In one sense, three employees at Saia-Burgess's Vandalia, Ohio, warehouse provided the impetus for dramatic changes in operations by leaving the company. The three announced that they planned to retire, and senior management, seeking to rein in labor costs, decided they would not be replaced.
That caused operations managers to look closely at what were largely manual operations and rethink how they handled order fulfillment. And the changes they implemented resulted in a leaner, more efficient warehouse operation.
A division of Johnson Electric, Saia-Burgess produces solenoids, switches, and motion solutions that are used by original equipment manufacturers in a variety of products, including ATMs, security monitoring systems, and medical devices. The Vandalia manufacturing facility, one of two that the company operates in the United States, includes a small onsite warehouse that holds parts and components needed for manufacturing as well as for filling orders from the company's 3,000 or so customers.
Until just over a year ago, items housed in the 7,000-square-foot warehouse were stored in bins on shelving. But that system had become increasingly unworkable over time. As the number of SKUs stored at the site swelled to 10,000, the warehouse ran up against a space shortage, which eventually forced the company to rent an offsite overflow storage facility.
At the time, picking was largely a manual process. When items were needed for manufacturing or order fulfillment, workers would select the products by hand using paper pick lists, filling one order at a time. But there were a couple of drawbacks to this approach. To begin with, it was time-consuming. The average order consists of 250 pieces, which meant workers spent a lot of time trudging up and down the aisles in search of various parts and components.
The process was also error prone. With workers picking to lengthy pick lists, it's probably no surprise that accuracy hovered below 94 percent. Beyond that, the work tended to be physically challenging. In some cases, workers had to climb a ladder to retrieve bins that weighed as much as 75 pounds.
On top of that, the process was inefficient. Because pickers were going out to retrieve items order by order, there was a lot of picking redundancy. "We would build one kit at a time working against a work order or a sales order," recalls Tim O'Brien, the company's materials manager. "But we would find ourselves going to the same bins several times a day."
The problem came to a head when three of the five pickers announced plans to retire, and word came down that no replacements would be hired. That meant managers needed to quickly come up with a way to accomplish the same amount of work, if not more, with less than half the previous staff. The only way to do that and still maintain high service levels, company managers concluded, was through automation.
Riding along on a carousel
After investigating several options, Saia-Burgess found a solution in horizontal carousels from Remstar. The units, which feature an oval track with rotating shelved bins that deliver items to the operator, promised to solve two of the operation's most pressing problems: space and labor. The four carousels Saia-Burgess installed can accommodate some 70 percent of the parts and components that used to sit on shelving; now, only the larger bulk items are stored on the shelves. Plus, with the new automated system, work that used to take five people can now be done with two. (The two remaining workers operate on different shifts, with one person primarily responsible for replenishing the carousels and the other handling picking tasks.)
Today, the picking process looks far different than it did a year or so ago. To begin with, the paper lists are gone. The entire picking process is now managed by sophisticated software. Remstar's FastPic software interfaces with Saia-Burgess's Movex materials requirement planning system to manage the picking within the storage carousels. The two software systems also keep track of inventories independently, which is helpful when it comes to verifying and cross-checking information on what parts and components are currently on hand.
Under the new system, the four carousels all feed into a single workstation, where the picker can batch pick items for up to six orders at once. This represents a huge leap in efficiency over the old system because it allows any SKUs needed for multiple orders to be picked at one time.
As parts are needed, a carousel spins to the first pick location. Indicator lights attached to the carousels direct the picking, telling the worker the exact locations of products within the carousel's bins and how many to select for each order. Lights at a put counter also illuminate, showing which of the selected parts go with each order. While the picker is busy selecting parts from the first carousel, other carousel units spin to locations holding parts for subsequent picks. Once an order is completed, the parts are loaded onto a cart for delivery to a specific assembly area or to shipping.
Faster, better, cheaper
In the year since the carousels were installed, Saia-Burgess has seen multiple benefits. To begin with, both its space and labor issues have been resolved. The carousels offer much higher-density storage than the shelves did, with the entire system occupying only 5,000 square feet. This has freed up around 2,000 square feet of warehouse space that the company has since converted to value-added manufacturing and an expanded shipping area. The denser storage has also eliminated the need for the offsite warehouse, saving the company $4,000 a month in rent.
In addition, the company has cut its labor needs by 60 percent with no sacrifice in accuracy. Picking accuracy currently stands at around 99 percent—a huge improvement over the sub-94 percent recorded with the manual system. The automated system also makes it easy for pickers to pull "hot" orders, like replacement parts that are urgently needed in the assembly operations. All the carousel operator has to do is push a button to interrupt the pick sequence so he or she can retrieve the needed part.
Safety has also improved because there's no longer any need for workers to climb ladders or lift heavy bins. Instead, work comes to them. And because fast-moving SKUs are placed in the carousels at kneeto- shoulder height, the need for bending is minimized.
Security has been enhanced as well. Since it began storing items in the carousels and not on open shelves, Saia-Burgess has seen a decline in loss and shrinkage.
Taken together, these benefits have added up quickly. Saia-Burgess reports that it saw a return on its investment in carousels in only 18 months.
Looking back at the decision today, the investment in carousels seems like a can't-miss proposition. But O'Brien reports that senior management initially had its doubts about whether this was the right solution for Saia-Burgess. That's all changed, he says. "We are getting by with fewer people now, which we could not do without the carousels. They now know that this project has been a success."