James Cooke is a principal analyst with Nucleus Research in Boston, covering supply chain planning software. He was previously the editor of CSCMP?s Supply Chain Quarterly and a staff writer for DC Velocity.
Congestion should ease up this summer at Tween Brands' high-volume DC in Columbus, Ohio. But not for any of the reasons you might expect. The facility isn't gearing up for an expansion or anticipating a seasonal slowdown. Rather, it's installing a highspeed sortation system that will rev up throughput in the DC's receiving operations and free up some space.
Though it was built just five years ago, the DC is already feeling the squeeze. The facility supplies all of the stores in the Tween Brands network—Limited Too and Justice stores that sell clothing for girls ages 7 to 14. The retailer (formerly known as Too Inc.) has been engaged in an aggressive store opening campaign in recent years. At the time of its opening, the 365,000-square-foot DC served about 450 stores. Today, it supports more than 730 stores located across the United States and overseas.
To understand how the new sorter—a Dematic sliding-shoe system—will free up space, you have to know something about the facility's receiving process. Right now, when DC associates unload trailers, they first place cartons on the floor so they can scan them and re-label them if necessary. Once they're finished, they place the items onto pallets and introduce them into the receiving system. With the new sortation system in place, they'll be able to shift to a fluid unloading process that eliminates the need for a staging area. As trucks arrive, associates will unload merchandise directly onto the conveyor system, where the sorter will take over.
Along with freeing up space, the retailer expects the new sorter to speed up its receiving operations and take throughput to a whole new level. "In the time it takes a human being to read a label on a carton and determine where it needs to go, a high-speed sorter can have read and acted on hundreds of cases," says Matthew Dippold, the facility's manager of technical services. That's a big plus for a DC that handles 1.5 million units a week on average during normal periods, and 3.6 million units a week during peak season. The facility, which holds between 25,000 and 30,000 SKUs, based its expectations on its previous experience with sorters. It has one in its packing area and one in its shipping area, both of which were installed at the time of construction.
A welcome diversion
Originally used mainly by parcel carriers to sort packages by destination, sortation systems are fast becoming a fixture in retail distribution centers, where much of the activity is centered on breaking down incoming loads of merchandise and reassembling the items into new loads bound for individual stores. "Today, retail is a big driver for sortation systems because they're dealing with such a high volume of small parcels," says Tom Carbott, managing director of the conveyor product section of the Material Handling Industry of America (MHIA).
Sortation systems today come in a variety of types. Retail distribution centers—like the one run by Tween Brands—frequently choose the type known as the sliding-shoe sorter, which is designed to handle high volumes and can accommodate a variety of package sizes. Sliding-shoe models feature a series of linked slats with shoes on the side that move along with the slats. The shoes, which are capable of independent lateral movement, divert items, cartons, or totes down a conveyor chute.
Also popular these days are pop-up and push diverter sorters. Pop-up sorters typically feature wheels embedded below the conveyor's surface at the point where two or more lines meet. When a carton needs to be directed to another line, the embedded wheels pop up to nudge the carton to the right line. A push diverter, by contrast, uses an arm or pusher panel that swings or pushes out as a carton approaches to direct it to a different line or sorting bin.
If they're not handling fragile items, DCs sometimes install what are known as bomb-bay sorters, which open up like the bomb-bay door on an airplane's belly and drop the product directly into a tote or carton stationed beneath. Bomb-bay units are often used for relatively small products, notes Samuel Flanders, president of 2wmc.com, a warehouse-consulting firm in Durham, N.H.
Operations that are looking for speed often choose tilt-tray sorters. Items are placed onto trays that move along a circular path until they reach their destination. At that point, the tray tilts and the item slides off into an order container or sorting chute.
Regardless of type, today's sorters all move at a pretty fast clip. MHIA's Carbott reports that the average sorter moves at 400 feet per minute, while some models operate at speeds of up to 600 feet per minute.
When Bubba isn't enough
Though sortation systems are sometimes installed during the construction phase, many DCs start out with what consultant Paul Faber of Tompkins Associates calls "Bubba sorters," workers who sort the merchandise by hand.
But as throughput volume grows, they sometimes reach a point where they either have to expand or automate. That's when many turn to sortation systems. "I can handle the same volume at a higher speed with less square footage by having a good sortation system," says Tom Freese of Freese and Associates, a management consulting firm in Chagrin Falls, Ohio. "Sortation systems enable a distribution center to handle high activity without a build-up of employees or enlarging the warehouse's footprint."
