STORE: VLMs Match Smoking-Fast Order Processing

March 20, 2013
Hauni Richmond reduced stockroom floor space by 65% while fulfillment is picking faster using half the labor.

Hauni supplies manufacturing technology for the international tobacco industry. The company’s Richmond, Va., facility focuses specifically on spare parts sales for North America, Canada and Mexico and machine remanufacturing for the world markets. At this site Hauni specialists completely dismantle and remanufacture machines using verified, overhauled and new OEM quality components.

When management needed to reduce the footprint of Richmond’s remanufacturing operations to make room for other revenue generating actives, the stockroom was faced with a 60% reduction in floor space. The stockroom already had a floor-to-ceiling man-up narrow-aisle picking system and there was little floor space and no additional shelf space that could be squeezed out.

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With more than $14 million dollars in parts inventory, the stockroom is the heart of the remanufacturing operation. In addition to Hauni Richmond’s three-aisle man-up narrow aisle order picking system, it used five vertical carousels to manage this inventory. Using a paper-based manual system, the order picker would work from a pick ticket and drive the order picker to the location of the part. 

The vertical carousels were managed in a similar manner. The paper pick ticket would tell the order picker which carrier number the part was stored on. The picker would enter the carrier number and the vertical carousel would rotate to the desired carrier for the order picker to retrieve the part.

Parts for multiple orders were picked into one large tote and delivered to shipping or kitting where the worker would sort through the box to create multiple orders. Using paper work tickets, the worker would match up the correct parts from the box to fulfill an order. 

“We couldn’t reduce our quantity of parts on hand without slowing down manufacturing,” says Clarence Cox, divisional manager at Hauni Richmond. “We had to find a solution to manage the same number of SKUs in 60% less space.”

Faster Picking with Less Labor

After researching the market, Hauni Richmond installed five vertical lift modules (VLMs) (Shuttle XP from Kardex Remstar) and integrated inventory management software (FastPic5) with SAP and an 18-position batch station. They also incorporated pick-to-light technologies and label printers to manage the stockroom inventory. 

The local Kardex Remstar distributor did the initial cube analysis and equipment installation and provided a parts slotting plan along with physical parts loading and long term support.

Since the installation, though order volume and SKU count have remained the same, the company is picking 75% faster with 47% less labor. With an average of 628 picks and 278 puts a day, Hauni Richmond performs over 223,000 transactions per year. 

“We’re easily picking the same number of orders in a quarter of the time,” said Cox.

The previous manual system required 17 workers and overtime was common. 

“Previously we were working an average of 3,200 overtime hours a year,” said Cox. The new automated system requires nine workers and virtually no overtime, providing a 47% reduction in labor.

The original stockroom occupied 9,069 square feet of floor space. The new VLM stockroom and bulk area occupies 3,180 square feet, allowing Hauni Richmond to free up 5,889 square feet of floor space. “We were required to reduce the stockroom footprint by 60%, and we exceeded the requirement by reducing our footprint by 65%,” said Cox.

Maintaining Accuracy

“Our accuracy has gone from 97% to 99%, but it requires a lot less effort to maintain it now,” says Cox. Previously, multiple orders were sorted from one box of picked parts and while accuracy was achieved, it was a manual and time consuming process. 

When receiving a part into the stockroom, the manual system would require a cycle count of that part within 24 hours to ensure the put location was correct. This was redundant, but necessary to maintain accuracy in the previous system. “With pick-to-light technology directing replenishment and the VLMs consistently cycle counting, our 99% accuracy rate is easy to achieve,” says Cox. 

System Flow

The stockroom manages more than 16,000 SKUs. The VLM area holds 15,000 SKUs while the bulk overflow area holds 1,000 SKUs. The stockroom fulfills two types of orders: sales orders for shipment to an end user and manufacturing orders for delivery to a manufacturing production cell. All orders are entered into SAP and downloaded into the inventory management software for fulfillment by the stockroom.

From the group of orders ready for fulfillment the VLM shuttle operator creates a batch of orders in the system. Up to 18 orders can be fulfilled at one time. Each position on the batch station is assigned a tote, for a sales order or for a manufacturing order. Each tote represents an order. 

The operator presses a button and starts the process. The five VLMs move to retrieve the parts required to fill the batch of orders. Each VLM is equipped with a TIC (transaction information center) that directs the operator to which machine to pick from first. A TIC is a light bar located on the front of the access opening that uses an arrow to pinpoint the exact location within the tray to pick from while displaying the quantity and part number to be picked. The operator picks the quantity indicated and pushes the confirmation bar underneath that TIC.

With the parts in hand the operator turns to the batch station to distribute the parts among the orders. A label printer and a “put” light are located above each tote. The printer prints an identification label for the operator to adhere directly to the part or bag and tag the part. The put light indicates how many of the parts to place into the tote. The operator individually labels the parts and places the quantity indicated by the put light into the tote. When complete he pushes the confirmation button at the batch station indicating he is ready to pick the next part. 

Once the parts required for each order have been fulfilled, the batch of orders is done and can be sent either to shipping for shipment to the customer or to kitting for delivery to the manufacturing floor.

If an order requires parts from the bulk area a paper pick ticket is generated and sent to the bulk picking area. The worker picks the parts required and delivers them to shipping or kitting to be matched with the parts from the VLM area to complete the order. The VLM area picks 99% of the parts required. 

Above and Beyond Picking

At the start of each day, in 35 minutes, the stockroom cycle counts 100 of the SKUs on hand. This helps to keep inventory accurate and prevents having to count all the parts at one time—for instance, at the end of the year. 

To replenish parts, the operator creates a batch of replenishment orders via the software. Each part to be restocked is treated like an order. When the batch replenishment begins, the VLMs move to present storage locations to the operator. In this process the TIC indicates to the operator the exact cell and how many parts to store. Just the opposite of picking, the operator picks from the batch station and puts into the VLMs as directed by the pick-to-light technology.

The initial project was justified and approved based on space and labor savings. “We reached our return on investment in 12 months, and plan to purchase four more VLMs this year,” says Cox.

Christina Dube is marketing communications manager at Kardex Remstar.

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