Pallet racking systems have traditionally been made from either structural steel or roll formed components. Structural steel is thicker and far more abuse resistant, which is an important aspect in a very busy, high traffic department like dry grocery for example. Structural steel is typically more expensive than the roll formed racking components created from sheet metal bent into different sections to produce upright frames, beams and safety bars.
Key to any racking layout is preparing for properly sized aisles in the planning stages to minimize the risk of damage occurring during regular operation. Regardless, the possibility for damage remains. For example, lift truck damage to the storage racks typically occurs at the front post of the rack upright as careless or hurried operators swing into a slot to deposit or remove a pallet, accidentally connecting with the front or side of the upright post.
We attempt to minimize such damage by specifying angled deflector shoes be welded at the base of those posts, but “accidents” can still occur. Another location where abuse frequently takes place is at the lower beam levels, and typically, directly behind the operator. As he backs out of the slot with the pallet ahead as his main focus, damages occasionally occur to the lower beams across the aisle.
Some rack companies have recently suggested a “Hybrid” scenario that combines the strength and durability of structural steel and the economics of roll formed equipment as a cost efficient option.
With the lift truck as the main culprit causing damages, we suggest only the beam levels higher than 100″ above the floor be roll formed. The very narrow aisle (VNA) environment, where the mobile equipment is either turret trucks or man up order pickers, is another prime candidate for roll formed components as these machines are guided down the center of the aisle and do not come in contact with the racking.
The one true constant in the business world is change, and a company’s rack layout today may not reflect its requirements for the future. Flexibility and compatibility must rate as important criteria in the long term planning process of any project. If you start out with a mix of components there is a greater potential you’ll have problems with compatibility and thereby limit your flexibility for future changes down the road.
Typically, the greater the mix the greater the number of components to be manufactured, shipped and installed. Depending on the extent of the mix of between structural and roll formed, there could be double the number of components on site for any given project. Overall, this logically implies that the resources required to keep track of all of these items may outweigh the initial cost savings expected for the project.
A prudent approach to the “hybrid” option is to keep the mixture confined to areas such as Conventional and VNA, as an example, to keep project costs to an acceptable level in relation to the potential benefits to be derived.
June 23rd, 2009
Many companies approach freight bids on a lane-by-lane or ad hoc basis; however, many of our clients are seeing 5-10% savings in their transportation spend after undertaking comprehensive freight bids on their entire transportation activities. The process is intense, but generates payback in less than 2 months on the cost of running the comprehensive freight bid project.
Conducting a comprehensive freight bid begins with a request for proposal issued to qualified carriers for all inbound and outbound shipping lanes. Carriers bid on the lanes of their choice, and provide their price and capacity per lane (frequency of deliveries per day or week, number of trucks, truck size, etc…). This data is compiled and each carrier is ranked by shipping lane. The carriers are then informed of their ranking and relative distance behind the top ranked bid.
In a second bidding round, all carriers have the opportunity to tighten pricing in order to increase their chance of winning lanes. The number of rounds conducted is determined by the needs of each individual client; however 2-4 is usually sufficient.
Once the rankings are finalized, a routing guide, by shipping lane, is generated. Weekly tracking reports going forward ensure that transportation managers adhere to the routing guides and that carriers are delivering the promised capacities.
June 16th, 2009
This year’s show was a great chance to catch up with all the terrific people we work with in the industry, customers and suppliers alike. Too bad it coincided with the longest stretch of sub-zero temperatures Chicago’s experienced in over a decade!
If anything stood out at the show, it would be the expanding presence of automated materials handling solutions. Cranes of all sizes were on display, automated guided vehicles were whirring around their booth tracks and palletizing arms were building pallets across the show floor.
This last, automated palletization, had a few interesting solutions for non-homogeneous box sizes. One company, Axxium (www.axxium.com), was demonstrating how its palletizer took the cube dimensions of boxes arriving down a sortation lane and planned out its pallet building sequence by consequence. While the pallet build rate did not rival what can be achieved by a human being, it was an impressive display nonetheless.
Several operators that we had a chance to talk with about automation told us the key driver in studying the suitability of this sophisticated machinery was not so much about payback periods and reduced operating expenses, but eliminating job functions which are chronically difficult to staff - even as the job market weakens. It isn’t simply the savings accrued from replacing a labor function, but savings that come from the human resource department costs in constant recruitment and training of new staff to do the work. With the potential for tighter OSHA regulations on the horizon, the impetus to look seriously at automated solutions will rise.
January 26th, 2009
iGPS is a relatively new venture that is getting increasing attention in the supply chain industry. For those who haven’t run into them yet, here’s a brief primer on what they are doing.
The company rents pallets along the lines of the CHEP program. The difference is that iGPS rents plastic pallets - imbedded with an RFID chip.
The traditional benefits of a plastic pallet are in full force: the pallets are roughly 30% lighter than typical wood pallets, providing attractive savings potential in freight and they are impervious to contamination. Moreover, the iGPS pallets meet the GMA standards as well as ISO 8611-3 requirements and are capable of supporting loads up to 2,800 lbs. They are rackable and provide comparable fire safety performance to wood pallets.
