May 2007 | Case Studies | DC Solutions

Hello? I'd Like to Order a New Fulfillment System, Please

Tags: Warehousing

A new order fulfillment system keeps catalog retailer Redcats purring.

Over the past two decades, the retail industry has seen a huge increase in the use of non-traditional sales outlets - namely catalogs and web sites.

As the world's third-largest home shopping retailer, UK-based Redcats is more familiar with this change than most other retailers. The company, which operates in 18 countries including the United States, sells through a multi-channel distribution system combining catalogs, e-commerce, and specialty stores.

The company traces its beginnings to the early 1900s, when it sold watches by mail order. Since then, it has continuously developed and extended its merchandise line. For some 90 years, the company's flagship business—its Empire Stores catalogs—has featured family apparel as well as products for the home.

In the mid 1990s, Redcats expanded its offerings by introducing three French big-book catalogs to its UK audience: La Redoute, a women's apparel brand in France; Daxon, offering men's and women's fashions and home goods for seniors; and Vertbaudet, featuring clothing and footwear for expectant mothers, infants, and children.

With the addition of these new catalogs, the company found that its distribution center—which was built in 1973 in Wakefield, Bradford, UK—couldn't keep up with growing volume. Its picking, conveying, and packing systems were dated, and "we knew we needed to expand the DC and overhaul operations," says Andy Parker, head of engineering for Redcats.

In addition to overcoming the limitations of its dated DC, Redcats also wanted to design a system that consolidated transportation operations so all brands moved through one courier network.

Do Me a Favor

Two key factors worked in Redcats' favor: One, the company owned a substantial plot of land surrounding its existing DC. Two, Redcats' highly skilled IT and engineering departments could analyze a new system in-house and lay down plans for the future.

The Redcats team conducted a detailed investigation into what the new system should accomplish.

"We analyzed statistics on our brands, stock turns, inventory, and projected growth, among other factors," says Parker. "We used this data, along with CAD drawings, to write systems and operating specs for potential materials handling suppliers."

Specs in hand, Redcats began shopping for the right supplier with the right solution. After narrowing the list from 12 to five finalists, Redcats decided to partner with Dematic, a global supplier of automated materials handling systems for manufacturing, production, warehousing, and distribution, for a variety of reasons.

First was volume and speed. "We need to process up to 30,000 items per hour, and to sort parcels into 1,000 chutes, which is a big undertaking at high speed," says Parker. "It became apparent to us that Dematic was the only team that could handle this challenge." Redcats also appreciated the time Dematic spent on-site, analyzing the new system and meeting with the project team.

Going Backward and Forward

Another selling point was Dematic's suggestion to integrate "backward" as well as forward.

"In Dematic's view, our operations were only as effective as our picking system," says Parker. "Dematic wanted to design picking conveyor systems, vertical elevators, and feed and buffing systems that would batch the work and feed the sorter machines."

Using computer-generated operational research models, Dematic was able to validate the materials handling designs Redcats was considering. This approach also identified weaknesses, such as potential bottlenecks, in the system. Eventually the companies settled on a design that would not only address existing space constraints, but would allow room for future growth.

Redcats came to Dematic more prepared than most distribution center operations, notes Ken Ruehrdanz, business development manager for Dematic North America (previously Rapistan).

"Typically, distribution center teams have a clear understanding of their functional requirements, but not the solution," he explains.

"Redcats had a conceptual solution in mind - we reviewed alternatives, added enhancements, and validated performance."

The Nitty Gritty

The two teams worked closely together to hammer out all the details. The new design built out the existing building to 807,000 square feet to accommodate production for all the catalogs.

After the addition was built, Redcats and Dematic began the transition to the new system by moving over low-volume items first. During this time, Redcats ran the old and new systems in parallel, eventually moving completely to the new system.

Within the new facility, a sophisticated materials handling system keeps the high-volume business moving at top speed. The new equipment includes two high-speed cross-belt sorters and an integrated conveyor network into the picking system. Each carrier on the conveyor features mini-belts, which allow for tight centerlines from chute to chute. The result is a compact layout that occupies half the space of a tilt-tray sorter.

The new picking system encompasses three floors in the newly expanded DC. Pickers select items from shelving, apply a bar-code ticket, then place the items into tote boxes that also receive a bar-code label. The take-away conveyor speeds the totes to a 10-lane conveyor buffer area, where they are scanned and automatically sorted into batches.

Because system throughput was of utmost importance to Redcats, Dematic designed the system to include "luffing" conveyors, which feed goods either onto the upper or lower carrier, or the sorter, according to the item's destination. The sorter moves at speeds of up to 315 feet per minute, directing items into the proper chute in the packing area.

At the heart of the operation is a Dematic sorter control system, which integrates with Redcats' legacy warehouse management system. The sophisticated software helps the sorter manage the task of assembling the items needed for a particular customer to be delivered by courier.

The new system was built with an eye to the future. Redcats currently processes about 18,200 items per hour, but can handle up to 30,000 items per hour.

"Redcats wanted a design that could move into the future," says Ruehrdanz, "so we built scalability into the new system."

Just What They Needed

The new design and equipment meet all of Redcats' needs. "Our pick rates have increased to as many as 300 items per hour," says Parker, "substantially reducing our price per parcel."

Redcats also gained efficiencies in its delivery system. "We can now give most of our deliveries to one courier network," says Parker. "We get one-on-one customer interaction that way, as well as delivery cost savings. We've also been able to increase the number of next-day deliveries, which customers appreciate."

The new equipment has functioned reliably. "We log very high equipment up-time— better than 99 percent," reports Parker. "We also achieved fast ROI."

Today Redcats boasts a perfectly functioning DC, with 100-percent operational efficiency. Ruehrdanz credits this "clean slate" to the perfect marriage between Redcats and Dematic.

"A design that included single-sortation processes between fulfillment and shipping led to the right configuration," he says. "The design makes this solution powerful."

Also powerful is the system's growth potential. As Redcats' catalog business continues to expand, the DC will be ready to handle the additional volume.

"The building can be expanded if needed, and the new materials handling system can expand right along with it," says Parker. "In addition, we have been able to maximize our designs and turn them into an efficient operating system."

The new materials handling system puts Redcats in a position to focus on extending its brands, and increasing its prominence in the market, he adds.