New distribution center requires new storage technology

Feb. 1, 2004
Proper planning prevents poor performance.

By Sean O'Neill

Becton Dickinson and Company (BD), a leader in drug delivery technologies, syringe production and medical products distribution, faced a challenge that called for improving distribution center (DC) service and reducing costs. The facility's storage design would play a large role in determining its success.

The first step was to form a BD logistics distribution team. The team began by studying the existing supply chain to understand its limitations, and learned that the distribution operations did not allow for accurate small order processing and damage-free effective distribution of BD's complex product offering.

BD performed a distribution network analysis, which indicated that there were significant customer service improvements and costs savings by shipping more volume from a West Coast distribution facility than the current level. The team concluded that it would be necessary to design and bring online a new West Coast distribution center.

BD could provide a framework around which the design of the facility could operate. With its experience with operations and 3PL operators, BD recognized the benefits and return on investment of having an independent engineering firm like St. Onge Company lead the design of an optimal distribution operation.

Flexible facility

The team based the DC sizing on inventory requirements to meet customer service levels and an understanding of the storage technology the facility would use. A site in Redlands, CA met all the required criteria, including the most critical one: schedule. The property selected was already in the permitting process but still had design flexibilities. BD chose to exercise these flexibilities by changing the planned column spacing to better meet the planned storage type, increasing the planned clear height of the facility, and altering the planned aspect ratio of the building. BD thus gained the unique benefit of both the flexibility and economics of a build-to-suit and the accelerated schedule capability of an existing building.

The new Redlands Distribution Center will distribute product from multiple divisions within BD. Therefore, validation of design data was required across all represented divisions. A particular challenge is a common unit of measure. An assessment of potential storage media required a detailed understanding of unit load characteristics for each item.

Selecting the storage

The team investigated a variety of storage configurations and media for the Redlands facility, from highly automated solutions (AR/RS) and hybrid solutions to conventional solutions. Based on an understanding of the product and customer demand associated with each item, preliminary indications showed that a hybrid or conventional solution would provide the best return on investment. St. Onge offered a tool to model the layout option which provided detailed financial data, including NPV and ROR costs assessment, for the project's life cycle. It included factors such as capital costs (storage and material handling equipment purchase costs) and ongoing expenses (direct labor, building lease costs, size as required by each storage medium).

The conventional bulk storage technology (Single Deep and Double Deep Selective Rack) was engineered. The rack types were chosen based on the large number of SKUs (3000+) and the lot size/segregation requirements. Advance Storage Products provided the storage system.

The forward pick area uses a "pick tunnel" technology. This is a three-deep pallet flow rack or case flow rack as the primary pick location and a four-deep pushback rack above. This design allows for better storage density by fully using the empty space above the floor level pick line.

The design also includes some added safety benefits. The replenishment and pick operators, by design, travel and operate in separate aisles, limiting the interaction of order selectors on foot and lift traffic and thus reducing the risk of injury. The three-deep pallet flow lane depth was determined based on one pallet replenishment point and allowing the full depletion of a double deep rack location.

Better accuracy and productivity

"We were pleased with the distribution design and the collaborative planning with 3PL providers, which was accomplished under a very aggressive timeline," said BD's William Ognibene, manager of DC Strategy. "Despite the urgency of this project, the results have been first-rate."

The Redlands facility has replaced the current California operation. After just five months of operation, the facility is exceeding receiving and shipping expectations in both the domestic and international markets. Inventory accuracy is more than 99 percent, and on-time shipping and receiving is near 99 percent. All of this was accomplished at productivity rates far exceeding the replaced DC.

Sean O'Neill is a partner of York, PA-based St. Onge Company (, a leading global consulting engineering firm emphasizing creative solutions in Logistics & Supply Chain Strategy and Internal Operation Design for manufacturing and distribution. He can be reached at (717) 840--8181 or at [email protected].