How do you expand your operations responsibly? That was the question facing the Burt's Bees supply chain group last year.
It was clear to the Raleigh, N.C.-based company that a move to a bigger distribution facility was in its future. Blistering growth had made that inevitable. In the past four years, sales of Burt's Bees' natural personal care products—lip balm, shampoo, lotions, and the like—had taken off, growing at an annual rate of 25 to 30 percent. The company had long since outgrown its distribution operations, which occupied just over a quarter of its manufacturing plant in Durham, N.C., forcing Burt's to use nearby third-party facilities as well as a small overflow warehouse in Butner, N.C., approximately 25 miles away.
Many companies in its position would have made the rounds of nearby sites, picked one, and been done with it. But for Burt's Bees, it wasn't so simple. As the company saw it, there was much more at stake than just finding a well-situated facility with enough space to meet its current and future needs. The site also had to measure up to Burt's Bees' environmental sustainability standards.
That was a non-negotiable requirement. Burt's Bees has been dedicated to environmentally friendly products and operations ever since founders Roxanna Quimby and Burt Shavitz (the bearded beekeeper on the logo) first began creating lip balm from leftover beeswax in 1984. Throughout its growth and eventual acquisition by Clorox in 2007, Burt's Bees has tried to remain true to this vision by promoting a corporate culture that focuses on what the company calls the "Greater Good." As an example, every employee from the CEO down to the hourly order picker has yearly sustainability goals tied to his or her pay. And no one bats an eye when the CEO himself periodically goes Dumpster diving to make sure that the company is not throwing away recyclable material. Any new distribution center—and its equipment—would have to reflect these core values.
The right site
Finding the right location was important enough that Burt's Bees decided to bring in professional help. It enlisted the aid of Tompkins Associates, a consulting firm that specializes in warehousing and distribution. Tompkins won the job not just because of its national reputation but also because it had a local presence—the firm has an office in Raleigh. The company's management liked the fact that they didn't have to climb on an airplane every time they wanted to meet with the Tompkins consultants, keeping both the project's cost and its carbon footprint to a minimum.
Tompkins' first step was to conduct a "sizing" exercise to determine precisely how much space Burt's Bees needed to support its current operations and to accommodate projected growth. As expected, the study revealed that the company was operating under severe space constraints. The exercise showed that Burt's needed 80,000 square feet for its distribution operations—twice the amount it occupied at the Durham plant—just to accommodate current demand. And that didn't take growth projections into account. When Tompkins added in the square footage needed to support growth, the total came to 140,000 square feet.
When the consultants reported the results to Burt's Bees' management team, they got an unusual reaction. "Their response was, 'Well, that's really going to increase our carbon footprint. How do we handle that? How do we minimize that?'" remembers Tompkins partner Dale Harmelink. "Right at the top, the response was more about the environment and the green side."
In the end, however, the obvious advantages of consolidating distribution operations in one location helped allay those concerns. Working out of multiple sites was fast becoming unsustainable on a number of counts. "It was impossible to control our service level and our inventory, not to mention our carbon footprint," says Paul Tartalio, senior vice president of Burt's Bees' Product Supply Organization. "We had trucks going all over the place. It felt like as soon as we left our little warehouse in Butner, we would decide we needed something back up there. We were going crazy."
Not only would consolidating operations simplify everyone's life, but it would also cut down on expenses. "With all of the distribution operations under one roof, we could save the costs of maintaining two facilities and transporting materials," says Tartalio. Plus, moving distribution out of the Durham site would allow manufacturing to move into the space vacated by distribution, helping it to ramp up production.
With the results of the sizing exercise in hand, representatives from Burt's Bees and Tompkins began to scout out facilities. Their search turned up a large distribution center about seven miles away in Morrisville, N.C., that seemed to fill the bill. By leasing one quadrant of the building, Burt's could obtain the space it needed for its current operations as well as room for expansion.
