REHAU: From Empty Shell to Functioning DC in Two Months

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How would you like it if you had two months to transform a slab into a world-class distribution center? Could you do it? REHAU did.

REHAU, a global polymer processing company with North American headquarters in Leesburg, Va., supplies the automotive, industrial, and construction industries. A core product, PEX piping used for heating and plumbing systems in residential and commercial construction, has historically been produced in Europe and shipped to a distribution center in Canada.

REHAU recently began manufacturing that product line in North America, with plans to transition to producing 90 percent of the North American volume in the United States and 10 percent in Europe.

The company planned eventually to move the product line from its Canadian DC to Cullman, Ala., in its automotive manufacturing facility where the PEX extrusion lines are being installed. Those plans changed, however, when analysis revealed that the company could provide better service to the majority of its customers by moving the product line immediately.

"The project, approved Nov. 10, was to be running on Jan. 5," explains Lance Self, who is responsible for operations development in North America. This would enable the move to be made during REHAU's slowest shipping period. But it also required "finding the facility, outfitting it, hiring and training the people, and moving the product" from Canada to Alabama in less than two months, Self says.

A building near REHAU's automobile manufacturing plant in Cullman was selected as the DC. The manager responsible for external logistics and shipping at the automotive plant assumed responsibility for the new DC.

Evaluating the Situation

To develop the concept for the new facility, Self flew to Canada and evaluated the existing operation. "We had outgrown the original facility and had contracted with a third-party provider to bring in containers from Europe, off-load them, store them, and release product to the REHAU facility in a kanban arrangement," Self explains.

After analyzing both operations, calculating space requirements, and developing a facility plan, "we realized it would be impossible to transfer and consolidate both operations without implementing an advanced warehouse management system (WMS)," he says. "With 2,000 materials in the warehouse, and people who have never seen the product before, we needed a good storage system managed by a WMS."

The next step was identifying which WMS to use. Picking optimization, variable storage. and customer-friendly labeling were the main focus of the comparison. The two options considered were the legacy proprietary warehouse management system in place at other facilities, and the warehousing module of REHAU's Enterprise Resource Planning system, SAP R/3.

In November, the project team, headed by Self, elected to go with SAP LES (Logistics Execution System), which includes SAP-Console to enable wireless data collection transactions. To assist with the system implementation and provide bar-coding and RF technology, REHAU tapped Catalyst International, a global provider of supply chain execution solutions based in Milwaukee. An internal SAP specialist from REHAU and a functional consultant from Catalyst began working on the new WMS in mid-November.

"During the week of Nov. 10, we configured all the RF transactions and the material master load," says Chris Gregory, Catalyst's project manager. "The next week, we did business process flow reviews, developed and implemented the RF transactions, and did testing."

The following week included issue resolution and more testing. During Week 4, documentation was developed and end users trained.

REHAU Team Gets Cracking

While the systems work was going on, the REHAU team negotiated the lease for the new facility, designed the interior, and met with rack suppliers. In addition, the manager of the new DC hired warehouse personnel, with the facility fully staffed right after Christmas. Some 80 percent of employees at the new facility moved over from REHAU's automotive plant.

Product coming to North America from Europe was redirected to the Alabama facility in mid-December. In addition, Self says, "we started moving B and C articles not needed to fill orders."

Sixty tractor-trailer loads of product were at the Alabama facility by Dec. 15. On Dec. 18, the last day for shipping from the Canada facility, remaining inventory was shipped to the new facility.

On Time, Within Budget

As of press time, the project was on time and within budget, Gregory notes. "The biggest success factor was that the REHAU team was 100-percent dedicated to this project. They worked on it 10 to 12 hours a day."

Another significant success factor was the small team. "This project is just small enough so that a core group of knowledgeable people could take the ball and run with it," Self says.

The move to the new facility will pay off in several ways. The manual data entry in the old facility has been replaced with a totally paperless system that will lead to increased productivity and reduced order cycle time. Customers will reap significant value, Self says. For example, every box will be bar-coded; every pallet will have a material list, enabling customers to find a particular material easily.

The new WMS will enable REHAU to combine orders into one delivery, picking orders so that heavy product is on the bottom of the pallet, with light on the top. "We'll also have a header label containing shipping information, and an order list with delivery information, so customers can see purchase order numbers for their delivery," Self says.

Getting the new DC up and running is just the first phase of the project, says Self. Phase two involves implementing the transportation module of the SAP Logistics Execution System and establishing milk runs within the United States. Implementation is tentatively planned for late in the first quarter of 2004.

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