October 16, 2017
material handling | AS/RS

A natural fit

A natural fit

As sales skyrocketed, a Japanese specialty skincare and nutrition company needed a better method for processing 4 million shipments a month. The natural solution: automated systems.

By David Maloney

What do kale juice and undergarments have in common? For starters, they're both part of the eclectic product mix at FANCL, a well-known Japanese consumer products company.

Founded in 1981, FANCL began its corporate life manufacturing and distributing natural additive-free skincare products and cosmetics by mail order. Gradually, more items were added to the mix, including health supplements, brown rice, the kale juice, green tea powder and other products with high nutritional value, and, of course, the undergarments. The company has also expanded its sales channels to include its own retail shops as well as convenience stores throughout Japan.

As FANCL expanded its product offerings, it also added distribution centers near its manufacturing plants to handle the new lines. But over time, the company became increasingly dissatisfied with the setup. Basically, it was finding that having multiple DCs with varying product mixes complicated the distribution process.

"As our product range and sales channels increased, we had to open other centers. We used to have eight distribution sites," explains Yoshiyuki Nakazawa, distribution division manager. "Customers would often order products that required shipping from several facilities, so they would receive multiple shipments. This was costly as well as inconvenient for our customers. We needed to improve shipping and efficiency."


To streamline its distribution process, FANCL decided to close the eight existing DCs and consolidate operations at a single distribution center located in Chiba prefecture, which lies in the Kanto region of Japan's main island. The new facility, known as the Kanto Logistics Center, is owned and operated by third-party logistics company Hitachi Transport System. FANCL's operation occupies three floors of the six-story building, which has a footprint of just 177,605 square feet. The client has six of its own employees on site.

In addition to boosting efficiency, FANCL's goals for the project included reducing its overall labor requirements and costs, while improving customer service and quality. Among other things, that meant abandoning the paper-based picking process used at the previous DCs in favor of automated fulfillment. "With our increasing volumes and wider product ranges, we felt we needed to automate things," says Nakazawa.

To design the material handling system for the new DC, FANCL turned to Daifuku Co. Ltd. After evaluating its client's requirements—which included engineering a system that could handle FANCL's full and eclectic range of products—Daifuku came back with a design that incorporates automated storage equipment, conveyors, sorters, pick-to-light systems, and radio-frequency identification (RFID) technology, all controlled by a warehouse management system (WMS) owned by FANCL.

Today, the company supplies about 2,300 different products from the Kanto DC, including cosmetics, nutritional supplements, brown rice, and kale juice. In all, the facility processes more than 15,000 cases of products daily, shipping goods to 205 of FANCL's own retail stores, to 250 retail partners, and directly to consumers. Over 90 percent of orders ship the same day they're received.

Receiving takes place in the morning at first-floor docks. Products arrive on plastic pallets or in plastic containers, which are color coded according to the manufacturing site. Once they're emptied, the pallets and containers are returned to the factories for restocking, and the color coding makes them easy to sort.

Forklifts supplied by UniCarriers unload pallets of inbound goods from trailers. Two large material lifts then raise the pallets to the fourth level of the building, where some items are stored in pallet racks. UniCarriers forklifts are also used on this floor to put away goods as well as retrieve pallets to replenish picking areas.

Individual totes are conveyed to a miniload automated storage and retrieval system (AS/RS) that is used to replenish picking areas. However, if the product they contain is needed immediately, the totes can be sent directly to picking zones.


Under the new system, order fulfillment is both swift and efficient. As consumers place orders (which they can do online or by phone), the orders are forwarded to the DC for processing. On average, 17,000 packages are shipped from the facility daily, with the volume peaking at 26,000 in the days following the release of a new catalog, which happens around the 20th of each month. Orders received by the Kanto facility before 6 p.m. can be shipped the same day.

As orders are received, packing lists and shipping labels are printed up and placed in a tote that will be used to gather items for the order. These order picking totes are half-blue and half-yellow, making them easy to distinguish from the source product totes, which are half-orange and half-yellow. Although the packing list rides along with each order in the tote, it is not used as a guide for picking.

Each tote also contains an RFID tag—in total, the facility uses more than 14,000 totes with RFID tags systemwide. Using a handheld reader, a worker scans the tag on the tote along with the shipping label and packing slip to marry all of the documentation to that tote. More than 150 RFID readers are scattered throughout the building to read the tags as totes progress through the facility.

The average order contains seven items, each of which may be stored in a different picking area (the facility has three picking areas, which are labeled A, B, and C). The WMS determines the picking sequence and the location of the ordered items in the picking zones, giving precedence to the items with the earliest expiration dates. Because many of the products have limited shelf lives, the facility practices strict first-in, first-out inventory management.

If the order includes any of the slower-moving C items, as about 20 percent of orders do, these are picked first. To select items in the C area, a worker equipped with an RFID reader scans the tote's tag. This brings up a display showing the items and quantity to pick as well as their locations in the adjoining shelves.

Orders that include heavier items start in a zone that uses pick-to-light technology. Workers select these heavy products from source pallets. Lights and quantity indicators linked to the pallets show which items to pick. To confirm the pick's completion, workers can use either traditional pushbuttons or pull cords that hang above the pallets, depending on their preference.

