In the summer of 2005, Jeffery Wolpov saw an opportunity. His third-party logistics (3PL) company, Distribution Solutions Inc. (DSI), was approached by a major U.S. departmentstore chain to help with container processing at its Newark, N.J., import facility.
Previously, a major logistics company handled the 3PL tasks for the chain’s merchandise containers as they crossed the Atlantic Ocean and were unloaded for distribution to stores across the country. However, the largely manual picking, fulfillment and shipping system made the process inefficient and costly.
Wolpov and the DSI team took over operation of the facility and started making improvements. Wolpov knew the process needed to be automated to handle the high volumes required by the store chain. DSI chose material handling integrator W&H Systems Inc. to overhaul the DC and install a high-speed sortation system.
Don Betman, president of W&H Systems, and his team gathered data, put together a five-year plan, and began the design, but they had obstacles to overcome. The manual equipment had to be moved out, and the DC had to be relocated to a different building to accommodate new machinery. In addition, the team needed to obtain the proper permits from the city of Newark.
Because the store chain faced the pressure of receiving high volumes of merchandise, it needed assurance that the new, automated DC would be completed quickly. A project of this scale would typically require up to 12 months of planning, design and installation, but W&H Systems completed
it in little more than five months.
“We got it done so quickly, I don’t think the departmentstore chain had even decided which products were being shipped to the East and West Coasts when the first cartons went through the system,” Betman says. The fast-paced project came in under budget, ahead of schedule and exceeded expectations.
“The reliability of the system has really exceeded our expectations,” Wolpov says. “The combination of proper planning, engineering, construction and maintenance has created an extremely reliable solution with less than 1% downtime.”
At DSI’s new facility, a crossdocking system is used for cartons direct from containers and garments on hangers (GOH) packed flat into cartons, which are ready to ship directly to stores. The system includes wave planning, with both full-carton and break-pack picking for the replenishment process, in which merchandise can be warehoused and sent to stores when needed.
DSI’s new system incorporates the RSU tilted tray sorter from W&H Systems, as well as the FKI Logistex UniSort XV high-speed sliding shoe sorter, which sorts merchandise for direct loading of outbound trucks destined for specific store DCs.
Full cartons packed and ready to be shipped to department stores are received at the DC and offloaded directly from an import container onto a powered extendible conveyor. The conveyor can be extended into the import container to facilitate the unloading of cartons.
There are six crossdock inbound receiving lines. Each carton passes under a scanner and is identified by purchase order and SKU. The data from barcodes are used to print and apply a new shipping label, which the DSI system uses for sortation processing. The cartons are then transported to the outbound system and sorted directly to their destinations.
Cartons containing merchandise not matching the department-store chain’s content requirements must be repacked. These cartons are directed to a special area where each carton is opened and repacked to the department store’s requirements. The repacked cartons are placed on a takeaway conveyor and transported to the outbound system.
GOHs are offloaded at two receiving doors and staged on trolleys for packing. The garments are packed into cartons according to the store’s specifications (style, color, size and quantity). Shipping labels are applied to full cartons, which are pushed onto a takeaway conveyor. Cartons then pass through a semiautomatic sealing machine and are transported to the outbound system.
Merchandise to be stored at the DC is received, unloaded and palletized according to SKU. Orders are generated by store department and carton. Nearly 140 order cartons are grouped, and items are batch picked for that group/wave.
• Record production numbers with zero overtime;
• Crossdock operations routinely exceeding operational plans by 10%;
• Up to 380,000 units processed in a one-week timeframe with the RSU sorter—twice the one-week maximum of the old facility;
• Increased individual labor productivity by 50%;
• Consistent pricing and greater margins;
• Twelve-month on-time delivery performance of 99.7%;
• Less than 1% downtime.
At the beginning of each wave, cartons with storeorder barcodes are placed onto pack-out tables at the sort locations of the RSU sorter. A handheld, short-range RF scan gun is used to scan each carton barcode and assign it to the RSU sort location ID barcode. Once wave requirements are downloaded from the host to the sorter control system, the sort operation is ready to begin.
The RSU sorter, developed by W&H Systems, consists of tilted carrying trays that travel on an enclosed track conveyor. The DSI system is configured as a 965-tray, single-level system. The sorter operates at a speed of 120 feet per minute and presents approximately 60 trays per minute to each of the two induction areas. There are three manual inductions at each end of the sorter. The trays are presented to the product inductors at a fivedegree angle for easy placement of items onto the sorter trays. The maximum capacity of the sorter, with full tray utilization, is 7,200 pieces per hour.
Items are loaded with the barcode facing up, or forward into trays, and are scanned by an overhead camera. The data contained in the product’s barcode is transmitted to the sorter control system and identified. It is then matched to the wave information previously downloaded and assigned a specific sort location.
As the carrying trays reach their proper discharge points, the divert mechanism is fired by the W&H control system that releases the bottom edges of the RSU carrying trays. Gravity lets products slide from the tilted trays into a chute where they accumulate.
Each side of the sorter has a total of 142 sort locations: 139 order locations, plus one for items with non-readable barcodes, one for not-identified items that the barcode can read but for which there is no requirement and one jackpot location.
