to shipping, and they want all of the items
ity that was already up and running was maintain and has delivered a significant for an order shipped together. That has
to mimic the existing processes where improvement in efficiency. forced retailers to do things quicker, faster
it made sense. “In the old process, we “We’re meeting the needs of our and cheaper,” he says. “The pouch sorter
batch picked to pallet baskets that we e-commerce business, and we have the solution enables us to fill multi-line orders
brought to a putwall,” says Grundy. “We capability to expand as our business quickly and get them shipped in most
integrated that into the pouch sortation grows,” adds Deal. cases all in one package to minimize our
system. We still pick to the baskets and Hunter takes a higher level view. “Cus- shipping costs. It’s been a huge win.” •
roll them over to the induction area.”
If the overall project faced any hurdles it
was time. Implementation and go live was
scheduled to take nine months and to have Meeting the e-fulfillment challenge
gone through all of the dry runs prior to As Web sales continue to grow, department store operator
November 2016 so it was ready for the hol- Stage turned to pouch sortation technology to optimize its
iday season. As is often the case for early picking processes.
adopters of new technology, implementa-

U
tion took longer than anticipated. ntil recently, crossdocking and the hanging garment sorter (5). Items
“Our intent was to have completely flow-through store fulfillment that are fragile or too large for the con-
phased out manual fulfillment before the were at the heart of Stage’s veyor and sortation system are sent to a
start of the holiday season,” says Deal. 437,000-square-foot distribution center manual put-to-store area (8) for process-
“Because we didn’t finish implementa- in east Texas. Following the 2015 holi- ing. Other product may be processed in
tion until November, we took a phased day season, the department store opera- a floor-level, pallet flow through area (9)
approach to training and going live.” The tor turned to pouch sortation to expand or in a value-added work area (11).
system didn’t reach full capacity until after its e-commerce fulfillment capabilities. Storage: Inventory that isn’t cross-
last year’s holiday season. Receiving: Advanced ship notices docked or flow-through to stores will
That said, nine months later, Deal, (ASNs) representing about 97% of be put away into retail reserve storage
Grundy and Hunter agree that pouch inbound shipments are sent electroni- (10). Some of that inventory will be sent
sortation has been an effective solution to cally to Stage’s transportation manage- to one of the three nearby annex facili-
ment system (TMS). That allows the ties that provide an additional 170,000
facility to prepare for most receipts. square feet of storage. If there is enough
Stage Product is unloaded in receiving (1), of an item to build a pallet of uniform
where bar codes are automatically product, it is palletized and labeled with
Jacksonville, Texas
printed and applied as needed, and a license plate bar code. Smaller quanti-
SIZE: 437,000 square feet, with a
48,000-square-foot, e-commerce scanned into the warehouse manage- ties are placed into a carton, which is
mezzanine. The retailer also operates ment system (WMS). About 70% of put away onto a partial pallet or on shelf
three nearby annex facilities totaling
inbound receipts are already allocated storage. The inventory is now available
170,000 square feet.
BRANDS: The facility services five of to stores and can be crossdocked using for order fulfillment.
Stage’s six retail brands. the conveyor system (2) to shipping Picking: There are two distinct pick-
PRODUCTS: Everything from jewelry to
(3). The remaining inventory is sent to ing processes in the facility.
shoes to home goods.
THROUGHPUT: Receives 5.1 million one of three processing areas: A tilt- Store replenishment: Once a week,
cartons and ships out 2.5 million cartons tray sortation area (4) is designated for the WMS creates an automatic replen-
per year.
SKUs: 133,000 SKUs at peak for
items that can go into mixed cartons; a ishment order for each of the stores.
e-commerce. hanging garment sortation area (5) on Before orders are picked, merchandis-
SHIFTS PER DAY/DAYS PER WEEK: the second level is designated for items ers have an opportunity to review the
Two shifts per day/five days per week;
one shift for replenishment.
that are handled on hangers; cartons are order and add items they would like to
EMPLOYEES: 450 to 550. opened in a hanging garment processing add to the store order. Replenishment
area (6) and sent to a staging area (7) for orders are batched. Order selectors

mmh.com AUTOMATION/RETAIL 27
System Report
SECOND LEVEL

are directed to a storage location (10),


12
where they pick a full carton or pick the e-commerce
storage 5
number of items required for a batch of
Hanging garment
orders. Full cartons are inducted onto 14 sortation
the conveyor system (2) and are sent to Pouch
sorter
shipping (3), like a crossdocked carton. induction 7
Individual items are inducted onto one 15 Staging for
6 hanging garment
of the tilt-tray sorters (4) or flat sorter Pouch
sorter Hanging sortation
(16) and consolidated by store. When a garment
mixed carton is complete, it is put onto processing
a conveyor (2) and sorted into an out- Tilt-tray sortation 4
4
bound truck in shipping (3).
E-commerce fulfillment: E-com-
16 Flat sorter
merce orders are picked five days a
9 Put-to-store and
week during non-peak times. First thing 8
Pallet flow- non-conveyables
in the morning, the system creates a through 10
wave of all orders received since the last Reserve
wave was run the day before. The pick- 12 e-commerce storage
storage retail
ing process begins when order selectors 13
Value-add
log onto their RF scanning devices. e-commerce
11 work area
packing
They begin by picking the next available
pick in their zone in the e-commerce 2
Conveyor
storage area (12) and placing that system
item into a tub that then goes into a
15
basket. Once all the items are picked, 3
Pouch 1 Receiving
single line orders are sent directly to Shipping sorter
a packing station (13), where they are
FIRST LEVEL
packed, placed on a conveyor (2) and
sent to shipping (3).
Multi-line orders are System Suppliers
SYSTEM DESIGN, IMPLEMENTATION AND POUCH
brought to the induc- the next order should have a specific
SORTATION INTEGRATION, WCS, TILT-TRAY, BOMB BAY &
tion station (14) for the HANGING GARMENT SORTATION: SDI Systems number of pieces—the average order
pouch sorter (15). Items POUCH SORTATION: WRH Global Americas is four pieces. The packer removes
WMS: Oracle
are scanned and then the items from the pouches and adds
CONVEYOR AND CASE SORTATION: Intelligrated
placed into the next LIFT TRUCKS: Raymond and Toyota a packing slip that was automatically
available pouch. The WRIST-MOUNTED MOBILE COMPUTING & RING printed to the box or bag for shipping.
SCANNERS: Zebra Technologies (Motorola)
system joins two pieces The packed order is then conveyed (2)
MEZZANINE: Conveyor Solutions
of information—the to the shipping area (3).
product information Shipping: Once a package
and the license plate bar code—on the buffer. From there, the system marries arrives in shipping (3), an associate
pouch. Once a pouch leaves the induc- up the individual items for an order and scans a bar code label on the packing
tion area (14) and travels into a primary sends them to an available pack station slip. That information is used to
buffer holding area, it waits until all of (13). In all, there are 10 induction sta- create a shipping label that is applied
the items for that order are ready. Once tions and 24 pack stations. to the bag or carton. The shipping
all of the items for the order have been Pouch sorter packing: At the pack container is then sealed and sorted
picked, they move into an intermediate station, a display tells the operator that to the right shipper. •

28 AUTOMATION/RETAIL mmh.com
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Matthew Terry,
Thrive Market’s
director of
fulfillment

30 AUTOMATION/RETAIL mmh.com
Thrive Market’s Start Up Distribution Network

THRIVE
MARKET’S
STARTUP
DISTRIBUTION
NETWORK
How does a fast-
growing, e-commerce
startup company build
out order fulfillment
capabilities? Thrive
Market answered that
question with its new
facility in Indiana.

he typical facility in Modern Materials Handling


was put up by a large, brand-name company doing
hundreds of millions—if not billions—of dollars in
sales each year from that location. But there’s
another category of facility out there, designed by
rapidly growing startups that are bulging at the seams. In these
facilities, orders are filled using rudimentary processes and equip-
ment from Staples. This is especially the case for young e-com-
merce companies faced with the decision to outsource fulfillment
to a third-party logistics (3PL) provider or go all in on their own
Tim Webb/Verbatim

distribution network.