Sortation systems come at a price, however. Equipment costs alone can run into the thousands of dollars. Models at the lower end of the price range, like narrow-belt sortation systems, cost around $100,000, according to Flanders. More sophisticated sortation systems, like tilt-tray or sliding-shoe sorters, can run upwards of $1,000,000 once all the design, installation, and software costs are factored in.
Equipment and installation costs vary according to the complexity of the sorting application. For example, if a company simply wants to sort products by the first three digits of the destination ZIP code, it can get by with a simple bar code and lower-end bar-code readers, says Freese. But if the company wants to sort by both shipment date and destination, it will require a longer, more complicated bar code, making it necessary to use top-of-the-line readers and printers.
Companies that ship thousands of orders per day may be able to use their sortation systems to reduce their transportation bills. Freese explains that sortation systems make it possible for companies to take advantage of "zone skipping" programs. For example, they could sort out items bound for the West Coast, load them into a truck, and move them via truckload service to a parcel carrier's hub on the West Coast for local delivery, thereby getting a break on parcel shipping costs.
Labor-saving devices
Whatever additional savings they may achieve, DCs that install sortation systems almost universally report a jump in productivity and labor utilization. That prospect led e-commerce specialist GSI Commerce to install a sophisticated sortation system in the 540,000-square-foot distribution center it's building in northern Kentucky.
Business has been growing at a 30-percent annual rate for the King of Prussia, Pa.-based company, which handles order fulfillment for more than 60 online retailers. As is common in the retail business, volume swells around the holidays. During the peak shipping season, the company processes more than 100,000 orders a day, reports Paul Chisholm, vice president and general manager of GSI's Louisville and Richwood, Ky., fulfillment centers. In the past, GSI has hired up 1,200 workers to handle the seasonal uptick. GSI hopes that with the sortation system in place, it will be able to avoid that expense in the future.
The new facility, slated to open this month, will actually contain two sortation systems working in tandem: a combination packing/shipping tilt-tray sorter from FKI Logistex and a sliding-shoe sorter from TGW-ERMANCO. Incoming items will first go through the tilt-tray sorter, which will direct them down the appropriate chute to a packing station, where a packer will deposit them in a box. From there, the unsealed boxes will travel by conveyor onto a mezzanine, where they'll enter the sliding-shoe sorter.
Acting on instructions from a warehouse control system, the second sorter will direct the carton down one of five lanes. If no special handling is required, the box will be sent to the first lane, where the packing slip will be created, void fill added, and a shipping label printed and applied. Orders that require gift wrapping will be sent to the second lane; fragile items will be diverted to the third lane; and items that must be shipped in plastic bags will be sent to the fourth lane. The fifth lane will be reserved for orders requiring problem resolution.
More demands, more sorters
Vendors say they're hearing a lot of stories like GSI's these days, which makes them bullish on their future. Sales of all types of sortation systems in the United States totaled about $750 million last year, according to Ken Ruehrdanz, a market development manager at Grand Rapids, Mich.-based Dematic Corp., which manufactures sorters. He predicts the market will soar as more and more DCs turn to sortation to boost productivity and meet growing demands from customers.
"I expect sortation requirements to increase in retail and wholesale distribution since the distribution requirements are becoming more complex," says Ruehrdanz. "There will continue to be more growth in the requirements to process smaller, split case orders more often. This equates to more sortation systems in the distribution center."
E-commerce activity remains robust, but a growing number of consumers are reintegrating physical stores into their shopping journeys in 2024, emphasizing the need for retailers to focus on omnichannel business strategies. That’s according to an e-commerce study from Ryder System, Inc., released this week.
Ryder surveyed more than 1,300 consumers for its 2024 E-Commerce Consumer Study and found that 61% of consumers shop in-store “because they enjoy the experience,” a 21% increase compared to results from Ryder’s 2023 survey on the same subject. The current survey also found that 35% shop in-store because they don’t want to wait for online orders in the mail (up 4% from last year), and 15% say they shop in-store to avoid package theft (up 8% from last year).
“Retail and e-commerce continue to evolve,” Jeff Wolpov, Ryder’s senior vice president of e-commerce, said in a statement announcing the survey’s findings. “The emergence of e-commerce and growth of omnichannel fulfillment, particularly over the past four years, has altered consumer expectations and behavior dramatically and will continue to do so as time and technology allow.
“This latest study demonstrates that, while consumers maintain a robust
appetite for e-commerce, they are simultaneously embracing in-person shopping, presenting an impetus for merchants to refine their omnichannel strategies.”
