A highly flexible split-case picking system has allowed London Drugs, a Canadian pharmaceutical and variety retailer, to double its warehouse capacity for split-case orders, quadruple worker productivity, and assume distribution of 4,000 SKUs of merchandise that previously had been delivered by vendor/suppliers to its retail outlets.
Rapid growth in new store locations created serious space, turnaround, and cost problems at London Drugs, a well known retail and pharmacy operation. By tightening its supply chain control, London Drugs is realizing higher productivity at its distribution center as well as fewer stock-outs and more efficient handling of its more than 8,000 product lines carried by the company's single distribution service center (DSC).
London Drugs DSC provides health and wellness items, computers, electronics, cameras, beauty supplies, home ware, food, and a variety of other items to its 61 stores. The 4,000 additional SKUs brought in by the London Drugs distribution center brings to 12,000 the number of split-case line varieties now handled by this retailer at its suburban Vancouver, B.C., Distribution Service Center (DSC).
To increase productivity, capacity and efficiency, 24 Remstar horizontal carousels were installed for flexible picking. These carousels provided the high density storage as well as the added productivity and accuracy for split-case picking of merchandise that the company needed for effective delivery to the many retail outlets.
The DSC’s previous method of picking from shelving and flow racks into totes on carts had become too time-consuming, labor intensive and mistake-prone. Remstar’s Flexi-WorkStation™ design now allows for dynamic change in the number of carousels each work zone uses to meet current work flow requirements. Since seasonal variations in demand at London Drugs create major differences in picking requirements, the Flexi-WorkStation is an important aspect of the new picking system.
The Flexi-WorkStation design permits distribution centers to staff picking operations at variable levels, allowing them to ramp up to meet a spike in demand while, at the same time, retaining the ability to operate at efficient employment levels at other times throughout the year. At London Drugs, both picking and replenishment of the Remstar system is accomplished during normal work periods with one person handling every two carousels. However, 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% without losing the efficiencies.
"The company wanted to provide its stores with more frequent deliveries," reports Ken Booth, Manager of Split Case Distribution Operations for London Drugs. "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. Rapid turnaround from store order to warehouse shipment would help assure the success of JIT methods by minimizing the hours merchandise might be out of stock on retail shelves.”
"At the same time, we in distribution wanted to cut warehouse inventory carrying costs by receiving our bulk orders from vendors in smaller quantities at shorter intervals--every week or two rather than every month," Booth says. "This would compact storage in the warehouse, improve turns, and help us accommodate the 4000 new lines."
Automation Becomes Vital
Tightening the London Drugs’ supply chain obviously meant making more split-case deliveries to stores -- and automation incorporating high density storage was 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 dual-tiered 12-unit banks one directly above the other, was installed in a mezzanine area of the DSC having a roof beam height of 18 feet. The small footprint of these systems has saved 75% of the floor space that was otherwise wasted would if flow rack had been expanded to house merchandise now on the carousels.
Competitive Edge
Faster picking has allowed the DSC to schedule earlier deliveries in the some of the delivery areas. Many stores request and receive orders 6 days a week. However, in particular, one fast-response, prescription drug-only local delivery leaves at 9 am each day. Immediately after this run's picks are completed, the stores are sent electronic packing slips notifying the location of any shorted items. This allows the location to immediately contact third-party drug sources for alternate replenishment.
"The computer-driven horizontal carousels have drastically cut our split-case picking costs," Booth adds. "For an equivalent amount of merchandise, the system provides a picking rate 2.5 times faster with fewer than half the pickers. Without our improved split-case picking system, the DSC would not have been able to handle the increased business," Booth observes.
"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.
Greater Flexibility
When necessary, the system’s software at the DSC can engage full-case locations in the flow racks to accommodate a SKU’s increased sales velocity. For example, Photo Electronics products prior to Christmas will have a dramatically increased demand. The primary picking locations for those SKUs can be temporarily transferred from carousels to flow racks because the extra picking labor can be assigned a replenishment task simultaneous with picking.
Coordinated with vehicle delivery schedules, merchandise is picked from the carousels into order batches of up to ten 20"L x 15"W x 12"D, lidded plastic totes per station. Typically, batches consist of ten stores and the average store order contains 315 lines picked from the entire carousel system.
Carousel replenishment is automated and simply reverses the picking process. Each station processes 50 cases at a time, with the cases positioned on the Light Table and hand-scanned to associate their SKU numbers with their Light Table’s position and carousel locations. The carousels then rotate and stop in an efficient sequence, showing on the Light Tree and the Light Table which case fills which carrier location.
"Our picking accuracy has substantially improved by incorporating pick-to-light technology with the carousel system," Booth asserts. "This is due to the Put-lights on the order stations and the Light Tree displaying the “carrier number” and “quantity to pick” adjacent to the carousels. Also, there are “Put-lights” indicating the proper order quantity to place in each store’s tote bin.”
During last year's peak season, the carousel system filled about 2,000 totes a day. 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.