By Bob Trebilcock, Executive Editor

mmh.com AUTOMATION/RETAIL 31
Thrive Market’s Start Up Distribution Network

That was the dilemma confronting designed a building that accomplished at our core business helping Americans
Thrive Market, a membership-based least three goals, according to Matthew live a healthier lifestyle, we’re trying
online platform focused on mak- Terry, director of fulfillment. to choose suppliers and solutions in a
ing healthy living easy and affordable. First, using a warehouse manage- sustainable way,” Terry says.
Launched at the end of 2014, Thrive ment system (WMS), wrist-mounted Finally, the solution needed to be
Market now has more than 400,000 mobile computers and ring scanners, scalable to accommodate growth that
members who pay $60 a year. conveyor and sortation, and automated was projected to continue at up to
As recently as 2015, orders were being packaging, launched the company on a 100% a year. “We needed to fill orders
picked by hand from pallets stored on journey from completely manual opera- and start building out for the future
shelves in a 12,000-square-foot building tions to automation. all at the same time,” Terry says.
in Los Angeles. With sales growing at Second, Thrive Market’s social mis-
25% to 50% per month, Thrive Market sion drives every decision. Packaging The mission
made the decision to forgo the 3PL route, materials are sustainably sourced; the Thrive Market was the brainchild of
hire experienced supply chain executives, company’s carbon footprint from a ship- Gunnar Lovelace, a California native
and build out its own distribution net- ping standpoint was a factor in the loca- who grew up on a communal farm
work, starting with a 361,000-square-foot tion selection; and Thrive Market offers where people pooled their resources
facility in Batesville, Ind., near Cincin- full-time employment and benefits to its to purchase the seeds and equip-
nati. Working with a system integrator Thrivers, as associates are known, rather ment they needed to grow food. He
(Swisslog, swisslog.com), Thrive Market than use temporary labor. “Not only is wondered why a community of people

To keep up with
exponential growth,
Thrive converted a
former pallet and
case handling facility
into an e-commerce
fulfillment center.

32 AUTOMATION/RETAIL mmh.com
best way,” says Terry. What’s more, he
adds, Thrive Market organizes selec-
tions that meet various dietary and life-
style needs. “If you’re on a paleo diet,
you’re diabetic, or have a child who is
gluten free, we do the homework for
our members,” he says.
The company resonated with consum-
ers and investors. By 2016, according to
reports, Thrive Market had raised $141
million across three rounds of funding.
Meanwhile, sales increased 500% from
March 2015 through March 2016.
While many might be envious of that
kind of growth, filling all those orders
creates its own set of problems. Initially,
orders were filled out of a 12,000-square-
foot space in Los Angeles; the plan
was to stay there for two years. It soon
became apparent that wasn’t going to
work. Plan B was to bring in John Win-
kels, an experienced supply chain execu-
tive from Kroger, to build out a distribu-
tion network.
“Most young growing companies
would have gone with a 3PL,” says Terry.
“Our founders wanted to control the cus-
Items are picked in one of four pick modules, soon to expand to six. tomer experience.” The original goal was
to open a long-term distribution facility
couldn’t pool together their resources The company tackled those problems in 2016. “That timetable was moved up
to bring down the cost of organic foods, in two ways: Thrive Market is a member- to September 2015,” says Terry, who
health and wellness. Lovelace attracted ship company, like Costco, with a $60 interviewed with the company over a
three other founding partners—Nick annual membership fee. Membership weekend and started working in Bates-
Green, Kate Mulling and Sasha Sid- provides access to natural and organic ville a week and a half later.
dhartha—and the company launched in food products at prices 25% to 50% lower Asked what brought him to a startup
November 2014. than retail. In addition, for every paid from one of the country’s best-known
“The founders were trying to tackle membership, the company donates a retailers, Terry says it was Thrive Mar-
two problems that put American diets free membership to a low-income family, ket’s mission. “Touring the company, I
and lifestyles out of whack, which were teacher, veteran or student in the United saw passion, growth and what they were
cost and geography,” says Terry, who States. Second, as an e-commerce com- trying to accomplish,” Terry says. “I
joined the company from Target in 2015. pany, Thrive Market addresses the geogra- think John and I were both drawn to the
“Unless you live in a city or urban area phy issue by shipping products nationally opportunity to build something from the
with access to a health food store or a for free. Last, in an effort to keep prices ground up.”
farmers’ market, you don’t have access down, it offers a curated, but limited,
to a lot of wholesome foods. And, the assortment of about 4,000 SKUs. Building out a network
second is the cost: It’s just cheaper to “A normal grocery store has 26 One of Winkels’ first tasks when he
purchase processed rather than whole- ketchups; we carry two brands that came onboard was to pick a location for
some items.” meet our values and standards in the a long-term distribution facility. “The

mmh.com AUTOMATION/RETAIL 33
Thrive Market’s Start Up Distribution Network
down the street. In short order, however, a system integrator
was on site to offer initial suggestions and begin working on a
permanent solution.
“They helped us secure the contractor who put up some
of that initial shelving,” Terry says. “And they were literally
doing back-of-the-napkin drawings—on a napkin—about
where they would put things.”
In addition to the goals outlined earlier, the design was
driven by three critical factors:

1 They had to get up and running quickly just to keep up


with the volume of orders.

2 The solution had to be scalable and modular so it could be


installed in phases. “We started with four pick modules and
the ability to insert two more in the next phase,” says Terry. “That
allowed us to continue to operate while the solution was being
installed.”

3 Finally, the system needed to be efficient and safe over the


long term. “We have a limited number of SKUs, but there is a
significant variability from order to order,” Terry says. “We needed
a system that would allow us to deal with that from an efficiency,
quality and safety standpoint.”

Phased automation
The ultimate design in operation today includes a high-
velocity area known as the Fast 50. This is a pallet storage
area reserved for the 50 fastest moving SKUs that show
up in almost every order. In that area, boxes are created
Picking areas are tied together by a conveyor and
sortation system. and labeled manually—and while it was not in the original
drawing, it was added in the first phase.
problem facing all e-commerce companies is where do you Next up was four perpendicular pick modules for mid-
ship from,” says Terry. “If you’re only going to have one facil- velocity SKUs, where associates pick from pallets and case
ity, Los Angeles is probably the worst from time in transit to flow rack. In addition, there is a separate bin shelving area
the customer and our carbon footprint.” for the slowest-moving SKUs.
Like many other e-commerce companies,
Thrive Market began looking for space within
the inverted triangle between Columbus, Lou-
isville and Indianapolis. Located near Cincin-
nati, the Batesville facility that Terry was hired
to setup and run had until recently been used
by GE to ship full trailer loads of pallets to big
box retailers, but not for piece picking and par-
cels shipped direct to consumers. “It was a big
empty space ready to be filled, and there was
a local community with a population that had
experience in manufacturing and distribution,”
Terry says.
To get started, pallets were stored on the floor;
there was limited bin storage for cartons and all
picking was manual. Pack stations were created
at desks that had been donated by a closed office Extra effort goes into the packing area to create a unique customer experience.