The Morrisville site met all of Burt's Bees' key requirements: It was large, it was relatively close to the manufacturing plant, and it could be retrofitted to meet Burt's Bees' standards for energy efficiency and environmental sustainability. Even so, the facility wasn't exactly appealing. "To put it nicely, it was dirty and dingy," says Tartalio. "But it was empty. And that was an important factor; we didn't have to throw anything out."
The right equipment
Once the deal was struck, Tompkins immediately turned to the next phase of the project: equipment selection. With business booming, Burt's Bees couldn't afford to wait long for a new distribution center to come on line. Although the project had a strict timetable, Tompkins was able to adhere to the schedule. On April 1, 2007, the consulting firm started the sizing project. By mid-May, it had begun purchasing the equipment. On Aug. 15 of the same year, the company moved into the new facility.
In keeping with Burt's Bees' core values, equipment was chosen with an eye toward accommodating growth and promoting environmental sustainability. Those considerations, for example, strongly informed the company's decision on what type of conveyor it would purchase. At its old facility, Burt's Bees used a line-shaft conveyor, which ran continuously—14 to 16 hours at a stretch. Knowing Burt's Bees' priorities, Tompkins suggested that the company consider a motorized drive roller (MDR) conveyor that would run only when needed.
Burt's Bees followed through on the suggestion, installing 288 feet of TGW-Ermanco IntelliRol conveyor in the building. Along the side of the conveyor, spaced 30 inches apart, are small sensors about the size of a human thumb. When they detect the approach of a carton or tote, the sensors activate the conveyor; otherwise, they deactivate the unit. That cuts down on noise and reduces power consumption. "With this feature, other companies have seen energy requirements decrease as much as 40 to 60 percent," says Harmelink.
Kevin Conklin, the company's director of fulfillment, confirms that Burt's has already noticed a difference in power use. "The previous installation was a line-shaft that ran constantly from switch on to switch off," he says, "so obviously you're going to see an improvement right off the bat."
The conveyor was also chosen for its scalability. "Another great feature of the MDR is its flexibility and adaptability," says Harmelink. "As Burt's Bees continues to grow and change, the company can add additional pick lines. It requires little maintenance and is modular so that it fits within the conveyor rail."
Along with installing the conveyor, Burt's Bees made some other technological enhancements to accommodate growth. For example, it installed Tompkins' warehouse control system and RedPrarie's warehouse management system.
Other upgrades were a little more low tech. To reduce the facility's energy consumption, for example, the company installed T5 fluorescent lights, which require less energy and are brighter than metal halide and high-pressure sodium lights or previous generations of fluorescent lights. Burt's Bees and Tompkins also had the walls repainted white, which would reflect light and make the facility brighter.
Taken together, these energy efficiency measures have had a measurable impact. "We've grown about 26 to 28 percent, but we used 2 to 3 percent less electricity in doing that," says Tartalio. "So we shipped out 25 to 30 percent more product, made 25 to 30 percent more units, and we've used less electricity."
"In a building with 140,000 square feet," adds Harmelink.
All of these changes have also made a big difference in the work environment. Today, the DC is no longer dirty, dingy, and empty. Instead, it is brightly lit, clean, open, and buzzing with activity as workers pack containers bound for destinations all over the world.
Not only is the Morrisville DC a hive of activity, but it's also a testament to the company's commitment to the environment, from the biodegradable products used to clean the floors to the four large recycling barrels that sit at the end of every other aisle—one each for corrugated, paper, stretch wrap, and wood. "Everything we do comes down to sustainability at some point in time," says Tartalio. "It's our core culture."
Tartalio admits that when he first joined Burt's Bees, he was skeptical of claims that the company could keep costs down without sacrificing its green ideals. But he's become a convert to the cause. "If you use old-school mentality, you're going to say, 'Wow, we can't do that,'" he says. "But if you dig deep, the proper way to do things can be cost effective."
Although this commitment to sustainability is part of what makes Burt's Bees unique, Tartalio believes that companies of all sizes and types can profit from the "lean and green" approach. He reports that Burt's Bees' own parent company, Clorox, is watching and learning from Burt's Bees' successes.