Sortation Supports Parcel Distribution

Aug. 1, 2003
Whether it's Blockbuster or the U.S. Postal Service, parcel handling in distribution faces many of the same problems. Here are the rules that apply.

Maybe you work for Blockbuster or the U.S. Postal Service or some similar industry. Or maybe your company is introducing a new product that will need distribution. Maybe there's a change on the horizon - a switch from shipping palletloads to shipping eaches, or a change from the familiar carton to the unknown plastic shipper.

Now's the time to step back and look at the big picture. That means distribution, sortation and packaging, of course. But maybe it's time to evaluate how you collect and process information through the system.

What's first? The business decision. "Any type of capital outlay has to be a business decision, not just a technology decision," says Patrick Sedlak, vice president, Sedlak, a management consulting firm. "But in the last few years, technology - the use of improved bar codes or multiple bar codes - from shipper to shipper has really improved. The business decision is closer to technology than it used to be. So now it's not just the mechanical portion of the sortation, it's what you are doing with the information: how you are picking up the information and, ultimately, how you are sending that information back to the customer and the carrier, as well," Sedlak says.

Picking up the information through improved automatic identification techniques, for example, might involve parcel conveying through tunnels where scanners read all six sides of an item.

Part of the business decision is your company's distribution philosophy, says Jim Kitson, senior vice president, Crisplant Inc. "Do you have a push-based distribution or a pull-based one, or some combination of the two?" he asks.

But you don't get far into the decision-making process for any type of distribution before you face sorter selection. "Sortation is the key to the distribution center," says Kitson. "The sorting starts at receiving. It will affect how you put the product away or whether you will cross-dock it. Or maybe you do both."

This leads to another decision point: "Even if you put the product away, are you talking about reserve storage or the fulfillment of the active packing area?" Kitson asks. (This article will deal with sortation in general, with emphasis on small parcel handling. But most of the principles are the same, say the experts.)

The sortation dilemma

Even before you answer all the questions related to sorter selection (see the box on "Selecting a Sorter") you'll uncover certain attitudes and prejudices that can be found at any level of management:

-- Price is certainly a factor. The danger would be if price were the only consideration, overriding other factors.

-- Redundancy is another consideration. "Most customers have a certain comfort level when it comes to redundancy," Kitson says. He points out that some customers will not live with one sorter; they want two, in case one breaks down. On the other hand, redundancy in the control system is a must for other sorter users.

Kitson believes that too many sortation decisions are based on stereotypes. "In general, I think most of the marketplace says that a shipping sorter is necessarily a sliding shoe sorter. Yet we've done shipping applications with a tilt-tray sorter. There's no right way or wrong way; there are just different ways. What are the advantages and disadvantages?"

Think Crisplant and you think tilt tray sorter. But there's more to sorter selection than that. "We've found that the integration of the induction, the sorter and the discharge are critical," says Kitson. It's important to know how the equipment operates, its dependability, its uptime and its control system.

Kitson studied under Dr. John White and Dr. Paul Eaton at Georgia Tech. "One thing I learned from them is to understand what you're trying to do," he says. He points to the example of an expensive figurine. It's not enough to ship that item intact; the box it's packed in must remain undamaged, because it will be as much a keepsake as the figurine.

Other considerations

Throughput is the one consideration that all the sortation experts mention. "Throughput rates dictate the sortation technology that would apply and the type of sorter that would be used," says Jeff Campbell, sales manager, Government, Postal and Parcel Operations, Siemens Dematic. He adds: "After throughput rate, the next consideration is volume - how many parcels come into the facility. The next consideration has to do with where the distribution center will be located and what the labor rate of the workers will be. Equally important with the labor rate is labor availability, which will change, depending on the region of the country where the distribution center will be located."

One frequently overlooked factor is accuracy, says Campbell. "When an overnight courier guarantees delivery, this becomes a cost factor, and a higher level of automation can be justified." That is, when a delivery time is missed, it will cost the courier - so whatever automation is necessary to solve the problem can be justified.

Levels of automation

What would be an example of no automation? A good example, says Campbell, is a company that ships small boxes of jewelry. An employee reads the addresses of boxes that have been delivered to sortation in a container. Standing between two belt conveyors, the employee puts one group of addresses on one belt and another group of addresses on another. These belts dump the cartons into another container, which goes to another sort. The final sort goes into a mail sack and is sent to the local post office. A throughput rate on this kind of system would be about 25 parcels a minute, or about 1,500 to 2,000 parcels an hour.

However, says Campbell, a parcel sorter such as a tilt tray or crossbelt, using a manually-fed induct (such as the type used by magazine distributors or overnight couriers) is able to handle up to 2,400 to 3,000 items per hour. When a container of small parcels or bundles or bags arrives, an operator dumps it into a chute that feeds a tilt-tray sorter. This sorter, in turn, feeds into sacks by ZIP codes for delivery. This level of automation calls for tilt tray or crossbelt sorters. Advances in technology have increased the efficiency of the crossbelt sorter. The throughput has gone up because of more robust software and control, says Campbell.

