The prospect of losing three key employees to retirement proved to be just the impetus switch-maker Saia-Burgess needed to automate its warehouse operations.
David Maloney has been a journalist for more than 35 years and is currently the group 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.
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.
Crunch time
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."
Supply chain planning (SCP) leaders working on transformation efforts are focused on two major high-impact technology trends, including composite AI and supply chain data governance, according to a study from Gartner, Inc.
"SCP leaders are in the process of developing transformation roadmaps that will prioritize delivering on advanced decision intelligence and automated decision making," Eva Dawkins, Director Analyst in Gartner’s Supply Chain practice, said in a release. "Composite AI, which is the combined application of different AI techniques to improve learning efficiency, will drive the optimization and automation of many planning activities at scale, while supply chain data governance is the foundational key for digital transformation.”
Their pursuit of those roadmaps is often complicated by frequent disruptions and the rapid pace of technological innovation. But Gartner says those leaders can accelerate the realized value of technology investments by facilitating a shift from IT-led to business-led digital leadership, with SCP leaders taking ownership of multidisciplinary teams to advance business operations, channels and products.
“A sound data governance strategy supports advanced technologies, such as composite AI, while also facilitating collaboration throughout the supply chain technology ecosystem,” said Dawkins. “Without attention to data governance, SCP leaders will likely struggle to achieve their expected ROI on key technology investments.”
The British logistics robot vendor Dexory this week said it has raised $80 million in venture funding to support an expansion of its artificial intelligence (AI) powered features, grow its global team, and accelerate the deployment of its autonomous robots.
A “significant focus” continues to be on expanding across the U.S. market, where Dexory is live with customers in seven states and last month opened a U.S. headquarters in Nashville. The Series B will also enhance development and production facilities at its UK headquarters, the firm said.
The “series B” funding round was led by DTCP, with participation from Latitude Ventures, Wave-X and Bootstrap Europe, along with existing investors Atomico, Lakestar, Capnamic, and several angels from the logistics industry. With the close of the round, Dexory has now raised $120 million over the past three years.
Dexory says its product, DexoryView, provides real-time visibility across warehouses of any size through its autonomous mobile robots and AI. The rolling bots use sensor and image data and continuous data collection to perform rapid warehouse scans and create digital twins of warehouse spaces, allowing for optimized performance and future scenario simulations.
Originally announced in September, the move will allow Deutsche Bahn to “fully focus on restructuring the rail infrastructure in Germany and providing climate-friendly passenger and freight transport operations in Germany and Europe,” Werner Gatzer, Chairman of the DB Supervisory Board, said in a release.
For its purchase price, DSV gains an organization with around 72,700 employees at over 1,850 locations. The new owner says it plans to investment around one billion euros in coming years to promote additional growth in German operations. Together, DSV and Schenker will have a combined workforce of approximately 147,000 employees in more than 90 countries, earning pro forma revenue of approximately $43.3 billion (based on 2023 numbers), DSV said.
After removing that unit, Deutsche Bahn retains its core business called the “Systemverbund Bahn,” which includes passenger transport activities in Germany, rail freight activities, operational service units, and railroad infrastructure companies. The DB Group, headquartered in Berlin, employs around 340,000 people.
“We have set clear goals to structurally modernize Deutsche Bahn in the areas of infrastructure, operations and profitability and focus on the core business. The proceeds from the sale will significantly reduce DB’s debt and thus make an important contribution to the financial stability of the DB Group. At the same time, DB Schenker will gain a strong strategic owner in DSV,” Deutsche Bahn CEO Richard Lutz said in a release.
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.
Serious inland flooding and widespread power outages are likely to sweep across Florida and other Southeast states in coming days with the arrival of Hurricane Helene, which is now predicted to make landfall Thursday evening along Florida’s northwest coast as a major hurricane, according to the National Oceanic and Atmospheric Administration (NOAA).
While the most catastrophic landfall impact is expected in the sparsely-population Big Bend area of Florida, it’s not only sea-front cities that are at risk. Since Helene is an “unusually large storm,” its flooding, rainfall, and high winds won’t be limited only to the Gulf Coast, but are expected to travel hundreds of miles inland, the weather service said. Heavy rainfall is expected to begin in the region even before the storm comes ashore, and the wet conditions will continue to move northward into the southern Appalachians region through Friday, dumping storm total rainfall amounts of up to 18 inches. Specifically, the major flood risk includes the urban areas around Tallahassee, metro Atlanta, and western North Carolina.
In addition to its human toll, the storm could exert serious business impacts, according to the supply chain mapping and monitoring firm Resilinc. Those will be largely triggered by significant flooding, which could halt oil operations, force mandatory evacuations, restrict ports, and disrupt air traffic.
While the storm’s track is currently forecast to miss the critical ports of Miami and New Orleans, it could still hurt operations throughout the Southeast agricultural belt, which produces products like soybeans, cotton, peanuts, corn, and tobacco, according to Everstream Analytics.
That widespread footprint could also hinder supply chain and logistics flows along stretches of interstate highways I-10 and I-75 and on regional rail lines operated by Norfolk Southern and CSX. And Hurricane Helene could also likely impact business operations by unleashing power outages, deep flooding, and wind damage in northern Florida portions of Georgia, Everstream Analytics said.
Before the storm had even touched Florida soil, recovery efforts were already being launched by humanitarian aid group the American Logistics Aid Network (ALAN). In a statement on Wednesday, the group said it is urging residents in the storm's path across the Southeast to heed evacuation notices and safety advisories, and reminding members of the logistics community that their post-storm help could be needed soon. The group will continue to update its Disaster Micro-Site with Hurricane Helene resources and with requests for donated logistics assistance, most of which will start arriving within 24 to 72 hours after the storm’s initial landfall, ALAN said.