34 AUTOMATION/RETAIL mmh.com
we want to get through packing,” says Terry.
“We flipped that on its head and asked: Given
the customer experience we want to provide
through packaging, how many minutes do we
need per container.”
Packages include branded printing on the
inside of the box, 100% recyclable packaging
and sustainably sourced packaging material
and hand-written thank you notes, to name a
few touches.
The facility also takes a different approach
to software. The WMS system is a true man-
Picks are confirmed by
agement system in this facility, managing
ring scanners and wrist-
mounted mobile computers. inventory control, communication with the
host order management system and order

In the final phase of the facility, which will come later,


Thrive Market will add two more pick modules and reconfig-
ure and relocate the bin shelving for a smoother flow through
the facility. There are additional plans for a cold storage area;
the company does not sell perishables, but it does offer some
products that are sensitive to heat.
Work process areas are tied together by a conveyor and
sortation system that routes cartons through the various pick-
ing areas on a pick-and-pass basis. Once an order is com-
plete, it is conveyed to a packing area, where a lot of effort
is expended. “When we first started talking to our systems Shelf storage is used in an area reserved for slow-
moving items.
integrator, they asked us how many containers per minute did
batching. A warehouse execution system
(WES) receives a batch of orders from the
Thriving with automation WMS and orchestrates the flow of goods

O f the many changes that occurred in the first two phases of operation, per-
haps the biggest was the transition from conventional warehouse processes
to automation. In a company that values its “Thrivers,” that required careful plan-
through the facility.
Terry says the facility hit on all of its
goals. Thanks to its location and automa-
ning. Culture, for instance, is introduced at orientation, reinforced in meetings tion, it improved Thrive Market’s carbon
and taught during training. footprint, increased capacity and reduced
“Talk to anyone in distribution, and they’ll tell you that change is the reason time in transit on orders. “We can move
leaders exist,” says Matthew Terry, director of fulfillment. “Our first year was like more product than we could with a
one big Kaizen event, in that we changed processes about five times, and each manual process and do it efficiently and
time we’d scrap what we had been doing before to do something different.” safely,” he says.
The biggest change from manual to automation was how the building was But the fast-growing e-commerce
staffed. “In a manual operation, the question is how many people do you throw company is not done. Last June, it took
at a problem,” Terry says. “With automation, you’re managing your uptime.”
over a 350,000-square-foot e-commerce
facility in Sparks, Nev., to serve the
Since the company was growing rapidly, employees were not replaced by
west and northwest United States. “Our
automation. Rather, Terry says that the leadership team explained to the Thrivers
growth means that we had to move
that they were building staffing levels to meet customer service requirements and
faster than we anticipated,” Terry says.
right sizing automation to the building. “Once the automation came in, we had a
“We believe we now have the capacity to
different world from a safety standpoint, and the staff realized that,” he says.
meet our projected growth over the next
two years.”•

mmh.com AUTOMATION/RETAIL 35
Thrive Market’s Start Up Distribution Network

Keeping up with growth


Thrive Market’s new Indiana DC was designed to meet the needs of a fast-growing
e-commerce startup today and tomorrow.
Receiving

S
1
calability is the key attribute of
Thrive Market’s new facility with
software, automatic data collec- 5
Shipping
tion, and conveyor and sortation designed Pick module 7
5
to grow with the company’s sales.
Receiving: The facility receives full 5 Final pack area 6
truckload, LTL and parcel shipments Pick module 4
in receiving (1). Inbound inventory is 5 Slow
Slo
low
ow
w moving
movi
m
movin
movin
ng bin
b shelving
ing
ng
inspected and scanned into the ware- 4
house management system (WMS).
2
Most inventory will be palletized and Fast 50
0 stora
storag
storage
stora
staged for putaway in a Fast 50 storage
Reserve storage
area (2) for fast-moving items; reserve 3
storage (3): or a shelving area for slow-
moving, low-velocity picks (4).
Storage: The WMS directs a lift truck orders. Once orders drop, the WES man-
operator to a location in one of the storage ages the flow of work through the facility.
Items can be picked from several areas. process to create a branded experience
Fast 50: In this area (2), the 50 fastest- for the customer. The inside of the box
Thrive Market moving SKUs—items that are included in is printed as is special water tape. All
Batesville, Indiana almost every order—are stored. The system packaging material is sustainably sourced,
SIZE: 361,000 square feet prints out an order, boxes are created man- including tissue liner and the dividers
PRODUCTS: Focused on health and ually and labeled and items are scanned and material used to hand wrap breakable
wellness, including food, beauty, pet and
items for the home into the box using a wrist-mounted com- material. Packers include a hand-written
SKUS: 4,000+ puter and ring scanner. thank you note. The invoice is added,
THROUGHPUT: 4,000 orders and 48,000
Pick modules: Cartons are conveyed along with a topper to provide a clean and
units per day
EMPLOYEES: 150 from the Fast 50 area to one of four pick neat sealed look. Once the box is taped, it
SHIFTS PER DAY/DAYS PER WEEK: 2 modules (5). Cartons are sorted to the first is conveyed to the shipping area (7). •
shifts, Sunday through Thursday; one
pick location for that order. Once the pick
shift Friday and Saturday.
is complete, the carton is placed back on to
System suppliers
the conveyor and is passed to the next pick SYSTEM INTEGRATION AND WARE-
areas (2, 3, 4), and a pallet or carton is location until all of the picks from the pick HOUSE EXECUTION SYSTEM: Swisslog
WMS: HighJump
scanned to complete the putaway process. module for that order are complete.
Caption
CONVEYOR AND SORTATION: TGW
Picking: The facility is managed Slow-moving items: From the pick PALLET RACK: SpaceRak
through a combination of WMS and ware- modules, cartons are diverted to a bin SHELVING: Tri-Boro Storage Products
MOBILE COMPUTING AND WRIST-
house execution software (WES). The shelving area (4) for slow-moving items to MOUNTED SCANNER: Zebra
WMS is a true management system: It is complete the order. Technologies (Motorola)
responsible for inventory control; tracks Packing: Once all of the items for LIFT TRUCKS: Crown
PACKAGING MATERIAL: Ranpak and
individual productivity; and is tied directly an order have been picked, the carton is Storopak
to the online ordering system and batches sent to packing (6), which is an intensive

36 AUTOMATION/RETAIL mmh.com
Warehouse Basics

Sign,
PA R T F I V E

Welcome to Warehouse
Basics, a five-part series

seal &
in which Modern will
unpack the essential
elements of functional
areas in the warehouse.
Informed by industry

deliver
experts, these articles
are intended to capture
a snapshot of the cur-
rent state of materials
handling practices.

on customer
We’ve moved from
receiving through put-
away, storage, replen-

promises
ishment and picking.
Now, we turn to pack-
ing and shipping func-
tions before orders leave
Packing and shipping—as the final step of the four walls.
fulfillment—are the last chance for an operation
to ensure the job is well done.

