Site: London Drugs Distribution Center

Pharmaceutical Retailer Discovers Payback with DC Carousel System

Application: Retail and pharmaceutical split-case picking for 61stores

Equipment: 24 horizontal carousels, pick and put lights

Summary: This DC doubled its capacity, quadrupled workers productivity, improved order accuracy and reduced shipping costs.

A highly flexible split-case picking system has allowed London Drugs, a pharmaceutical and variety retailer, to double its warehouse capacity for split-case picking, quadruple worker productivity and improve order accuracy while adding 4,000 SKU’s to their inventory.

Rapid growth in London Drugs new store locations created severe space limitations, tight delivery turnaround times, and cost headaches in distributing split-case quantities of merchandise. Using one central Distribution Service Center (DSC) London Drugs distributes 12,000 SKUs to each of its 61 retail store locations. Their previous method of picking from shelving and flow racks into totes on carts had become too time-consuming, labor intensive and mistake-prone. To continue growing their business they needed to increase their productivity, reduce picking errors and add more floor space.

Great Picking Flexibility
To improve their process, the London Drugs integrated 24 Remstar horizontal carousels in their DSC to provide high density storage as well as added productivity and accuracy for split-case picking of merchandise. The carousel system is flanked by flow racks and shelving for reserve product to support carousel replenishment and storage of full-case merchandise. On average, 510 lines are picked at each workstation every hour. The number of workstations in use varies from six to 12 depending on that day’s staffing and picking requirements.

Remstar’s Flexi-Workstation™ design allows organizations to dynamically change the number of carousels in each workstation to meet current work flow requirements. Seasonal variations in demand at London Drugs create major differences in picking requirements. This design permits distribution centers to staff picking operations at variable levels while controlling their labor costs.

“Designing a cost-effective system able to meet peak demands and seasonal lows was a challenge,” says Ken Booth, Manager, Split Case Distribution Operations for London Drugs. “Adding personnel during peak periods was easy with flow rack and shelving. Being able to get the benefits of automated carousels and the flexibility to double our staffing or cut it in half provides us with the best of both worlds.”

During periods of light demand when typically fewer workers are employed, the system permits one operator to handle as many as four carousels. This flexibility translates into being able to decrease picking labor by 50% while keeping efficiency at 100%.

Automation Becomes Vital
While planning out their growth strategy, London Drugs determined that if they could eliminate wholesale distribution to individual stores and instead distribute all products from the DSC they would save on time and labor. Doing so would remove storing and restocking pressure from retail stores who are not be able to physically fit all product received from the wholesaler on the shelves. To distribute all products fom the DSC, London Drugs needed to stock an additional 4,000 SKU’s, improve order turnaround times, and distribute to stores more frequently.

"The company wanted to provide its stores with more frequent deliveries," reports Booth. "As in many retail businesses, just-in-time receipt of the exact amount of new inventory allows stores to maximize retail space by eliminating off-shelf storage. Automating our process with horizontal carousels allowed us to add the SKU’s we needed and increase our store deliveries. At the store levels we’ve reduced our off-shelf storage needs, saving on labor restocking" reports Booth.

More split-case deliveries to stores—and automation incorporating high density storage and retrieval—were critical to reduce floor space and allow the DSC to carry more product lines in the future.

The solution of 24 Remstar horizontal carousels, each 50 feet long arranged in two duel-tiered 12-unit banks one directly above the other, was installed in the mezzanine area of the DSC which has a roof beam height of 18 feet. The carousel system's footprint occupies only 25% of the floor space that otherwise would have been required had the flow rack system been expanded to house merchandise now in the carousels.

A carousel control software package utilizes a TXP (transaction-processing) system. The software runs on PCs and interacts with the warehouse's existing WMS to access SKU locations on the carousels. All transaction information including inventory levels, pick lists and transaction logs are kept at the WMS host level.

"Higher picking efficiency and faster deliveries has helped make London Drugs more competitive, boosting sales and prompting the construction of additional stores," the Split Case Operations Manager stated.

Great Picking Flexibility
Coordinated with vehicle delivery schedules, merchandise is picked from the carousels in batched orders. Typically, batches consist of ten store orders each with an average of 315 lines picked from the carousel system.

"Our picking accuracy has sub-stantially improved by incorporating put and pick-to-light technology with the carousel system for each trans-action," Booth says. "This is due to the Put-lights on the batch order stations and the Light Tree displaying the “carrier number” and “quantity to pick” adjacent to the carousels.”

The operator picks the product from the carousel and then turns to the batch station put lights. The “Put-lights” on the batch station indicate how many items to place in each store’s tote bin. As the product is being placed in the correct orders, the carousels are positioning themselves for the next pick. It’s a very efficient process with almost no dwell time.

Order picking in the DSC is sequenced by the layout of merchandise at the retail stores. Picking by department and product size at the DSC, for example, facilitates later shelving in the stores. The carousels and workstations are assigned products by store departments – Pharmacy, Health & Beauty, Cosmetics, etc. Within departments, carousels are further segregated by product size so that shipping totes are filled with either large or small items.

During last year's peak pre-Christmas season, London Drugs’ carousel system filled about 2,000 totes a day. Remstar’s split-case picking system proved to be a productive and economical success for London Drug.

Optimizing the supply chain network at the picking sector has allowed London Drugs to improve its distribution center productivity, increase efficient store-door delivery, and improve its in-stock position at retail.