Because of the advances in technology, you can put much more product through the system in a shorter period of time. Campbell notes that a fully automated system with automated induction and sortation could exceed throughputs mentioned previously. This would depend on the requirements, materials and volumes required.

The packaging factor

Packaging is another consideration that is undergoing a radical change. "The biggest change in the past four or five years is the replacement of boxes with bags for shipping," says Sedlak. "It used to be that corrugated paper boxes were used for presentation or protection. But the use of the plastic or Tyvek bag has increased tremendously because of the pressure on shippers to improve their bottom line. Because it's so much more cost-effective to ship goods in a plastic bag than it is in a traditional cardboard carton, shippers are taking a hard look at what belongs in a box and what can be shipped in a bag.

"In the old days, the box was used because the perceived customer wanted it in a box. No thought was given to product characteristics. Now customers are asking, how many orders can migrate to plastic bags? The bag is less costly and the shipping cost is less because the package is lighter," Sedlak says.

Of course, this radical a change in packaging will have an impact on the whole distribution system. CDs, DVDs and paperback books are the first items that come to mind when you look for examples of packaging in plastic. Next are prescription drugs sent through the U.S. Postal Service in paper envelopes.

One piece of advice from Sedlak: "Don't start with selection of sortation equipment and force-feed it."

Distribution and the Internet

Sortation is not the only decision you have to make in planning a parcel distribution center. A fairly recent option -- and opportunity - involves the Internet.

Sedlak speculates: "Suppose you're a company that markets through catalogs and you ship a lot of parcels to your customers, using different outbound carriers. The ability to get that barcode into all the carriers' systems and track that parcel to their door is very important. Shippers are doing that by integrating a single bar code into their systems and making the information available, either on the Internet or sending it by e-mail. So the Internet is something you have to think about when you install a distribution system. Information flow is what is going to separate you from competitors in the marketplace."

Managing parcel distribution

Using a Warehouse Management System (WMS) is the way sortation equipment understands the way to ship orders. Prashant Bhatia, director of project management, Manhattan Associates, describes the functionality that is being offered to the marketplace for order consolidation and shipping.

"The first step is selecting a number of different orders that the customer wants to process in a facility in a given point of time," says Bhatia. "We're going to go through and determine where the pick locations or the inventory currently reside in the warehouse in order to meet that order demand."

The WMS determines the criteria for picking and sorting the product. Criteria may be by customer or by how the order is being pulled or shipped. "The last component I want to mention is that the information is passed down to the material handling system," says Bhatia. "So the material handling system has information as to what carton it should be expecting on the conveyor, and--once the carton is received, and the system knows that the carton is physically ready to be sorted--what location it should be sorted to."

Selecting a Sorter

Jim Kitson, senior vice president, Crisplant Inc., lists a number of criteria you should employ when selecting a sortation system:

Are you handling full cases only? Or does the system also involve split-case handling?

Are you sorting individual items? What is the range of items - narrow focused like the Gap, with just soft goods, or more like Target, with a full range of soft goods, hard goods, big items and little items?

Who is your customer: a retail distribution center or an individual store? Or both?

What are your products? (The temptation is to start with this question, but the other considerations previously mentioned have to be addressed simultaneously.) What is the size and shape of the products? Are they fragile, like bottles of wine that can break? Or are they susceptible to scratches or dents?

How is the product being shipped? (See the section "The Packaging Factor" on new packaging techniques.)

Are you handling controlled substances, like liquor, cigarettes, or drugs? Are there rules you have to follow?

Do you have to deal with customs paperwork, locked areas or inspections?

Note: Products change. Packaging changes. Justification rules change. Regulations change. Be prepared!

Parcel Shipping Is Strategic, Says Survey

Thirty-three percent of logistics and shipping executives surveyed recently cited customer service as the most important reason they have improved or plan to improve their company's parcel shipping system.

The survey was conducted by ShipNow, an organization that develops enterprise-class manifesting systems for high-volume parcel shippers.

Regarding priorities, 77 percent of those surveyed said parcel shipping has become a strategic function. As for investment, 33 percent required an ROI of less than 12 months, and 28 percent wanted to see a return in 9 months.

Those planning to upgrade their parcel shipping systems cited the need for handling higher volume as the primary reason, followed closely by the need to share information, improve customer service and control costs. Other factors were dependability, the ability to handle international shipping, improving the returns process, and integrating manifesting with pick and pack.

Said Michael Kurgan, ShipNow's CEO, "The assumption that a parcel is going to arrive on time is a customer service mistake. Major parcel carriers have a failure rate of 1 to 1.5 percent regarding on-time delivery. For a company that ships 2,000 parcels a day, this failure rate means that 10 to 30 customers could be disappointed every day."

Additionally, Kurgan said, enterprise-class systems can be the key to more user-friendly returns/warranty procedures, especially when combined with the Internet.

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