I
BY JOSH BOND, SENIOR EDITOR

N THE PREVIOUS INSTALLMENT of this series, we optimum worker comfort. As recently as 10 years
explored a range of solutions and processes to ago, the mere presence of an adjustable-height
perform picking in your facility. The story was split table was considered “best in class” from an ergo-
into case picking and each picking, and we now nomic standpoint. Now, everything in the pack
follow the less-than-case stream into the pack and station is carefully arranged to limit reaching,
ship operations. After all, less-than-case are the stretching, repetitive motion and strain of any
orders that usually require packing. kind. Especially in seasonally sensitive e-com-
Having picked the eaches for an e-commerce merce environments, it is common to install
order, the container into which they were picked is enough pack stations for peak seasons, even if
now transported to a pack station. The container that leaves several unoccupied for the remainder
might be a tote or bin, or a corrugated box that will of the year.
also serve as the shipping carton. If items arrive at the pack station in anything
First, the pack station should be designed for other than the shipping carton, there are several

38 AUTOMATION/RETAIL mmh.com
Ample and disciplined dock space is essential to efficient and accurate shipping.

mmh.com AUTOMATION/RETAIL 39
Warehouse Basics

steps to prepare the order for ship- Adding in automation company shipping cartons with unused
ment. At the most basic level, the item Automation can also create corru- space. The demand for efficient alterna-
or items are placed into a poly bag or a gated boxes on demand and reduce or tives has driven investment and innova-
corrugated box. “Autobaggers” are popu- eliminate the reliance on predetermined tion in on-demand box creation or auto-
lar automated solutions that create bags, carton sizes for shipping, which can pro- boxing solutions that were previously not
insert items, automatically seal the duce wasted space and increase shipping cost-effective.
bags, and deposit them onto a sorter. costs. Saving just a few pennies per box Once the order is packed into a
In these setups, the last time a worker can quickly add up when multiplied by shippable container, the container
touches an item is when it is inducted the millions of boxes shipped each year. must include a manifest, packing list
to the autobagger. On-demand auto-boxing solutions cre- or invoice of some sort, which might
Dunnage and void fill made of paper, ate a corrugated box customized to the be manually or automatically inserted
plastic air bags, custom foam or other dimensions of the order and then build into the container at the pack station,
materials must be available to secure the the shipping carton around the items or can be affixed to the outside of the
product in the shipping carton. The role that comprise the order. container. At the pack station or shortly
of such packing materials is to protect the These types of solutions are becom- downstream, each container must also
product from damage or, as in the case of ing more commonplace as e-commerce be marked with a shipping label. Some
a garment that could be crumpled in tran- volume grows. Dimensional weight rates solutions create a packet with both the
sit, to ensure the product arrives at the such as those instituted by FedEx and invoice and shipping label and automati-
consumer in a presentable manner. UPS have created steep penalties for any cally affix it to the container. In cases

Modern packing stations


prioritize ergonomics to
ensure productivity and
minimize strain.

40 AUTOMATION/RETAIL mmh.com
where orders are picked directly into the Dimensioning equipment helps
shipping container, the shipping label minimize costs for shipping,
consumables and labor.
might be attached before the first item
for the order is even picked. code zone or parcel carrier
The original business case for cubing zone to allow “zone skipping.”
and weighing systems was to optimize By contrast, if a facility is one
the use of storage space in the ware- of 10 in a network, you might
house, but solutions have now evolved configure sortation lanes by car-
to provide additional value for distribu- rier instead of zip code. Sorta-
tion functions like cartonization and tion might also reflect varying
accurate manifesting. service levels, with diverts and
The warehouse or DC might round dock doors for next-day air,
up dimensional information on receipt standard ground or somewhere
to coordinate putaway and optimize in between.
order fulfillment decisions, pre-pack and The sortation will be more
then shipment manifesting. A vendor or less complex based on the
might even supply some of the details options provided to the con-
in advance of receipt, and if the data is sumer; some retailers offer car-
detailed enough it might be possible to rier options, some offer various delivery before loading is especially important
pre-manifest a shipment—right down to speeds, and others give no options at when route-stop sequencing is needed.
void fill weight—and eliminate the labor all. In any case, sortation for outbound To avoid confusion and ensure proper
to cube and weigh again downstream. parcels in an e-commerce facility is not sequencing, it is best to dedicate a sin-
Once collected, the dimensions of a new nearly as complex as the shipping sorta- gle forklift to the loading of each trailer,
product can be put into the warehouse tion required for a distribution center a practice called single-thread loading.
management system and supplied to any serving, say, 300 stores. A facility that A dock should offer about 60 feet of
automated packing equipment. is designed for store deliveries of hard space to stage a trailer’s worth of pal-
Insertion of value-added documents goods, but also fulfills e-commerce lets two abreast and verify orders before
and materials like custom marketing orders, might leverage their existing ship- goods leave the facility.
for a familiar customer, for instance, ping sorter. By adding outbound diverts The need for a clear and open stag-
has dwindled in recent years. Instead to doors assigned to parcel carriers, the ing bay has influenced the design
of manually or automatically inserting sorter can also effectively handle parcels. of modern large-capacity buildings,
an assortment of additional coupons Poly bags, however, are not compatible nearly all of which will allow for 60
or catalogs, a significant portion of this with all carton sorters. feet between the dock door and the
function has been moved to the digital Parcels might be sorted into Gaylords, first column line. In existing facilities
space, where such consumer-specific stacked on pallets, or floor-loaded into where the first column line is, say, 40
outreach is sent by e-mail or is pre- trucks. In cases where a facility does feet from the dock doors, that does not
sented directly to a customer on the enough volume, the parcel carrier might mean the dock staging area should end
retailer’s Website. staff the building with a driver who is at that point and racking begin.
responsible for loading the product, The full 60 feet is still essential, even
Sorting it out perhaps from an extendable conveyor in if the staging area now includes an obsta-
Once packed and labeled, outbound the trailer. cle in the form of a column. In fact, the
parcels are sorted. The design of the placing of racks and aisles beyond the
sortation process is informed by the facil- Setting the stage first row of columns is also an important
ity’s volume, location and position in the As compared to parcel shipping, the consideration, since cramped pathways
overall company network. For example, staging and loading of case and pal- can be a recipe for congestion or colli-
a single e-commerce facility servicing let quantities requires more ample and sions. In such cases it might be best to
the entire United States may sort by zip disciplined dock space. Staging pallets allow for 70 feet to ensure ample space.

mmh.com AUTOMATION/RETAIL 41
Warehouse Basics

Cube utilization soft-


ware can help configure
loads to optimize space
utilization in each trailer.
Such solutions also help
ensure compliance with
weight distribution and
axle loading regulations.
If load sequencing is
not an issue, multiple
forklifts are free to load
a truck, and less staging
space is required. The
warehouse management
system (WMS) and load
labeling will need to sup-
port a scan destination,
in which the loads are
scanned next to the door
to ensure they are being
loaded onto the correct Packout is the last opportunity to confirm the accuracy of an order before it leaves the building.
truck. Some captive fleets
have confirmation bar codes located than-truckload (LTL) shipments and affixed with a shipping label or bill of
inside the trailer. mixed-case pallets. Such pallets might lading. They must also be labeled to
Between the two extremes of full be built during the picking process or ensure proper handling, such as warn-
pallet loading and parcel shipping, after automatic sortation, but must ings to avoid stacking pallets.
there are operations including less- be wrapped for stability in transit and Because LTL trailers are sometimes
used infrequently, the items to be
loaded might be staged inside the dock
before a trailer arrives. Or, if an opera-
tion has significant LTL volume with a
single carrier, a dedicated trailer might
occupy a dock until it is removed daily,
or perhaps twice daily if volumes justify
it. Again, organized staging areas are
critical to keep loads accurate,
segregated and properly sequenced.
This story was created with generous
support from Bryan Jensen, who has 34
years of experience in retail and whole-
sale distribution, transportation and
Automated carton-building
logistics and is a principal with St. Onge
solutions provide custom Co. in York, Pa. (www.stonge.com).
boxes on demand to
optimize shipping costs.
Contact Bryan at bjensen@stonge.com. •

