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.
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.
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."
BIG VOLUME, SMALL FOOTPRINT
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.
BEAUTY IN MOTION
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.
FINISHING TOUCHES
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.
ECONOMICAL AND ECO-FRIENDLY
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.
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.