Online Exclusive Case Study: 3PL Converts to Narrow Aisles

June 1, 2009
The CEO of a successful 3PL reflects on a year-long project to reinvent his storage strategy.

Phoenix Warehouse is a 3PL in Jersey City, N.J. focusing on distribution of apparel, shoes, furniture, luggage, home furnishings and other consumer items. About a year ago, Alan Antonucci, CEO, decided to convert his three New Jersey facilities and his several California facilities to very-narrow-aisle (VNA) configurations.

“It wasn't a snap decision,” he recalls. “We spent several years thinking about the conversion to VNA, and during that time, there was give and take between myself and my CFO over taking the big step. The conversion sounded great in terms of space and storage density, but the cost involved made us hesitate.

"Converting also unfortunately meant giving up a lot of aisle space we routinely used to do certain kinds of warehouse support work, like product staging, labeling, price ticketing and even rework,” he adds. “Not only that, we knew the change would be a total culture shock for our workers. They'd have to adapt to a whole new warehouse environment—most of the people who'd be working in the new rack configuration would come from one of our other buildings that still has conventional wide aisles."

Nevertheless, Antonucci didn’t want to pass up the greater pallet-storage density and better efficiency that VNA configuration could bring. He also knew he could pass along the savings to customers and make his business more competitive.

"When we took over a new building as our headquarters site, we decided to configure it as VNA from scratch,” says Antonucci. “That was a defining moment for our company. For the conversion project we hired an independent rack specialist. We prefer to lease our trucks, so we knew the biggest expense would be the construction of the racks. And before we followed through to buy and set up what that consultant recommended, we had a consulting engineer lay the racks out in the most efficient configuration. Those two outside experts, along with the wire guidance specialists we brought in to set up an embedded wire system, had to communicate freely with engineers from our lift truck supplier and the folks from Liftec, our truck dealer. And, the entire team had to cooperate closely to verify that the trucks we ended up using would operate smoothly in the new VNA environment."

It took about a year to complete the conversion, but Antonucci believes it was well worth the time and effort. "Over the five-year life of the equipment and leases, we conservatively project we'll save 30% to 35% on labor and overhead-related costs. As a bonus, our narrow-aisle facility will be able to serve as a model for future expansion and remodeling of our other buildings. And, we’ve probably gained 30% more space by changing over to narrow, seven-foot-wide aisles. Previously, they were twice that in width. As a result of the change, our 210,000-square foot building now offers us 18,000 pallet rack locations. We would have been limited to 10,000 if we hadn't gone to the VNA configuration.

"It's true we lost the ability to do staging and certain other tasks inside our aisles when their width shrunk, but we found a way around that,” Antonucci explains. “We designated a zone in the middle of the building as a major central staging area, and we also made the end of every aisle a pickup-and-delivery location."

Antonucci chose Jungheinrich lift trucks for the redesigned facility and is now replacing all of his LPG forklifts with Jungheinrich 3-phase AC electric vehicles. For the initial New Jersey warehouse conversion, he acquired four Jungheinrich EKX 410 man-up turret trucks/orderpickers to serve the narrow aisles and six Jungheinrich EKS 314 orderpickers. Both trucks run on a wire-guided system. The company is also using three Jungheinrich EFG 216k electric three-wheel counterbalanced trucks and several ECR 327 electric end rider pallet trucks.

"Jungheinrich electrics, especially the turrets, have absolutely changed our corporate culture," states Antonucci. "They've made us much more efficient. The man-up turrets were the missing part of the VNA puzzle for us, with their ability to easily navigate tight quarters at a productive speed. In our current process, an operator takes a truck down the aisle to put stock away and also makes a stop to pick an order a little bit further down the rack. So, that one operator is actually doing two different jobs on one pass. That's highly efficient."

Antonucci also notes that he runs two shifts but only charges batteries every three days or so, and the maneuverability, low maintenance, and long service time per charge on the Jungheinrich trucks helped his VNA configuration meet expectations.

"These are tough economic times,” says Antonucci, “but, frankly, our business is thriving. I'd have to say that’s in large part due to our having gone with Jungheinrich products. We'll convert the rest of our warehouses to very narrow aisles as soon as possible—as soon as it's prudent to spend the capital to do it. And, when we do, we'll use Jungheinrich trucks to serve the new racks we build."

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