Ninety-nine bottles of beer

Ninety-nine bottles
of beer

Handling liquor distribution for the Alberta Gaming and Liquor Commission (AGLC) (www.aglc.gov.ab.ca) has proven to be a lucrative business for Connect Logistics Services (CLS) (www.clsna.com), but it has also brought close governmental scrutiny and a heightened need for accuracy as well.

The Alberta distribution center (DC) is 430,000 sq. ft., and holds 1.5 million cases of spirits, coolers, wine and imported beer, with some 20,000 registered SKUs, explains Ken Collins, project leader for CLS, a third-party logistics provider (3PL). “We pass AGLC our sales and inventory information every night,” he says. “They pass us back the regulatory information — details on who is licensed, what products are licensed, and at what price they should sell. The government does the regulation, and we do the warehousing and distribution.”

Last year the DC handled 9.6 million cases, averaging between 30,000 and 50,000 per day. It runs two shifts per day, five days each week, with 20 selectors per shift. All deliveries are handled by truck and are all by contracted carriers.

Because of the need for accuracy in handling and reporting, CLS has implemented a voice recognition-based picking system from Vocollect (www.vocollect.com). In the process, CLS evolved from a manual paper check to radio frequency bar code scanning for checking.

At the Alberta DC, all product is consigned and brought into the warehouse by a designated agent, who is responsible for stock levels and bringing the product into the warehouse. An agent indicates a delivery and asks for a slot, and CLS must find a place for it.

There are approximately 1,500 licensees that order from the DC — liquor stores, hotels and restaurants. The DC deals only with orders of 25 cases or more. If those ordering cannot meet the quantity restriction, they make agreements with secondary distribution sources. In this way, some liquor stores have become suppliers of bottle orders. Too, local brewers have their own distribution network that operates under the same guidelines as CLS.

For CLS, the average wholesale price of one case is $100, but the 3PL also deals with some cases valued at $1,500. The financial impact of errors in picking orders thus can add up quickly. For that reason, CLS runs through three separate levels of checking.

The first level is on the warehouse floor. With voice technology, checkers conduct random audits on selectors.

“If a checker finds an error on a picker,” explains Collins, “that's what we call an out-the-door error. In other words, if it hadn't been audited, it would have been shipped. That's a measurement that got added with the voice technology. Because a picker can say, ‘I'm short this case because it wasn't in the bin.' That's a picker level error.”

CLS has seen a five-time improvement with the voice system because it's possible to go between 1,500 and 2,500 cases per picker without the picker identifying an error.

“The second level of error occurs if the checker identifies an error,” continues Collins. “We are consistently running at around one error in 12,000 cases, which is 99.99%. Those errors are still caught before they hit the truck. We classify them as errors, since it takes an audit to find it. Our third level of error is the store report.” CLS has seen a rate go as high as one in 50,000 or more from actual reports from a retail customer.

Over a one-year span, the company has achieved a 5% improvement in its pick rate. It also is ready to move ahead, looking at other Canadian provinces — Ontario looking at a deregulated model for its liquor distribution — and on the 19 or so U.S. states that have regulated liquor distribution. LT

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July, 2004

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