42 AUTOMATION/RETAIL mmh.com
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• Over 3 billion cases picked with COM since implementation.
Over 5 million cases picked with COM per day
Advantages
• Automatically pick & palletize more than 15,000 unique SKUs in one operation
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and industry.
www.witron.com
Identification

We’re gonna need to see


To address the AIDC challenges of e-commerce and
omni-channel, labeling and marking suppliers are
ensuring the information contained within each printed
bar code is read with 100% accuracy every time.
BY SARA PEARSON SPECTER, EDITOR AT LARGE

A s documented over the past few years in Peerless Research Group’s “Annual
Warehouse and Distribution Center (DC) Operations Survey,” more operations
are dealing with the unrelenting expansion and demands of e-commerce and omni-
channel retail order fulfillment. In response, investments in larger facilities to hold
more stock keeping units (SKUs) in inventory have consistently been on the rise, with
companies reporting plans to spend an average of more than $378,000 on information
system (IS) solutions alone, according to the 2017 survey (p. 50).

Among that intended IS spend are investments in technologies for


identification of inventory, both for locating it in the warehouse and
labeling it after it’s packaged for direct-to-consumer shipping. To address
the automatic identification and data capture (AIDC) challenges of
e-commerce and omni-channel retail fulfillment DCs, labeling and
marking suppliers have added new features to their solutions to ensure
the information contained within each printed bar code, regardless of its
form or purpose, is read with 100% accuracy every time.
Over the next few pages, Modern takes a look at some of the latest
developments in label printers and applicators, direct carton marking
print engines and storage location identification labels that help opera-
tions keep better track of inventory within the four walls as well as
deliver clear destination information on outbound shipments.

Label printers/applicators engineered to minimize waste,


ensure adhesion
To help shippers keep pace with the exponential increase in labeling
individual parcels while still minimizing costs and consumables waste,
Toshiba America Business Solutions has developed several new features
for its thermal bar code printers, explains Theresa Lee, product manager.
“We just introduced the industrial, high-speed B-EX6T, capable
Portable printer use is increasing in warehouses of printing 6-inch wide labels in lengths up to nearly 60 inches,” Lee
and by parcel carriers, as it allows workers to
quickly generate a new, scan-readable label to explains. “What makes it unique is its integrated ‘ribbon save’ technol-
affix over an unreadable one. ogy, meaning the printer pre-scans the incoming imprint data to ensure
that the ribbon only advances when printing is required.”

44 AUTOMATION/RETAIL mmh.com
some identification…
For identification of stored product, rack labels can be specified
with repositionable adhesive, allowing them to be easily removed
and relocated.

Caption

Doing so enables the printer to save ribbon with each print, when expected.”
maximizing ribbon use and minimizing waste. This also applies Several factors can negatively impact label adhesion, says
for pre-printed or flexographic labels, which often contain stan- Fox. “If a label applicator is equipped with a blow-on applicator,
dard information when only variable information is required to the air pressure may not be strong enough to ensure the label
print. Further, the unit’s print head is warrantied for 3 million sticks. For that reason, we use a tamp method,” Fox says.
inches—three times longer than competitive models. It also Other reasons for adhesion failure include the type of adhe-
accommodates large ribbon capacity of up to 2,625 feet. sive used. If the initial tack isn’t high enough the label won’t
“Print heads also get wear and tear and must be replaced stick and, generally speaking, the cheaper the label the weaker
periodically to ensure print quality,” continues Lee. “These new the initial tack, Fox says.
features save users cost and downtime, as the ribbon and print “Likewise, during certain periods of the year—particularly
head don’t have to be replaced as often.” the colder months—low humidity conditions can generate a
Lee also notes a tremendous uptick in portable printer use within static charge that literally pops the label off the box surface,” he
warehouses and by parcel carriers. “If the bar code on a shipment adds. “To solve that, a pre-heating section can be added to the
label is not scan-readable due to a smeared imprint or low toner, an labeling line that warms up the label or the side of the box; or a
operator or driver can create and print a new label on the spot and blow-on applicator can be switched to a tamp.”
place it directly over top of the unreadable one,” she says. “That Another trend Fox sees is the transition to dual-sided labels
ensures the package is properly routed and delivered on time.” that print the shipping information on the top side, and the
The jump in individual parcel shipments means it’s not only packing slip on the other.
imperative that a label be readable, but that it also adheres to the “Our Quick Slip system prints the packing slip on the label
package itself. liner, repurposing it and keeping the contents confidential,” he
“As more companies move to automated print-and-apply tech- explains. “The top side has a pre-printed message indicating
nologies, we’ve heard concerns from some carriers that not every that the recipient can peel back the label to reveal the packing
label sticks to every box or envelope,” says Rick Fox, president slip. The advantage for shippers who feel they must include a
and CEO of FOX IV Technologies. “They’re issuing charge backs packing slip is that they no longer have to open the box, insert
for missing labels, and the customer doesn’t receive the package the paper then seal. It’s much faster.”