Other findings include:
• Apparel and cosmetics shoppers show growing attraction to buying in-store. When purchasing apparel and cosmetics, shoppers are more inclined to make purchases in a physical location than they were last year, according to Ryder. Forty-one percent of shoppers who buy cosmetics said they prefer to do so either in a brand’s physical retail location or a department/convenience store (+9%). As for apparel shoppers, 54% said they prefer to buy clothing in those same brick-and-mortar locations (+9%).
• More customers prefer returning online purchases in physical stores. Fifty-five percent of shoppers (+15%) now say they would rather return online purchases in-store–the first time since early 2020 the preference to Buy Online Return In-Store (BORIS) has outweighed returning via mail, according to the survey. Forty percent of shoppers said they often make additional purchases when picking up or returning online purchases in-store (+2%).
• Consumers are extremely reliant on mobile devices when shopping in-store. This year’s survey reveals that 77% of consumers search for items on their mobile devices while in a store, Ryder said. Sixty-nine percent said they compare prices with items in nearby stores, 58% check availability at other stores, 31% want to learn more about a product, and 17% want to see other items frequently purchased with a product they’re considering.
Ryder said the findings also underscore the importance of investing in technology solutions that allow companies to provide customers with flexible purchasing options.
“Omnichannel strength is not a fad; it is a strategic necessity for e-commerce and retail businesses to stay competitive and achieve sustainable success in 2024 and beyond,” Wolpov also said. “The findings from this year’s study underscore what we know our customers are experiencing, which is the positive impact of integrating supply chain technology solutions across their sales channels, enabling them to provide their customers with flexible, convenient options to personalize their experience and heighten customer satisfaction.”
Transportation industry veteran Anne Reinke will become president & CEO of trade group the Intermodal Association of North America (IANA) at the end of the year, stepping into the position from her previous post leading third party logistics (3PL) trade group the Transportation Intermediaries Association (TIA), both organizations said today.
Meanwhile, TIA today announced that insider Christopher Burroughs would fill Reinke’s shoes as president & CEO. Burroughs has been with TIA for 13 years, most recently as its vice president of Government Affairs for the past six years, during which time he oversaw all legislative and regulatory efforts before Congress and the federal agencies.
Before her four years leading TIA, Reinke spent two years as Deputy Assistant Secretary with the U.S. Department of Transportation and 16 years with CSX Corporation.
As the hours tick down toward a “seemingly imminent” strike by East Coast and Gulf Coast dockworkers, experts are warning that the impacts of that move would mushroom well-beyond the actual strike locations, causing prevalent shipping delays, container ship congestion, port congestion on West coast ports, and stranded freight.
However, a strike now seems “nearly unavoidable,” as no bargaining sessions are scheduled prior to the September 30 contract expiration between the International Longshoremen’s Association (ILA) and the U.S. Maritime Alliance (USMX) in their negotiations over wages and automation, according to the transportation law firm Scopelitis, Garvin, Light, Hanson & Feary.
The facilities affected would include some 45,000 port workers at 36 locations, including high-volume U.S. ports from Boston, New York / New Jersey, and Norfolk, to Savannah and Charleston, and down to New Orleans and Houston. With such widespread geography, a strike would likely lead to congestion from diverted traffic, as well as knock-on effects include the potential risk of increased freight rates and costly charges such as demurrage, detention, per diem, and dwell time fees on containers that may be slowed due to the congestion, according to an analysis by another transportation and logistics sector law firm, Benesch.
The weight of those combined blows means that many companies are already planning ways to minimize damage and recover quickly from the event. According to Scopelitis’ advice, mitigation measures could include: preparing for congestion on West coast ports, taking advantage of intermodal ground transportation where possible, looking for alternatives including air transport when necessary for urgent delivery, delaying shipping from East and Gulf coast ports until after the strike, and budgeting for increased freight and container fees.
Additional advice on softening the blow of a potential coastwide strike came from John Donigian, senior director of supply chain strategy at Moody’s. In a statement, he named six supply chain strategies for companies to consider: expedite certain shipments, reallocate existing inventory strategically, lock in alternative capacity with trucking and rail providers , communicate transparently with stakeholders to set realistic expectations for delivery timelines, shift sourcing to regional suppliers if possible, and utilize drop shipping to maintain sales.
National nonprofit Wreaths Across America (WAA) kicked off its 2024 season this week with a call for volunteers. The group, which honors U.S. military veterans through a range of civic outreach programs, is seeking trucking companies and professional drivers to help deliver wreaths to cemeteries across the country for its annual wreath-laying ceremony, December 14.
