September 2005 | Case Studies | DC Solutions

Design for the Future

Tags: Warehousing

A high-tech DC design lets Future Electronics increase staff productivity, consolidate orders more effectively, and increase pick rate.

Everyone loves a good challenge, including Montreal-based Future Electronics, an electronic components distributor ranked third in component sales worldwide. When the company determined it needed a new distribution center in the Memphis area, it challenged potential integrators to design the right DC to meet its growing needs.

Several companies jumped on the opportunity to respond to Future Electronics' Request for Quote.

"We made the contest open enough to allow designers to come up with the best design," explains Bernard Betts, vice president, worldwide distribution operations for Future Electronics. "We had only a few rules for the designers to follow—such as ensuring all our DC employees were in the front part of the building. Then we let them create the concepts."

In all, 12 different companies submitted designs. From these, Betts and his team categorized the designs as low-,medium-, or high-tech.

"When I presented the potential solutions to senior management, I thought we would go the medium-tech route," says Betts.

But in the end, the high-tech design's efficiency won out. WITRON Integrated Logistics Corp., headquartered in Germany, with U.S. operations based outside Chicago, delivered the winning design.

Today, Future Electronics' Memphis Area Distribution Center (MADC) is a state-of-the-art facility that has helped the company achieve substantial supply chain efficiency gains.

From the Ground Up

As an electronic products distributor, Future Electronics' SKU spectrum includes semiconductors, passive assembly components, wireless transfer media, electro-mechanical components such as LCD displays, and RFID solution modules from a variety of manufacturers. The company operates 157 offices in 35 countries.

The MADC covers the entire North American market, and is also the stopping site for rush orders and stocking orders going to Future's international DC. These products are shipped all over the world from the Memphis site.

When Future Electronics issued its design challenge, one requirement was that the new DC have 100-percent redundancy and the ability to handle 15-percent growth each year for five years. It also wanted the DC to handle up to 22,000 order lines daily.

To meet those requirements, WITRON designed the MADC to a size of 250,000 square feet, with 50-foot ceilings to accommodate 23 high-speed cranes. The new design also includes a complete IT and programmable logic control (PLC) system, and a pallet, tote, and carton conveyor system. At the heart of operations is the order picking system (OPS).

The WITRON system employs a pick-pack strategy. Goods are picked directly into the shipping unit according to a pre-calculated volume capacity. The OPS expands modularly according to growing demands, to meet Future Electronics' need to handle future growth.

Twenty-three pick stations are located on two levels within the DC. As SKUs in the tote warehouse fall below a defined level, the OPS replenishes from high-bay storage by retrieving the SKU and delivering it to a pick station employee. The employee then repacks the SKU from the pallet into an automatically provided tote.

The system delivers orders to pick station employees in a specified sequence. Buffers in the pick front optimize the supply of items at workstations so employees are never left waiting for an item. The buffers also minimize traffic volume within the DC, separating the warehouse from the pick stations. The totes' storage locations are connected to the pick workstations via a network of sequencers and sorters, providing a "goods-to-man" pick principle.

The OPS' design allows Future Electronics to continually monitor its real-time inventory. The system consolidates orders directly at the pick stations, which can be individually switched on or off due to the workload. This keeps the system functioning despite fluctuations in its 69,000 SKUs. In addition, the OPS directs picking assignments according to specific needs.

No Regrets

While building from the ground up is a huge undertaking, Future Electronics was determined to take its time with the project. "We were intent on not opening the facility until we were completely ready," Betts says.

In fact, the company chose to build when the economy was slow so that it wouldn't feel the pressure to rush through the project. "There's an opportunity to take on projects such as this when the economy is slow," says Betts. "If you do it at the right time, you get pricing and availability that might not exist during boom times."

To ensure it was ready to roll when the DC actually became operational, Future Electronics hired 100 people and practiced operations with dummy products for several months leading up to its go-live date.

The implementation began in July 2003 with the rack and conveyor installation, followed by the electric installation in October 2003.

"Our PLC and IT teams started commissioning the system in February 2004," says Juergen Dendorfer, project manager at WITRON. "Testing and training took place until August 2004, when the ramp-up phase started. It took 12 months to turn an empty building into an operational system."

One year later, Future Electronics is using the system to its full potential.

Because the WMS was built from the ground up, the slow implementation phase allowed Future Electronics and WITRON to work out all the bugs in the system.

"This was a specialized project, so we wanted to take the time to do it right," Betts says.

WITRON often designs a WMS for its clients, says Dendorfer. "We start with a base system and customize it as needed for specific needs," he explains. "We take the data from our customers and fit it into our system."

In addition to the WITRON WMS, Future Electronics also added a transportation management system, provided by Montreal-based Tecsys, that tells the WMS when to process an order based on travel time from the MADC to the customer. The system considers travel time, carriers, and logistics service providers when calculating the order process.

The new DC has garnered big improvements for Future Electronics. To begin with, it allowed the company to reduce the number of associates required to process orders.

"We can run two shifts five days a week," says Betts, "compared to three shifts six days a week at our old facility. We brought labor costs down substantially."

In addition, Future Electronics' pick rate has increased threefold—it is now at 60 picks per hour per employee.

And the company can now consolidate orders, something that was difficult to do in the past. "We have several customers who order multiple times a day and now we are able to consolidate those orders for them," Betts explains.

24/7 Support

Since going live at Future Electronics, WITRON has kept technicians on site to ensure that all continues to go well.

"The technicians cover the PLC and mechanic components, as well as the IT side," says Dendorfer. "We also provide 24/7 remote support from our service department in Germany and through our U.S. office in Illinois."

While the project was a huge undertaking, it was well worth it for Future Electronics, says Betts.

"If you are gutsy enough to build from scratch, you must be willing to spend the time to do it right. When the opportunity is right, it can pay off nicely," he says.