When Gucci decided to consolidate all distribution into one facility in Secaucus, N.J., it became apparent that it would have to modify its distribution philosophy. "We merged 200,000 sq. ft. of operation into our existing 100,000 sq.-ft. facility. We needed something simple, but very effective, to meet our space and productivity requirements," says Tony Mauro, vice president of operations.
Gucci Group (Amsterdam) is one of the world's leading luxury goods companies. It had sales of $3.2 billion in 2004. The Group designs, produces and distributes personal luxury goods. It operates stores in major markets throughout the world and wholesales products through franchise stores, duty-free boutiques and department and specialty stores.
"Our old RF [radio-frequency]-controlled carton flow warehouse required too much wasted walk and search time," Mauro adds. "We had used RF picking to be efficient, but realized that too much time was being spentwalking and not enough time picking. In addition, to meet seasonal peak demand we would need to hire almost 100 temporaries which were costly and required additional time to train and manage."
Analysis of Gucci's 3,800 active SKUs showed that 25% them were very active. By moving the fast-movers into pick-to-light flow rack from Siemens (Grand Rapids, Mich.), and the slower movers into three Remstar ( Westbrook, Maine) shuttle vertical lift modules (VLMs), Gucci reduced its labor costs and increased productivity by 40% while reducing floor space 80%.
"We calculated an 18-month ROI [return on invest-ment] for the VLMs based exclusively on labor savings. In fact, we are realizing an additional 40% increase in productivity and some days even up to a 100%. The decision to implement the VLMs was an easy choice based on the labor savings. The space savings and daily productivity gains were a bonus," Mauro says.
Gucci's picking area is divided into five zones connected with conveyor that routes orders directly into shipping containers. The first three zones use pick-to-light flow rack. The three VLMs make up the next zone, storing 40% of Gucci's slower moving items. The last zone is the "double-scan" area, which uses shelving and double bar code scanning verification for additional security for high value items.
Integrated software is key to the system's success. Manhattan Associate's (Atlanta) warehouse management system (WMS) manages the DC. Software from Reddwerks (Austin, Texas) drives the pick-to-light flow rack zones and software from FastPic Systems (Westbrook, Maine) controls the shuttle VLM pick zone. Both systems communicate with and update the WMS.
Order fulfillment begins in the customer service department, which sends order waves to the floor. The waves are sorted into zones and inducted at the first available zone. When complete, orders pass to the next zone automatically via conveyor. "Each order will go only to the zone that contains the SKUs required to complete that order, automatically bypassing unnecessary zones to increase the system's efficiency," explains Ralph Carangi, operations manager.
VLM orders are picked in batches of 10. The operator scans the barcode on the shipping container label and the position on the batch station. When the batch is ready to be picked, VLM trays are automatically delivered to an ergonomically located pick window. Indicators tell operators which SKU and what quantity to pick. Once the batch is complete, the order pickers push the cartons onto the take-away conveyor, which delivers the cartons to the next zone or to the weighing and shipping department.
Monthly slotting analysis balances the system based on SKU order velocity and physical size. The pick to light flow rack stores larger quantities of goods that can be replenished while still being picked.
"When everything was in carton flow, I had pickers passing hundreds of less-used SKUs to find the one item they really needed," Carangi says.
The perfume retail business is constantly coming out with new products, packages and promotions which affect the amount of SKUs stocked and picked, packed and shipped. Remstar Shuttle VLMs' modular design allows the units to be moved or have the heights modified quickly and cost effectively. Every tray height is scanned when put back into the unit, automatically letting taller or shorter items be stored without wasting additional space.
"Our customers want and demand selectivity and we provide them with what they're looking for by picking and selling the exact quantity they want," Mauro says.