This option deserves exploration from operators across a broad range of industries, but, of course, the cost-benefits case needs to be made. Like buying plastic pallets, renting them comes with a premium over their wooden counterparts.
August 8th, 2008
Thanks to all of you who made the KOM Klinic 2008, our 25th annual conference, such a tremendous success. The key to this event, year in and year out, is the opportunity for distribution managers and executives to spend two days collaborating, idea swapping and sharing experiences. And, of course, we squeeze some fun as well.
Our speakers almost exclusively come from the ranks of KOM clients so attendents learn from folks on the ground who are getting things done. These brave souls step up to the podium and make our event unique in the industry. Following are some key take-aways from each speaker:
- Allan Kohl, President & CEO of KOM, walked the group through a case study in automation design for a foodservice distributor where automation can be a tool to enable sales growth.
- Eberhard Braun of METRO Cash & Carry International GmbH gave an overview of the complex logistics network required to support 2,000 wholesale stores across 29 countries. For many North American based retailers, globalization is an inbound phenemenon. Eberhard showed us that the outbound side has many risks and challenges along with enormous opportunities as well.
- Klinic veteran Ron Cellupica, VP at Price Chopper drew on his 35 years in the grocery business to put Computer Generated Ordering in historical perspective. The immense power of data processing today makes complex decision making possible to automate and companies pursuing those possibilities are seeing benefits rapidly accrue.
- Scott Craig, Director of Supply Chain Services for Hannaford Brothers shared insights on how to develop an operating strategy culled from lessons learned at Hannaford as well as personal lessons in life.
- Pat Tagnani, Senior Director of Supply Chain Services for LMS, led a moderated discussion on the topic of fuel prices. Discussion groups came up with a number of ideas - some that were completely off the table just a few years ago - on how to manage our way through this new world of high energy prices.
- Another veteran of the Klinics, Richard Kochersperger, reminded us of the trends in retail and demographics that are shaping the nature of our businesses. Top of mind: staffing the supply chain in light of changing attitudes towards work in the young workers of North America.
- Charles Fallon, partner at KOM, gave a brief review of the productivity benchmarking survey for 2008. One highlight: the most productive warehouses invest in inventory control and minimize the number of problem orders they handle. Problem orders can turn a 200 cases per hour selection rate into 40 cases per hour.
- Ken Koester, Sr. E. VP of Affiliated Foods Midwest, gave a primer on building a compelling case for supply chain investment. From the perspective of a former CFO, Ken covered the basics in building a financial analysis and putting together the financial measures that will win board approval.
- Steve Creed, E. VP of Warehousing and Transportation for Associated Grocers of New England, walked the audience through his company’s recent move from a decades-old facility to a state-of-the-art 350,000 sq.ft. facility in Concord, NH. Steve shared strategies and tactics for managing a move which was completed in a weekend and maintained a 96% service level during that period and the first days following.
- Tom Frederick, Director of Distribution Services, Weis Markets shared with the group the experience of selecting and implementing a Yard Management System. The technical considerations and operating benefits of such systems were presented - Tom also gave some cautions on potential pitfalls to avoid.
- Clem DeLiso, President of Pioneer Cold Storage, teamed up with Nick Hill of Hill Energy Services to paint a picture of the current energy market in the United States and strategies to manage energy costs through load deferring and pricing contracts. As the cost of energy rises, operators must become increasingly sophisticated about their energy purchases and use management.
When not in session, attendents enjoyed the sights of Old Montreal in a collegial atmosphere. The weather was perfect.
June 16th, 2008
What’s the right distribution model?
The dot.com bubble might have burst some eight or nine years ago, but increasingly, companies are asking KOM International about e-commerce distribution. Either they are looking at e-commerce as a complimentary channel for their products or it is their sole means of selling to a customer. Sometimes, companies want a greenfield design for an exclusively e-commerce fulfillment center or they want to re-engineer an existing operation to incorporate an e-commerce space.
Like any distribution design, e-commerce fulfillment begins with modelling the entire operation from receipt to shipping. Product will be received, putaway, replenished into pick slots, picked, packed and shipped. At each stage, the appropriate design is a function of the physical characteristics of the operation it will support, not how the order got into the queue. In fact, it is a mistake to think that two e-commerce operations are alike and would have similar distribution designs. Consider an electrical supplies company doing B2B and a grocery company doing B2C:
The electrical supplies company might have much smaller orders (e.g., 1 - 2 lines) versus the grocery company (e.g., 20 - 25 lines). The electrical supplier deals with a single temperature zone in distribution and delivery, the grocer - three or more. Inbound, the electrical supplier might have almost everything coming in LTL whereas the grocer has truckloads of some very specific items (e.g., Coke and bottled water). On the shipping dock, the grocer is loading delivery trucks which run within a service area; the electrical supplier might be doing parcel and LTL shipments across North America. Both companies are dot.coms, but they would not look alike.