Operators pick the pieces out of the holding trays and pack them into the cartons on pack-out tables. When the carton is full, or the wave is complete, the operator pushes the carton onto a takeaway conveyor under the sorter. The cartons are then transported to an accumulation conveyor that feeds a tape-sealing machine. The tape-sealing machine then moves the cartons onto the outbound system.
Full cartons are stored at the DC and picked when required for an order. The full cartons are palletized and then brought to a staging area. Here, they are labeled and placed onto a takeaway conveyor and then transported to the outbound system.
Cartons are merged into one line via a high-speed combiner from FKI Logistex. The combiner directly feeds the shipping sorter. An FKI Logistex UniSort XV sorter diverts cartons into 23 pitched gravity conveyor lines designed to accumulate cartons for either processing or truck loading. This high-speed sliding sorter directs cartons to their proper shipping line at a capacity of 6,000 cartons per hour.
• W&H Systems, www.whsystems.com: GOH, warehouse control system, tilt-tray sorter;
• Manhattan Associates, www.manh.com: WMOS;
• FKI Logistex, www.fkilogistex.com: shipping sorter, conveyor, combiner;
• Accu-Sort Systems, www.accusort.com: scanners;
• Transnorm, www.transnorm.com: merges;
• Symbol Technologies, www.symbol.com: hand scanners;
• 3M, www.3m.com: carton sealer;
• Stewart Glapat, www.adjustoveyor.com: powered extendibles;
• Nestaflex, www.flexmh.com: gravity extendibles.
Of the 23 lines, 20 are used for direct loading of outbound trucks destined for specific store DCs. One line transports cartons to a repack area, one line transfers them to a laydown area where cartons are held for other DCs and one line moves them to a no-read/jackpot area for barcodes that cannot be read. Cartons exit off the end of the sorter if their destination line is full and circulate back to sorter induction for another divert attempt.
As DSI contracts more business, it will be able to add up to six more receiving doors and 23 more shipping doors to increase capacity. The W&H sorter is also designed to handle the store chain’s products on one side of the sorter and other products on the other side to accommodate future growth. FKI Logistex UniSort sorters also can integrate with other high-speed material handling equipment.
Equipment Financing: Three Steps to Ease the Credit Squeeze
By Edward A. Testa
If you’ve tried to get funding to meet today’s challenges, chances are you’ve felt the credit crunch. If you’re getting ready to look for credit, you may be in for an unpleasant surprise.
Whether used for implementing new technologies and equipment, realigning business operations or attempting to grow, credit is the lifeblood of business. And, many companies today are attempting to invest in solutions that promise to reduce sky-high operating costs.
The Federal Reserve’s July 2008 survey of senior loan officers revealed that 65% of banks tightened small-business lending in the last three months, a figure that’s up from 50% in the previous quarter. About 60% reported more stringent credit standards for large- and middle-market companies. On top of that, a very high percentage of banks had “increased spreads of loan rates over the cost of funds.” In other words, the credit squeeze is real, and there’s no sign it will change in the near future.
Even companies with gold-plated credit are reporting tighter underwriting standards and more stringent terms. While the credit picture is bleak, the funding faucet is not turned off. Money is still available to improve manufacturing and distribution processes. Here are three steps to take to make your operation more attractive to a lender:
1. Have a plan that takes into account a tight economy. If someone asked you how you planned to repay a loan or make lease payments for new equipment, what would you say? Many times, business owners and managers give some type of general response. What’s needed is a plan on paper that describes in detail exactly what you would do to produce the necessary revenue. Then, you’ll be ready.
Because businesses acquire new equipment to increase revenue or reduce costs, the following are several questions you should be ready to answer: If you are borrowing to invest in new equipment, why is it needed? What benefits will it bring? Will the investment replace outdated equipment or allow you to enter a new market? If you want to enter a new market, how do you plan to penetrate it? If the new equipment will allow you to reduce operating costs, what will be the actual savings?
Spending time developing your road map pays off. It’s a tool that assures lenders you have the cash flow to make your payments. It also enhances your credibility, which can have a positive impact on terms and interest rates.
2. Get your financials in order. Managers with budget responsibility are understandably frugal. They have what seems to be an innate ability to keep costs down. Unfortunately, however, accounting services are sometimes dismissed as unnecessary luxuries. Yet, without current financial reports, you can count on being turned down for credit.
Having adequate financial reports is helpful in another way. You’re going to have to complete a credit application. Current financials give you a leg up because you’ll have the necessary data at your fingertips.
3. Demonstrate that you are serious. We’ve had such a long run on easy credit that it’s difficult to come to terms with the fact that times have changed. Only a few years ago, lenders were giving money to almost any business for almost any reason and for almost any terms.
Those days are gone. Today, lenders want to know that business managers are serious, and they measure commitment in tangible ways. It’s in any borrower’s best interest to make sure the operation looks good. Things as basic as active participation in a trade association or a professional, detailed Web site show that you’re serious.
Operations that take these three, simple steps have a good chance of obtaining the credit they need to grow. The credit crunch has a Darwinian quality to it; the best prepared will thrive.
Edward A. Testa is vice president of sales at Greystone Equipment Finance Corp. in Burlington, Mass. The company specializes in equipment lending and leasing. Testa can be contacted at [email protected] or 888-894-4332.