mmh.com AUTOMATION/RETAIL 45
Parcel handlers can
replace bar code labels
with high-resolution Identification
piezo inkjet printers that
mark images, text and ity, Matthews Marking’s MPERIA marking being aesthetically unattractive, if there’s
bar codes directly on and coding automation platform can be any show-through or an uneven surface
blank corrugated boxes.
connected to an in-line vision system that beneath the new label, a scanning device
automatically verifies that a mark meets the might not be able to read it accurately on
pre-determined grade standard, he says. the first pass.
“If a mark’s quality does not meet the “Our Beam Renew product comes in
grade standard, MPERIA tells the produc- colors that match existing racking, allowing
tion line control system to divert the prod- it to be applied over any existing labels with-
uct to a reject conveyor and prints the same out scraping, cleaning or painting,” Johnston
Direct carton marking offered as mark on a backup print-and-apply label explains. “To prevent show-through, the
alternative to print-and-apply system for manual placement over the previ- labels have a custom-engineered opaque
Parcel handlers seeking to reduce use of ous mark. This prevents waste, ensures no backing material. We also provide installa-
bar code labels can consider direct carton poor marks leave a facility and avoids non- tion services, which includes first removing
marking with high-resolution piezo inkjet compliance, lost revenue and fines.” any uneven surfaces beneath and preparing
printers, says Raymond Fortuna, technical the beams for relabeling.”
product manager at Matthews Marking Storage location identification labels Further, ID Label offers a line of pre-
Systems. The system automatically marks support changing inventory printed, removable identification labels,
images, text and bar codes across blank With the explosion of SKUs and inventory marking bar codes and text as indicated in a
boxes for custom logo placement or private volumes faced by e-commerce and omni- customer-provided spreadsheet.
branding, eliminating storage of pre-printed channel fulfillment operations, warehouse “These Clean Release labels feature a
cartons and labels. storage racking is more likely to need new proprietary adhesive blend that attaches
“Our new VIAjet T-Series Enhanced identification labels as items are shifted securely to a painted beam or the Beam
printer’s print engine delivers on-demand around in response to changes
marking that is fast, accurate and costs in item velocity and throughput.
one-tenth of label expenses,” Fortuna Whether racks are being
explains. “For maximum mark clarity and reset to accommodate seasonal
readability, the previous T-Series had to inventory changes, a third-party
be positioned 1 to 3 millimeters (less than logistics fulfillment provider has
1/8-inch) away from the box. The new a customer change, bulk stor- Dual-sided labels enable printing
of shipping information on the
model allows us to increase that throw age bays are being converted top side and packing slip on
distance to 6 millimeters (1/4-inch) with- to picking bays, or a new or the other, giving shippers who
feel they must include such
out loss of bar code quality.” upgraded warehouse manage-
documentation a quicker way to
While a 3 to 5 millimeter spacing ment system or inventory con- process outbound orders.
difference may not sound like much, trol software demands a new
Fortuna says it prevents dust build up in identification scheme, rack relabeling is Renew surface, yet is easily removed and
the ink nozzles and lessens the chance of becoming a more frequent activity within re-positionable without leaving residue,”
a slightly bulging box side coming in con- these operations, says Neil Johnston, CEO Johnston continues. “The same label can be
tact with the printer. of ID Label. moved to a different location multiple times
“It’s also 25% faster, so for a line running “Unless they’re labeling a brand new and still adhere.” •
at 260 feet per minute with ink coverage of racking system, these facilities will have to
about 18% of the side of a white corrugate deal with existing bar code labels on the Companies mentioned
box, line speed can be increased to 320 feet
per minute without causing shadowing or
beam faces, and often those are damaged,
partially missing or peeling off,” Johnston
in this article
ghosting of text or bar code, and the bar notes. “But it’s very time consuming to • Fox IV Technologies
codes are repeatedly scanned as A grades,” scrape off the old labels first before re- • ID Label
he continues, adding that by grouping mul- applying new ones.” • Matthews Marking Systems
tiple print heads, messages larger than a 4 x That means warehouse associates often • Toshiba America Business
6-inch label can be achieved. apply a new adhesive-backed paper label Solutions
To validate bar code clarity and readabil- over the top of an old one. In addition to

46 AUTOMATION/RETAIL mmh.com
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2018 Warehouse/Distribution Center Equipment Survey

48 AUTOMATION/RETAIL mmh.com
2018 Warehouse/DC Equipment Survey

AU T O M AT IO N &
ROBOTICS
LEAD ROBUST OUTLOOK
Our annual survey reveals a bullish outlook for continued material
handling investments, with enthusiasm extending into newer technologies
such as robotics as well as warehouse control system software and the
closely related category of warehouse execution systems.

BY ROBERTO MICHEL, CONTRIBUTING EDITOR

I
f there were one clear-cut conclusion to
be drawn from our “2018 Warehouse and
Distribution Center (DC) Equipment Sur-
vey,” it would be that the outlook for spend- P eerless Research Group’s (PRG) e-mail survey
questionnaire was sent to readers of Logistics
Management and Modern Materials Handling in Janu-
ing is bullish. The percentage of respondents
ary of 2018, yielding 315 qualified respondents. The
saying that they’re “proceeding with invest- respondents were from sites whose primary activ-
ments” reached its highest level in four years, ity is manufacturing (36%), corporate headquarters
and the percent of respondents saying that (28%), warehousing and distribution (24%), as well
they’re “holding off” on material handling as warehousing supporting manufacturing and other.
solutions shrank by 7%. The median revenue of responding companies is $67
However, the purse strings aren’t being million, while the average is $271.45 million. Qualified
respondents—managers and personnel involved in
held wide open across the board. A few sub-
the purchase decision process for materials handling
categories saw tepid or declining indications,
solutions—hold influence over an average of 131,2675
and generally, respondents seem more inter- square feet of DC space. Respondents were spread
ested in specific types of material handling pretty evenly across multiple verticals, with a few of
equipment, rather than large scale informa- the most common ones being food & beverage, indus-
tion systems (IS) spending. At the same trial machinery, retail trade, electronics, and transpor-
time, the survey revealed growing interest in tation/warehousing services.
the use of relatively new types of technology,

mmh.com AUTOMATION/RETAIL 49
2018 Warehouse/Distribution Center Equipment Survey

How is the present state of the economy making an impact your spending
on materials handling equipment technologies, services and solutions?
2015 2016 2017 2018
42%
35% 35% 35% 35%
31% 21% 20% 20%
29% 16% 28% 17%
14% 14%
9%

We are taking a "wait and see" We are We are The economy is having little
approach, and making only those holding off proceeding or no impact on our materials
purchases and investments that on investing with our handling spending
are critical to sustaining investments
our ongoing business
On what?
On what? 2015 2016 2017 2018
2015 2016 2017 2018 Material handling equipment 67% 64% 65% 64%
All major capital purchases 50% 51% 60% 61% Fork lifts and lift trucks 64% 53% 59% 56%
Capital equipment 30% 27% 26% 23% Technology information systems (WMS, ERP, etc.) 53% 49% 58% 49%
Technology/Software 17% 20% 14% 10% Conveyors and sortation equipment 42% 31% 39% 40%
Storage equipment 15% 17% 11% 16% Robotics 13% 9% 26% 25%
Fork lifts/Lift trucks 15% 17% 6% 20% AGVs 13% 7% 8% 14%

Source: Peerless Research Group (PRG)

including robotics, drones and smart ing growing investment in systems for Indeed, when it comes to new
glasses. These new technologies have to distribution centers (DCs), what’s dif- purchases, areas with rising interest
be supported and integrated into infor- ferent this year? not only included equipment such
mation technology (IT) systems. It may be that a rising stock market as AS/RS, lift trucks, bins/totes, and
Peerless Research Group’s (PRG) and a continued strong economy, when conveyors—a broad category that rose
annual survey, conducted in January of combined with unrelenting operational from a 29% response last year to 34%
this year, found that 42% of respondents pressures around e-commerce fulfill- this year—but also outside services
were proceeding with investments given ment, have many industry participants such as third-party logistics providers
the state of the economy, up from a 35% moving forward with focused invest- (3PLs). Interest in new 3PL services
response to the same question in early ments in automation to help address the rose by 2%, and when looking at areas
2017. That’s the highest, most positive challenges. Additionally, after a few years for investment over the next 18 months,
measure for this question over the last of increasing investment indications for outsourcing to 3PLs is up by 5%.
four years. Similarly, only 9% said they IS solutions, many companies may feel The impact of e-commerce is likely
were “holding off” on investments, well they have a solid IT foundation. influencing spending priorities, as it has
under the 16% in 2017. “Where the respondents appear to be for years. For example, 29% of respon-
While the overall outlook is posi- spending more is on automation such dents say that in their operations, they
tive, there were some lagging categories, as conveyors and specific applications support a “buy online, ship to customer
though even these showed some resilience like vertical lift modules and put walls,” from DC” process. Additionally, when
when looked at across related questions. says Norm Saenz, managing director asked about “very important” industry
The categories that exhibited strong with St. Onge Company, a supply chain issues today as well as two years from
growth included jumps in investments for engineering and consulting firm. “While now, 29% deem multichannel fulfill-
automated storage & retrieval (AS/RS) sys- there are clear indications for growth ment very important today, and 34% see
tems, warehouse control system (WCS) in the survey, I believe companies are it as very important in two years.
software, and the closely related category being tactical about investments. They
of warehouse execution systems (WES) want investments that will bring them Overall outlook
software as well as robotics. quick improvements, while some are High confidence in the economy
So, after years of the survey reflect- thinking about outsourcing.” appears to have eased reluctance