Two more thoughts:
1) Avoid re-inventing the wheel. The forebearers to the dot.com fulfillment center are consumer-direct catalog operations, home shopping network distribution centers and the folks who ship you the Magic Bullet when you phone the 1-800 number at the end of an infomercial. These businesses have been handling small orders across wide sku ranges for decades and the lessons they have learned can be profitably applied to e-commerce.
2) Because your website is full of bells and whistles doesn’t mean your operation must be. Often, merely saying “e-commerce” translates into expectations of million dollar budgets for automated picking and sorting technologies and miles of conveyor. Sometimes, that’s called for - but only when the numbers support it. Wonderful technologies exist to help companies manage throughput requirements and/or labor availability issues - but simple, conventional handling systems can be the optimal solution which get overlooked due to the high-tech aura associated with the dot.com business.
May 20th, 2008
Technological advancements in RFID and sensor technology have created an opportunity for distribution managers in managing their mobile equipment fleets. Equipment suppliers, like Hyster and Crown, are now offering “pay by the hour” programs which track equipment usage and charge hourly rates for that usage.
This option has merit for companies that struggle to size their fleet for operations that undergo periodic peaks in volume due to seasonality, intra-week imbalances and opportunity purchasing. A truck might sit idle 75% of the time making it an underutilized asset or, a truck might be overused during peak periods causing excessive wear & tear and maintenance costs. A “pay by the hour” program allows managers to right-size their fleet and mitigate those fleet management challenges. Currently, not many operators are asking for quotes on this option - but expect this to change as soon as folks become more aware that the option is available.
April 29th, 2008
In Canada, Boom, Bust & Echo (Amazon link here) is a bestselling business book that has people talking more than a decade after it was first published. The book is about demographics and how the demographic patterns in Canada and the United States are major forces in how businesses thrive or fail. As many of us know, the Baby Boomer generation is an enormous cohort with unprecendented buying power whose needs inform what companies bring to the marketplace. Following the Boomers comes:
1. The Bust Generation - a relatively small demographic sliver that is currently 25 - 40 years old.
2. The Echo Generation - a large cohort whose parents are the Boomer generation.
Many companies have considered the sales and marketing aspect of this demographic shift - the boomers are aging, rapidly reaching retirement in huge numbers - and with their buying power, looking for products and services that cater to their active-retirement lifestyles.
But an article in today’s Morning Newsbeat points out a poorly understood ramification of the coming Boomer retirement tsunami. The demographic group that follows boomers, the Bust generation, does not have sufficient numbers of workers to replace the Boomers - not only on the shop floor but all the way up the corporate ladder. The US government predicts that within 10 years, there will be a shortage of labor amounting to 10 million unfilled positions.
What this means is that companies must begin to plan for the shortage today. Retention programs and human-resource strategies that aim to keep quality employees are paramount. Folks who can run a facility, a department and distribution network will be fewer and farther between; the war for talent will be hard-fought. But companies preparing for this today will find themselves on much surer ground when the battle begins.
April 22nd, 2008
The Good
There are many clever things being done by companies to control fuel costs and this weekend’s edition of Parade Magazine contains one such example from UPS. UPS decided to change its delivery routing system such that it develops truck routes that minimize left turns. There is a safety benefit here, since minimizing left turns minimizes the number of times a truck must cross on-coming traffic. But minimizing left turns generates significant fuel savings due to reduced idle time at intersections. UPS engineers figured the company eliminated 3 million gallons of gas last year from making the change. It’s an idea worth exploring for any company that has alot of routes in urban areas.
The Bad
That said, operators must be cautioned not to become fuel price obsessed. Conferences across the continent are devoting huge amounts of time to highlight ways to cope in a high-fuel price environment - often getting down to brass tacks (like retrofitting trucks with equipment to make them more aerodynamic). Of course, the soaring price of fuel makes it difficult, if not dangerous, to ignore. However, we must always look at the total cost of a solution and not focus exclusively on minimizing the cost of one aspect of the supply chain: minimizing the total cost of getting product in your customer’s hands does not result from minimizing the costs of each distinct segment in your supply chain. When cost savings programs are proposed, the impacts on other departments cannot be ignored.
April 8th, 2008
By now, pretty much all internet users have used or been directed to Wikipedia - the on-line encyclopedia that grows by having users submit additions to its volumes. In fact, your children are propably using it to research essays they submit to school, much to the chagrin of teachers who would like to see, now and then, a student use a library!
Well, the Warehouse Education & Research Council have launched a supply chain specific tool called WERC-ipedia. It a fun and handy tool that grows when you the user contributes a word and definition. Administrators at WERC vet each submission for accuracy and clarity before publishing it on-line; so you can rest assured that the definitions are correct.
To test it out, I went through the section on Incoterms which can be confusing for many people. These are concepts that we all have to grapple with as supply chains become increasingly international and the drive to reduce costs push us to put every single cost item under the microscope. Sure, CIF terms might have the least number of hassles, but there may be savings to switch to CFR. And if you didn’t understand that last sentence, you need WERC-ipedia!
April 1st, 2008
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