Orders that do not contain a C item or a heavy product start in the A picking area before moving on to the B area. In both the A and B areas, source products are stored in flow racks opposite the picking zones. These racks are automatically replenished from the miniload automated storage system via conveyor. Two shuttle cranes are deployed in the B area to automatically load the flow racks.

The A area holds 15 of the smaller, very-fast-moving SKUs (stock-keeping units), such as cleansing oils and face wash powder. The section also houses promotional merchandise, including calendars, diaries, seasonal items, and samples. "This area contains our most popular products, so usually almost every order will have one or more items from here," Nakazawa notes.

In total, the A area consists of three picking zones. Four totes at a time stop here, and a pick-to-light system provides directions for item selection.

After leaving the A area, the totes pass on to the B area for further picking if needed. Here, six order totes are conveyed at a time into each of the area's 28 picking zones. RFID readers at each tote location read the tags to determine which totes need products. A pick-to-light system then guides the selection of products from the source totes. Indicator lights above the six order totes also illuminate to show which totes should receive the items.

The picking zones here are outfitted with shelves above the staged order totes, where workers can store batch-picked products that will be needed for totes scheduled to arrive shortly and for future orders. The items are held there until the totes arrive, at which time lights will provide further picking instructions.

Workstations in this area feature an innovative type of labor management technology. Lights above the zone flash if the worker is picking too quickly or too slowly—a red light indicates that performance is too slow, while an orange light warns that the speed is less than optimal. In some cases, workers may move to other locations within the picking zones to help bring a line up to speed and avoid bottlenecks elsewhere in the system.


Once the orders are assembled, the totes are conveyed to inspection and packing areas. A sliding-shoe surfing sorter directs each tote to one of 60 packing stations (totes are assigned to stations based on the size of the shipping carton required for the order and the need to balance work). When a tote arrives at a pack station, an RFID device scans its tag to bring up a list of the items the tote should contain. The display also tells the worker which size carton—the facility stocks 14 different-sized boxes—to use for the order.

The associate next removes each item from the order tote, scans it for verification, and places it into the shipping carton. As each item is verified, its entry grays out on the packing station's computer screen. A chime sounds when the order has been verified as correct and complete. As a final step, the worker places the packing list that has been riding along with the order into the carton and applies the shipping label.

To accommodate orders that require specialty packaging services, such as giftwrapping and special labeling, the Kanto facility includes a value-added pack area. Meeting customers' expectations is very important at FANCL, so the company assigns its veteran workers to this station.

As a result of the automated systems and attention to detail, order accuracy is quite high. Nonetheless, FANCL continuously works toward the ideal of the "perfect order." For instance, cameras are positioned throughout the various workstations to capture work performance. "The cameras are not there to find fault, but to confirm quality and to resolve issues," says Nakazawa.

After packing, products move on declining conveyors to the first-floor shipping area, where another sliding-shoe surfing sorter diverts cartons to one of six lanes, each of which is assigned to a specific postal or parcel carrier. Overall, approximately 4 million shipments are handled monthly at the facility. As an indication of how quickly this all happens, most orders arrive in the shipping area within 30 to 40 minutes of the time the packing list and label were printed.


Since the new facility opened, FANCL has met its goals of improving customer service while providing more efficient distribution. The automated system has reduced shipping errors from four per 1,000 to less than two per 10,000.

The move has produced other benefits as well. Consolidating facilities and switching to paperless picking has eliminated 7.4 million paper documents annually, saving the company money while making the operation more environmentally sustainable. Transportation miles have also been reduced. The company calculates that by consolidating its distribution facilities, shipping efficiency has improved, cutting CO2 emissions by some 130 tons annually.

As for the material handling systems used in the new operation, FANCL managers say they are pleased with the equipment's performance. "Daifuku has been a good partner with the design, implementation, and ongoing maintenance of the technology. Daifuku has been able to respond incredibly quickly to any issues. The equipment has operated almost problem-free," Nakazawa says.

But perhaps the biggest testament to the project's success is this: FANCL says it has already started to plan for a new highly automated distribution facility to be built in the near future.

About the Author

David Maloney
Editorial Director
David Maloney has been a journalist for more than 35 years and is currently the editorial director for DC Velocity and Supply Chain Quarterly magazines. In this role, he is responsible for the editorial content of both brands of Agile Business Media. Dave joined DC Velocity in April of 2004. Prior to that, he was a senior editor for Modern Materials Handling magazine. Dave also has extensive experience as a broadcast journalist. Before writing for supply chain publications, he was a journalist, television producer and director in Pittsburgh. Dave combines a background of reporting on logistics with his video production experience to bring new opportunities to DC Velocity readers, including web videos highlighting top distribution and logistics facilities, webcasts and other cross-media projects. He continues to live and work in the Pittsburgh area.

More articles by David Maloney

Resources Mentioned In This Article

Material Handling Videos

Join the Discussion

After you comment, click Post. If you're not already logged in, you will be asked to log in or register.

Subscribe to DC Velocity

Feedback: What did you think of this article? We'd like to hear from you. DC VELOCITY is committed to accuracy and clarity in the delivery of important and useful logistics and supply chain news and information. If you find anything in DC VELOCITY you feel is inaccurate or warrants further explanation, please ?Subject=Feedback - : A natural fit">contact Chief Editor David Maloney. All comments are eligible for publication in the letters section of DC VELOCITY magazine. Please include you name and the name of the company or organization your work for.