50 AUTOMATION/RETAIL mmh.com
when it comes to investing in material last year’s 48%. When asked to look to spend more significantly than other
handling. This year, only 29% of respon- forward to spending in the coming year, respondents. This year, 35% said they
dents said they are taking a “wait and 40% anticipate an increase, which is the have a pre-approved budget, down
see” approach on spending given the same as last’s year’s 40% response for slightly as a percentage from last year,
current state of the economy, down from this question. but of these respondents, the average
35% in early 2017—the lowest measure When it comes to spending expecta- budget is $457,640, up from $422,260
for this question in four years. tion in dollar ranges, average anticipated last year.
However, some measures for spend- spending over the next 12 months “Overall, the survey reflects enthusi-
ing outlook essentially stayed even with is $350,000 for 2018, down from asm for where things are going with the
last year, which was a strong year for $378,000 last year, while median comes economy in general, and with supply
spending outlook. For instance, 52% in at $68,750, down from $82,610 in chain activity in particular,” says Donald
of respondents said they expect spend- 2017. Some of this may relate to a slight Derewecki, a senior consultant with
ing on material handling systems to decline in annual revenues for respon- St. Onge. “There are exceptions in that
increase in the next two to three years, dents on average, and it also may tie into some companies are perhaps smaller
which is down 2% from that ques- the fact that 2017 saw steep increases or are not in a position to spend much,
tion last year. However, 43% expect to for this question over 2016, so 2018 fol- but at the same time, there’s a signifi-
spend the same amount in two/three lows a strong year. cant segment of respondents planning
years, up from 38% from last year. And Another factor worth noting with to spend $250,000 or more—which
this year, just 5% expect a decrease in anticipated spending is that 27% of is when you start to get into some real
spending in the next two/three years, respondents indicate that they will spend projects. The caution here is that if
compared to 8% in 2017. $250,000 or more, and of this segment, you’re not investing in technology, espe-
Additionally, when asked how spend- 6% will spend between $1 million and cially in a growth economy, then your
ing for the current year compared to $2.49 million, and another 6% will spend competitors are going to eat your lunch.”
the previous year, this year 38% said $2.5 million or more.
it increased, down 1% from last year’s Respondents with companies that Some ups and downs
39%. Additionally, 51% said spending have a pre-approved budget for capital As highlighted earlier, growth categories
stayed about the same, 3% higher than spending on materials handling are set in the survey tended to be for various

How did your company’s spending How do you expect your company’s
on materials handling solutions spending on materials handling solutions
in 2017 compare with 2016? in 2018 to compare with 2017?
And, by what percentage? And, by what percentage?
Increased Stayed about the same Decreased Increasing Staying same as last year Decreasing

59%
54%
51% 51% 49% 49%
48% 48%
38% 39% 40% 40%
35%
32% 32% 32%

11% 13% 20% 11% 11%


19% 19% 9%

2016-2017 2015-2016 2014-2015 2013-2014 2016-2017 2015-2016 2014-2015 2013-2014

2016–2017 21% 2017–2018 27%


increase 17% Average projected increase 15% Average
Median Median
2016–2017 36% 2016–2017 32%
decrease 25% projected decrease 20%

Source: Peerless Research Group (PRG)

mmh.com AUTOMATION/RETAIL 51
2018 Warehouse/Distribution Center Equipment Survey

Overall, how do you expect your spending on The WCS and WES categories are
materials handling equipment and related information closely related, with many WES solu-
systems to change in the next 2 to 3 years? tions having evolved from a WCS by
adding functions like wave manage-
Increase Spend about the same Decrease
ment, pick to light control, replenish-
ment, or voice picking. It may well be
2014 45% 43% 12%
that since investment in automated
equipment is up generally, WCS/WES
2015 49% 43% 8%
benefits from that.
2016 41% 48% 11% “It’s not surprising to see growth in
WCS and WES, because these systems
2017 54% 38% 8% have a control system aspect to them
that is needed for automation projects,”
2018 52% 43% 5%
says Saenz. “So, some companies are
Source: Peerless Research Group (PRG) looking not just to control the move-
ments of an automated system with one
types of warehouse automation as well “Greater functionality with robot- of these systems, but to leverage more
as a boost in spending for WCS/WES ics, more flexibility of applications, and of the higher-level functions that can be
software, which is often used in automa- lower costs are driving this spike in cur- deployed under a WES, like managing
tion projects to synchronize automated rent usage and evaluation of potential waves, or managing some of the move-
equipment with material flow and use,” says Derewecki. “As labor avail- ment of inventory and people.”
higher-level systems. ability becomes tighter and labor costs Also down were a few indications on
For example, when asked which type increase, demand for this technology spending on mobile computing solu-
of systems and equipment respondents will increase.” tions. In this section of the survey, 54%
are considering during the next 12 Spending indications for automated are using or have plans for mobile tech-
months, growth categories included AS/ guided vehicles (AGVs) also were up. nologies, which is down from 62% in
RS (up to 14% from 7% last year), order For 2018, 7% use AGVs, up 1% from 2017, though close to the 57% for this
picking and fulfillment systems (up to last year, while 14% said that they’re question in 2016 and 2015. However,
17% from 13%), as well as mezzanines evaluating use of AGVs during the net 24 when asked earlier in the survey about
(up by 4% this year versus last), and months, which is up 2% from last year. bar coding and automated data capture,
conveyor/sortation (up by 3%). Spending plans for IS didn’t grow as 48% have plans for these functions in
When asked about current robot- strongly. When asked about new pur- 2018, up by 3% from 2017.
ics use and whether they will evaluate chases, plans for IT/IS systems were at Under the mobile computing section,
robotics during the next 24 months, 37% this year, down from 46% the two respondents indicate growing interest
16% said that they currently use robot- previous years. However, when asked in some of the newer technologies. For
ics, while 15% are evaluating robotics, about 12-month plans for specific types example, 8% said they use drones, and
for a total of 31% now either using or of IS solutions, such as warehouse man- in 12 months, 17% said they would
considering robotics. That’s up from last agement system (WMS) and enterprise either be using drones or planning to
year, when 9% said they use robotics resource planning (ERP) software, each of deploy them. Similarly, only 3% use
and 13% were considering robotics. these subcategories was up by 2%. Plans smart glasses today, but 7% said they
For applications, using or considering for spending on transportation manage- plan to use them or will be using them
robotics for pick and place or parts trans- ment system (TMS) software over the in 12 months.
fer climbed by 8% to reach 41%, while next 12 months also ticked up slightly.
using or considering robotics for palletiz- The high growth subcategories within The e-commerce effect
ing declined by 8%. Use or consideration IS were WCS, up to 18% in 2018 from When asked which is currently the most
of robotics for pick to cart, order fulfill- 12% last year, and WES, up to 16% this common process for e-commerce fulfill-
ment (picker to part), truck loading, and year from 6% in 2017, which was the ment in their operation, “buy online and
transportation also were on the upswing. first year the survey asked about WES. ship to customer from DC” is again the

