Material Handling & Logistics selected Office Depot’s Newville facility to kick off the MH&L Innovation in Action Tour series because the operations scream flexibility. That’s the quality material handling and logistics professionals will need to adopt to keep their own companies competitive in this era of volatile change.
Before this facility, Office Depot served two supply chains, supporting business-to-business and retail clients. Newville represents the fusion of those services, with both business units being served by the same material handling operations and people.
By adopting this philosophy, Office Depot has cut its number of U.S. distribution facilities in half, down to its current 17 and will eventually get down to 12.
“We were born and grew up as two different companies,” explained Carlos Rodriguez, vice president of supply chain for Office Depot. “By bringing our supply chains together into one, it will reduce real estate, optimize inventory, and help us rationalize SKUs. We have many of the same SKUs but different pack sizes and units for our retail customers as well as our B2B. We want to go from inventory push to inventory pull for both retail and B2B. A facility like this with the automation allows us to do that. Newville is now the premier facility in our network.”
Robert Zelis, senior director of supply chain, guided one of two groups of corporate tourists through the facility. The Kiva Systems Mobile Robotic Warehouse Automation system was the main attraction, with employees demonstrating picking, packing and shipping operations. The visitors saw full case pick modules used for fulfilling B2B orders as well as the primary pick area where split case picking and pick to light modules were demonstrated.
When orders get inducted they’re assigned to a license plate. Workers demonstrated how these orders are put onto order pick pods, which the robots transport to pickers. At these pick stations, a laser points to items that need to be selected and the appropriate quantity is picked based on the numeric display beneath the box.
“We try to run the products very quickly in the morning,” Zelis explained. “We run 24 hours a day 5 days a week. When done picking for the day we go to batch refill of our Kiva primary pick locations. Then receiving starts and is completed by 5am.”
The driving force for Office Depot was the ability to process orders and do cycle times on them. The minimum is less than 20 minutes to get an order dropped down and all the way through the operation. The system’s modularity also contributes to quicker physical inventories. There are 12,000 SKUs kept in the Kiva system, distributed among 3500 inventory pods, representing 25,000 unique locations—all distributed to pickers by 430 mobile robots. The pods are used for both picking and replenishment.
This tour demonstrated a new way of business life—one that eliminates waste and applies just the right resources to whatever the demand signal is at any one time. When MH&L first talked to Brent Beabout about it—just before the facility opened in September—his explanation of the system also explained how he got his title: vice president of global network strategy and transportation. Office Depot wants its employees to develop a holistic view of the supply chain, all the way to the end customer. Beabout believes this requirement will draw talent from many disciplines, not just to Office Depot, but to all successful companies where supply chain is a competitive advantage.
“They’ll come from IT, data analytics, finance, the physical sciences,” he said, “because there’s a lot of low hanging fruit in this field. There’s a lot of money in supply chain, especially in inventory in the retail business. A few percentage point gains in efficiency go right to the bottom line.”
Even Kiva is broadening its view of supply chain best practices with each new installation.
“Every customer has unique challenges so we learn from each project,” concluded Brian Quigley, account manager for Kiva. “We’ve improved our training processes. The fact this was a greenfield project, and our largest with 400 drive units going live all at once in a tight timeframe, taught us a lot.”