November 2004 | Case Studies | DC Solutions

Coty U.S. Warehouse Network Gets a Facelift

Tags: Warehousing

Coty U.S. went for the one-two punch by consolidating and modernizing at the same time.

Any company that has managed to grow over the last several years in the midst of an economic slump has something to cheer about.

The case of Sanford, N.C.-based Coty U.S., LLC, which makes fragrances, bath products, and personal care items, stands out. Not only has the company grown, but its unit volume has increased by 135 percent over the last five years.

While everyone at Coty is happy to be growing at a substantial rate, such rapid growth is not without its challenges. Serving department stores, mass merchandisers, national drug chains, specialty retailers, and food outlets, the company wanted to ensure it could continue to deliver top customer service while sustaining its healthy growth rate.

"We wanted to become more efficient and to meet the needs of our growing consumer channels," explains David Campbell, Coty's manager of logistics engineering.

To accomplish these goals, the company decided on consolidation as the best strategy, using a consultant to help integrate its two 100,000-square-foot distribution centers in Pennsylvania and Canada into the 500,000-square-foot Sanford DC. The result is a retrofitted DC that ships more than 3,000 orders each day.

Interestingly, Coty achieved this consolidation without having to expand the existing footprint of its Sanford location. With this strategy, Coty sought consolidated management and control of operations, along with reduced overhead and labor costs.

In addition, says Campbell, consolidation provided the company with the opportunity to modernize its facility. Anyone familiar with the old Sanford facility would barely recognize the new, retrofitted DC.

"We removed all the old material handling equipment and created an entirely new design and new processes," says Campbell.

The old DC involved paper-based order picking—by contrast, the new DC is a computer-directed order fulfillment center handling more than 4,900 SKUs. A distribution method of full-case shipping to retail DCs was changed to split-case and full-case picking of individual orders for shipment either directly to stores or to retailer DCs. And consolidated store orders are now sorted to an individual location with crossdocking technology.

"For most of our customers, we pick orders to the store level, which reduces full-case picking opportunities," says Campbell.

A warehouse control system (WCS) integrates with all the new equipment installed in the DC, and is now the heart of operations at the Coty facility. "The WCS has all the functionality of a warehouse management system (WMS), with the exception of handling inventory movement," says Campbell.

WCS-WMS Connection

The WCS—which was in place prior to the 2002 retrofit—interfaces with a Red Prairie WMS, which controls inventory movement. It also interfaces with a customer order entry system from American Software.

"During the design phase, we made a financial decision to develop a robust WCS that would interface with the WMS, order entry system, and order processing sub systems," says Campbell. "The WCS provided the necessary order tracking, order fulfillment, and management tools required to meet our throughput goals today and for the next five to 10 years."

The retrofitted DC has a high-tech feel, with orders processed using fast, modern methods. "Coty is truly a global company with manufacturing in the United States, United Kingdom, and France supporting our retail offerings in North America," explains Campbell. "Inventory is received into the WMS from our manufacturing facilities and moved into a storage location. Once received into inventory, the products are available for order allocation."

Coty processes three types of orders—full pallet, full case, and pick-and-pack. "The type of customer order dictates the type of order processing method—in theory a customer order could contain all three types of picking operations," says Campbell. "Pallet orders are processed by a forklift operator and delivered to the correct dock door. Full case and pick-pack orders are processed within the full-case or broken-case work centers, then routed via conveyor to the correct dock door."

Once at the dock door, shipping personnel palletize, shrink wrap, and load completed cartons onto the designated outbound trailer. Once all cartons and pallets are accounted for by order, final processing releases the trailer and sends an Advance Shipping Notice to customers.

Order picking is a pick-and-pass process—orders move swiftly through "intelligent zone routing" where the shipping container is carried only to those zones that hold products for the order.

For example, if an order carries a pick stored in the A-frame conveyor, it is diverted to that section. If not, it passes that section and proceeds to the next area.

Among the order-selection equipment is an A-frame package dispensing unit, pick-to-light flow rack modules to handle fast- and medium-volume SKUs, and two Remstar horizontal carousels with light-directed pick towers to handle slower-moving items. Other equipment includes print-and-apply technology, high-speed sortation units, and two full-case pick modules.

Handling Slow Movers

While only amounting to about two percent of Coty's total volume, slow-moving items in the old set-up led to substantial bottlenecks in order processing.

"We used to pick the slow movers from our finished goods warehouse," says Campbell. "If we had several fast movers but only one slow mover, we would set aside the order until someone could go to the warehouse and find the slow mover."

This caused substantial delays in order processing. Now, however, with the addition of horizontal carousels, slow-movers are handled as efficiently as other items in the DC.

To improve its method of handling slow-moving SKUs—of which Coty has hundreds—a workstation consisting of two 65-foot-long, five-shelf Remstar horizontal carousels was installed to handle the items. The units include light-directed pick towers.

Being able to put a lot of stock into a small footprint is one advantage of using the carousels. Coty often has as many as 700 to 900 SKUs in the carousels at any given time and a single worker can pick the products, cutting down on labor requirements. The average carousel workstation processes 100 to 150 orders per shift at an average rate of 37 to 56 lines per hour.

As part of the pick-and-pass process, the carousels are third in the picking sequence. Eight containers can be staged at the carousel station, where scanning a container label initiates carousel activity to present the location of the assigned pick. Indicator lights identify the carousel shelf and pick quantity. Lights also indicate which order/container is to receive the picked items.

Many people are surprised by the idea of using horizontal carousels for slow-movers, says Ed Romaine, marketing director at Remstar. He points to Coty's situation as "a great example of how carousels in high-density storage and throughput make it a perfect blend for slow-moving SKUs.

"Instead of having slow-movers stored on shelving spread over thousands of feet of warehouse floor space and throwing man-hours at picking, Coty elected to maximize floor space and labor by having the products come to the picker," says Romaine. "This increased productivity makes good business sense."

Like other types of material handling equipment in the facility, the carousels receive their intelligence from the WCS. When an employee scans a UCC 128 label on a container, the WCS activates the carousels and lights, and tracks inventory. This then provides the WCS with the information it needs to direct restocking.

Ready for Anything

Even with its busy operations, Coty performs an audit on all orders. "We have three types of audits in place," explains Campbell. "A random audit, which is used to gauge internal picking accuracy, a weigh-in-motion audit, and a 100-percent audit, which is used for new launches and provides the opportunity to manage sensitive accounts when necessary."

Since going through its retrofit two years ago, Coty has continued to enjoy rapid growth.

"Most of our long-term growth projections are three to four years ahead of schedule," says Campbell. "As a result, we have investigated and implemented expansions to our order processing system. Recently, we doubled the size of our A-frame and we are planning a third dynamic full case/broken case picking module to handle promotional business. We also are planning RFID enhancements in the next year."

The carousel systems are set up to handle the continued growth. "A carousel's length can be increased, and new carriers can easily be added for extra capacity," Romaine says. "Likewise, each shelf level on the carrier can be changed in minutes to maximize each carrier's capacity by increasing or reducing the height per shelf."

With its consolidated DC and use of smart, modern warehousing techniques, Coty has hit on the right formula for sustaining its growth well into the future.