52 AUTOMATION/RETAIL mmh.com
most common process, drawing a 29% This year, 65% see labor availability as years), and “order fulfillment costs” (for
response, same as in 2017. This year, the “very important,” and 63% said it will be which automated jumps from 34% today
growth process was “buy online ship to “very important in two years.” to 52% in two years). While the survey
customer from vendor,” which stood at 8% Whether some respondents foresee an doesn’t ask respondents to specify how
in 2017, but went up to 15% this year. increase in the labor pool or expect auto- they plan to achieve automated mea-
Other choices for the most common mation investments will ease labor require- sures, generally speaking, investments
process for e-commerce remained fairly ments may be possible reasons for why the in WCS/WES, WMS and labor man-
steady or grew just a bit, such as “buy
online, ship from store” (up 2% this Thinking about any new purchases, in which of the following
year) and “buy online, pick up in store” areas were any the first deployment of a new solution, or
(up 1% to 4% this year). a substantial change in processes or historical practices?
When asked which e-commerce pro- 2015 2016 2017 2018
cess will be the most common in two 46% 46%
years, both “buy online and ship to cus- 40%
37% 35% 34% 34% 32% 32% 34%
tomer from vendor” and “buy online ship 28% 29%
to customer from DC” are expected to 9% 11% 9% 11%

grow. Specifically, 20% said “buy online,


Information technology Outside services Systems equipment None
ship to customer from vendor” will be the
systems, applications a (3PLs) (i.e automated retrieval,
most common process for them in two and/or solutions lift trucks, bins/totes,
conveyors, etc.)
years, up from 10% last year, while 40%
foresee “buy online, ship to customer from Source: Peerless Research Group (PRG)

DC” as being the most common process


in two years, up from 35% last year. labor availability isn’t seen as accelerating agement, as well as certain automated
The impact of e-commerce is likely further in importance. Interestingly, how- systems, can help an organization keep
influencing change in issues respon- ever, when asked in which areas they will track of various productivity measures in
dents see as very important. When invest over the next 18 months, “staffing/ an online, systematic way.
asked what issues are “very important” labor” drew a 52% response, up from a
today, 52% rated “cycle times,” while 49% response last year. Best practices
56% see it as “very important” in two When it comes to best practices The survey asked questions about utili-
years. E-commerce has many affects, around measuring productivity, the survey zation/activity level for manufacturing,
but “tighter cycle times” is certainly indicated interest in more tightly manag- warehousing supporting manufacturing,
one of them. Additionally, when asked ing fulfillment processes, and moving and standalone DC facilities, as well as
to rate the importance of multichannel to a more automated means of doing so best practices for manufacturing and
fulfillment, 29% see it as “very impor- in the next two years. For example, cur- DC operators.
tant” today, and 34% said it will be “very rently only 35% of respondents have an For manufacturing respondents, aver-
important in two years.” automated means of tracking order cycle age percent capacity utilization came
Other issues seen as rising in impor- times, 46% track them manually, and 19% in at 68%, equal to last year. However,
tance in two years include company don’t track them. However, when asked 15% reported that they were at 100%
growth, capital availability, and having a how they’ll be gauging cycle time per- capacity, while 19% were at 81% to 99%
presence in global markets. Overall, the formance in two years, 57% expect they capacity. Looking forward for the next
top answers for “very important” issues will have an automated means of tracking two years, 53% expect increased utiliza-
remained fairly steady with previous cycle times, 29% expect they’ll be tracked tion, while only 5% expect a decrease.
surveys. The top five issues this year manually, and those that don’t track cycle Continuous improvement is the lead-
were safety, cost containment, company time drops to 14%. ing best practices among respondents
growth, training and labor availability. Other areas in which respondents in manufacturing, followed by labor
The only change from last year’s top expect closer, more automated tracking productivity, lean manufacturing, build
five was that labor availability rose to the include “picking accuracy” (automated to order, and just-in-time (JIT) methods.
5th spot, and “throughput” fell to 6th. jumps from 30% today to 54% in two Respondents were also asked to rate the

mmh.com AUTOMATION/RETAIL 53
2018 Warehouse/Distribution Center Equipment Survey

In total, over the next 12 months, approximately how much some aren’t faring that well with utili-
do you expect to spend on materials handling equipment zation in this growth economy, there’s
and information systems solutions? 27%
a significant segment of respondents
8% 18%
whose growth and capacity limitation
6% 6% 7% 15% 13%
issues are going to have to be addressed
$2.5 million $1 million- $500,000- $250,000- $100,000- $50,000- $25,000- Less than soon if not immediately.”
or more $2.49 million $999,999 $499,999 $249,999 $99,999 $49,999 $25,000
Overall, the survey points to an
In which areas will you be investing over the next 18 months? industry that continues to invest to
keep up with economic growth and
66%
New equipment/ 68% operational challenges in this era when
Equipment upgrades 67%
64% e-commerce fulfillment and tighter
cycle times are common challenges for
46%
Staffing/labor 42% many companies, not just big e-tailers.
49%
52% Respondents appear to be most inter-
ested in specific types of automated
53%
Information technology 53% equipment to increase productivity and
hardware/software 57%
50% throughput in their DC operations, and
help lessen problems with labor avail-
38%
Maintenance services 33% ability, which has risen to become a
37%
34%
critical industry issue.
Although investment in IS is down
22%
Enterprise applications 23%
2015
in some responses, this comes after
(ERP, CRM, WMS, WCS, etc.) 25%
years of growing investments in IS and
24% 2016
2017 software systems under the IS banner.
14%
Outside services 11% 2018 Additionally, when asked about specific
(3PLs) 17%
types of IS investments, some catego-
15%
ries of software show continued invest-
7%
Outsourcing/3PL services 9% ment interest or modest growth, with
8%
13%
WES/WCS, a category directly tied to
control of automated equipment, mak-
2014 2015 2016 2017 2018 ing strong gains.
Average As Saenz notes, the survey does
anticipated spending $348,600 $345,550 $327,340 $378,130 $350,000
reflect confidence in the economy and
Median
anticipated spending
$67,860 $72,035 $64,520 $82,610 $68,750 willingness to move forward on projects,
but many are being selective, or con-
Source: Peerless Research Group (PRG) sidering more 3PL services to quickly
address needs. “I think many companies
importance of best practices to their 100% capacity, and another 15% are in are being smart about investing in some
operations two years from now. Prac- the 81% to 99% range. Looking forward targeted types of automation,” he says.
tices rated as growing in importance in to the next two years, 38% of respon- “E-commerce pressures are likely push-
two years are labor productivity (up 4%), dents with standalone DCs expect an ing the overall direction. Companies are
lean (up 4%), and JIT (up 5%). Though increased utilization level, 58% expect looking for systems that will help them
not among the top best practices today, it to stay about the same, 4% expect a compete and be effective as more get
3D printing, seen as important by 10% decreased level. involved in e-commerce or are getting
today, but 17% say it will be important While these capacity measures trend pulled into fulfillment for big online
in two years. relatively low overall given the strong marketplaces.” •
For standalone DCs, activity/capac- economy, Derewecki points out the
ity level averaged 66%, down 1% from significant chunk of respondents run- Roberto Michel, is a contributing
2017. However, 21% said they were at ning at full capacity or over 80%. “While editor to Logistics Management

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