First in a series that looks into how North Canton, Ohio-based Diebold, Inc. developed its new modern Global Service Logistic Center. The next installment examines the equipment and processes of the new facility. The final installment will cover the logistics of moving from the old warehouse and repair center.
Managers at Diebold, Inc. knew that having order pickers on foot and lift trucks scurrying around a dimly lit wide-aisle, manual 93,000 sq.-ft. warehouse was not the way to move its business forward. It will enter the world of 21st century lean warehousing when the company moves its Mogadore, Ohio, warehouse and Seville, Ohio, repair center into a new Global Service Logistics Center.
By the end of August 2005, Diebold (North Canton, Ohio) should be moved into its new brightly lit, climate-controlled service center featuring bar code technology, conveyors, zone picking and two narrow-aisle, wire-guided lift trucks—one for picking, the other for stocking.
What's more, the 1,500 to 2,000 packages received each day from all over the world containing parts needing to be repaired or refurbished will no longer have to be trucked 35 miles to and from its repair center. In the new facility, they will be delivered directly to the in-house repaircenter, cutting two days off the parts' turnaround time.
Although Diebold's new service center is smaller than the one it is leaving, it will hold more inventory as business grows, and have more clear floor space because of new equipment, better space utilization and careful warehouse planning.
The new facility is all about accuracy, efficiency, speed and staying ahead of the competition. Robert W. Fletcher, director of service logistics, says Diebold is going through a business transformation. It has become a global company—its automated teller machines (ATMs) and services are used in every region of the world. That's a long way from its start in 1859 manufacturing safes in Cincinnati. Today, its core products include ATMs, retail and drive-up banking systems, branch facility equipment and integrated physical and electronic security systems. Specialized technologies include card systems for corporate and college campuses and electronic voting machines.
Diebold reported revenue of $2.4 billion in 2004 and an annual growth rate of 12.9 percent. More than 50 percent of the company's revenue comes from services, Fletcher reports. Part of the company's transformation includes shifting away from partnering with overseas service organizations to working directly with incountry service technicians. In fact, Diebold has one of the industry's largest service staffs employing more than 4,500 people in 600 locations worldwide.
"Orders are increasing," Fletcher says. "This means Diebold needs faster picking for faster shipping overseas."
To make this happen and to better serve its global customers, Diebold decided at the end of 2003 to put its global service, repair and refurbishment business in an efficient modern lean warehouse. When this decision was made, it was Fletcher's and his team's task to make it happen. A site had to be selected, and plans started for how the facility would be used. An architect, builder and a facility-planning consultant needed to be hired. Finally, the actual move had to be planned—in detail.
Site selection for the new facility was straightforward. Diebold wanted to locate the new facility in Northeast Ohio, preferably the North Canton area where its employeesand company are based. "We did not want to loose our skilled associates in our repair center," Fletcher says. It also needed to keep its growing international business in mind. These factors led Diebold to choose a site in a foreign trade zone (FTZ) next to the Akron/Canton Regional Airport that's easily accessible to rail and interstate highways. One of the business advantages of the zone, Fletcher explains, is that payment of customs duties, tariffs, and federal and state use and excise taxes are delayed. They have to be paid when parts are outside of the zone, he emphasizes.
Dan Pittman, manager of materials and distribution, adds, "We have not activated the FTZ restrictions yet. Once we do that, we will have designated dock doors and work areas where shipments are packed." When a foreign trade zone is activated, there are many restrictions concerning material placement and how shipments leave the building. Additionally, there are regulations that need to be adhered to, and paper work that has to be done, Pittman explains. "Right now, with our level of business, we're getting really close to where it is worth it to activate the foreign trade zone. But, we want to get our move taken care of first, get settled in, and get our processes understood. Then we can activate the regulations, probably within the next year or two."
The company broke ground for the new 169,534 sq.-ft warehouse and repair center in the summer of 2004. Today the facility is almost complete. Material-handling equipment is being installed and interior office space needs to be finished. However, the move dates have been pushed back almost a month due to a long Northeast Ohio winter. A record-setting snowfall and ice delayed construction. The roof was not on the building when the snow hit, Pittman recalls. "We had a hard time getting the roof on the building because it was not safe for the construction workers to be on a steel roof with three inches of ice." In addition, the frozen ground was too cold to pour concrete. "It was a particularly bad winter to try to build a building."
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Diebold's existing Mogadore, Ohio facility. Items to be repaired are stored on pallet racks. Aisles are blocked by product waiting put-away.
Inside Diebold's new facility looking at dock doors and future ATM staging area.
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Future pick module and small parts storage area. Contractors' blueprints are in the foreground.
New Diebold facility showing front entrance, distribution facility and service center.