“Wreaths Across America relies on the transportation industry to move the mission. The Honor Fleet, composed of dedicated carriers, professional drivers, and other transportation partners, guarantees the delivery of millions of sponsored veterans’ wreaths to their destination each year,” Courtney George, WAA’s director of trucking and industry relations, said in a statement Tuesday. “Transportation partners benefit from driver retention and recruitment, employee engagement, positive brand exposure, and the opportunity to give back to their community’s veterans and military families.”
WAA delivers wreaths to more than 4,500 locations nationwide, and as of this week had added more than 20 loads to be delivered this season. The wreaths are donated by sponsors from across the country, delivered by truckers, and laid at the graves of veterans by WAA volunteers.
Wreaths Across America
Transportation companies interested in joining the Honor Fleet can visit the WAA website to find an open lane or contact the WAA transportation team at trucking@wreathsacrossamerica.org for more information.
Krish Nathan is the Americas CEO for SDI Element Logic, a provider of turnkey automation solutions and sortation systems. Nathan joined SDI Industries in 2000 and honed his project management and engineering expertise in developing and delivering complex material handling solutions. In 2014, he was appointed CEO, and in 2022, he led the search for a strategic partner that could expand SDI’s capabilities. This culminated in the acquisition of SDI by Element Logic, with SDI becoming the Americas branch of the company.
A native of the U.K., Nathan received his bachelor’s degree in manufacturing engineering from Coventry University and has studied executive leadership at Cranfield University.
Q: How would you describe the current state of the supply chain industry?
A: We see the supply chain industry as very dynamic and exciting, both from a growth perspective and from an innovation perspective. The pandemic hangover is still impacting decisions to nearshore, and that has resulted in a spike in business for us in both the USA and Mexico. Adding new technology to our portfolio has been a significant contributor to our continued expansion.
Q: Distributors were making huge tech investments during the pandemic simply to keep up with soaring consumer demand. How have things changed since then?
A: The consumer demand for e-commerce certainly appears to have cooled since the pandemic high, but our clients continue to see steady growth. Growth, combined with low unemployment and high labor costs, continues to make automation a good investment for many companies.
Q: Robotics are still in high demand for material handling applications. What are some of the benefits of these systems?
A: As an organization, we are investing heavily in software that will allow Element Logic to offer solutions for robotic picking that are hardware-agnostic. We have had success deploying unit picking for order fulfillment solutions and unit placing of items onto tray-based sorters.
From a benefit point of view, we’ve seen the consistency of a given operation improve. For example, the placement accuracy of a product onto a tray is far higher from a robotic arm than from a person. In order fulfillment applications, two of the biggest benefits are reliability and hours of operation. The robots don't call in sick, and they are happy to work 22 hours a day!
Q: SDI Element Logic offers a wide range of automated solutions, including automated storage and sortation equipment. What criteria should distributors use to determine what type of system is right for them?
A: There are a significant number of factors to consider when thinking about automation. In my experience, automation pays for itself in three key ways: It saves space, it increases the efficiency of labor, and it improves accuracy. So evaluating which of these will be [most] beneficial and quantifying the associated savings will lead to a “right sized” investment in technology.
Another important factor to consider is product mix. With a small SKU (stock-keeping unit) base, often automation doesn’t make sense. And with a huge SKU base, there will be products that don’t lend themselves to automation.
With any significant investment, you need to partner with an organization that has deep experience with the technologies that are being considered and … in-depth knowledge of the process that is being automated.
Q: How can a goods-to-person system reduce the amount of labor needed to fill orders?
A: In most order picking operations, there is a considerable amount of walking between pick faces to find the SKUs associated with a given order or set of orders. Goods-to-person eliminates the walking and allows the operator to just pick. I have seen studies that [show] that 75% of the time [required] to assemble an order in a manual picking environment is walking or “non-picking” time. So eliminating walking will reduce the amount of labor needed.
The goods-to-person approach also fits perfectly with robotic picking, so even the actual picking aspect of order assembly can be automated in some instances. For these reasons, [automation offers] a significant opportunity to reduce the labor needed to fulfill a customer order.
Q: If you could pick one thing a company should do to improve its distribution center operations, what would it be?
A: Evaluate. Evaluate the opportunities for improving by considering automation. In my experience, the challenge most companies have is recognizing that automation is an alternative. The barrier to entry is far lower than most people think!