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BMW: Sheer Distribution Pleasure

July 1, 2006
Sales growth drives BMW Canada to move into a larger, more efficient facility.

BMW is a hot brand in Canada. The company's January 2006 sales increased 22% over the same month in 2005. Year-over-year sales growth had forced BMW's Whitby, Ontario, parts distribution center (PDC) to expand twice to 56,000 sq. ft., but it still did not have the capacity to handle the company's growing volume.

In January 2006 the operation moved into a new 183,000-sq.-ft. parts distribution center with 30 ft. of clear storage height. The new facility is located three miles from its old location in Whitby, which is about 30 minutes east of Toronto.

The new Whitby facility is the primary parts depot for all BMW dealers in Ontario and all points east. It also acts as the backup facility for parts that western BMW dealers cannot get from the BMW parts distribution center in Richmond, B.C., near Vancouver. The company's Canadian dealer network consists of 39 BMW automobile, 22 MINI automobile, and 18 Motorad motorcycle dealers.

In addition to increased storage space, the new distribution center has an enclosed waste management area and an uninterrupted dock space for shipping and receiving that is 360 ft. long and 80 ft. wide. Covering almost 29,000 sq. ft., the area offers flexibility for unloading sea freight containers and pre-storage packaging for parts that can be easily damaged, such as moldings, windshields, and body sheet metal.

BMW timed its move during five weeks in January and February 2006. "We shipped out of both PDCs on our regular schedule so there was no degradation of service to the dealers," says Steve Terry, national parts manager. At night, between 11:00 p.m. and 6:00 a.m. parts were moved, tagged, and put away in the new facility. By 6:00 a.m. they were ready for order pickers. BMW's staff of about 28 conducted the move; up to 12 temporary workers were added as needed.

BMW contracted G.N. Johnston (Mississauga, Ontario) to supply and install most of the material handling equipment in the new facility, including dock stockers and order pickers, a swing reach lift truck from Raymond Corp. (Greene, N.Y.), and three automated horizontal carousel systems from Remstar (Westbrook, Maine), two of which were brought over from the old facility. Combined, these carousels have storage capacity for 30,000 part numbers. The new system added 14,000 more locations for parts. Now, 250 lines per hour can be picked from the three carousels, he reports.

Schenker, a third-party logistic provider headquartered in Essen, Germany, operates both of BMW's Canadian parts distribution centers. However, the operating systems and software in each are owned and designed by BMW. All Canadian BMW dealers are connected to the company through an intranet system that lets them directly download their orders into BMW's computer system.

Order information is automatically downloaded into the warehouse management system in Whitby. Because of a tightly integrated information system, the Whitby facility is paperless except for shipping when hard-copies of packing lists are generated. The system lets employees manipulate the data by retailer, order type, and shipping method.

The majority of parts for BMW vehicles come from Germany. They are tightly packed in sea freight containers, which are shipped to ports in Montreal and Vancouver. Almost daily, carriers truck sea containers to Whitby where they are unloaded and taken away by the carrier.

A radio-frequency (RF) system is used for receiving and put away. When parts are received, part numbers are scanned and parts are sorted into and transported to the appropriate zone and bin, and scanned again so they are instantly available for sale.

All orders are processed using an RF, zone-picking system. Pick requirements are sent electronically to the order picker's handheld scanner or the automated carousels' individual databases. The scanners tell the pickers which presorted parts are to be picked by zone and then by location within each zone. Order pickers print an individual barcoded label for each part on a portable, belt-carried printer. Picked items are transported to a packing station for small parts, and then to a sorting area for consolidation with the larger parts. Each picker may be picking parts for eight different orders at a time.

The facility is divided into three distinct areas: large racking, small parts mezzanine and automated carousel systems. Each area is divided into smaller zones to allow the workload to be spread more evenly among workers.

All of the racking and mezzanine components were supplied and installed by North American Steel (Whitby). The mezzanine is an impressive 27,000-sq.-ft., three-floor structure, with a footprint of almost 9,000 sq. ft., which has the capacity to store more than 30,000 SKUs, explains Dan Rideout, parts distribution manager. Each of the mezzanine's floors contains one, two or three zones. Parts for put away are transported to the appropriate floor either by a freight elevator or by safety access gates (two on each floor), which allow skid loads to be lifted and set down. Parts to fill orders are transported to the packing area by picking carts from the ground floor, a conveyor from the second floor, or by elevator from the third floor.

Parts for the carousel systems are delivered for put away by lift truck to the ground floor units and to a platform through a safety gate for the upper unit. Parts for orders from the carousels are transported to the packing area by the same conveyor as on the second floor of the mezzanine.

The conveyor, originally provided by Matthews, was moved from the old facility, reconfigured and refurbished by Logix Conveyor and Palletizing Systems. The conveyor starts at the upper carousel, travels across the second floor of the mezzanine, down to ground level, across the front of both lower carousels, and into the packing areas. The conveyor's new layout has improved the efficiency of the packing and quality check areas.

"Everything that comes off of the mezzanine and the carrousels, which has a potential of storing 60,000 part numbers, comes to a central location where they are quality checked, packed and shipped to dealers," Terry says.

Large parts are also picked using handheld scanners and are transported by lift truck to a consolidation area. When the last part is picked for any order, the computer system produces a packing list.

Most orders within the distribution center's territory (Greater Toronto, Montreal and Ottawa) will be shipped the same day that they are entered into the system, arriving by 9:00 a.m. the next morning. Stock orders for dealers outside of the region may not be delivered by 9:00 a.m. or the next day, dependent on the distance. However, all emergency orders to all dealers are delivered by 9:00 a.m. the next morning. Each dealer is allowed two emergency orders per day, which have to be entered into the system by 8:00 p.m., local time.

The carousel systems in BMW Canada's Whitby new facility holds 30,000 part numbers.

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