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PRODUCTIVITY SOLUTIONS FOR DISTRIBUTION, WAREHOUSING AND MANUFACTURING
PRODUCTIVITY SOLUTIONS FOR DISTRIBUTION, WAREHOUSING AND MANUFACTURING
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®

Adam Wood, director of logistics, Tognum America

July 2012 TOGNUM AMERICA: Around the world in one to three days 16
July 2012
TOGNUM
AMERICA:
Around the
world in one
to three
days 16
SPECIAL REPORT Top 20 SCM software suppliers 24 EQUIPMENT REPORT Palletizers: Putting product in its
SPECIAL REPORT
Top 20 SCM software
suppliers 24
EQUIPMENT REPORT
Palletizers: Putting
product in its place 28
BEST PRACTICES
Food and Beverage:
Keeping up with
the SKUs 36
REPORT Palletizers: Putting product in its place 28 BEST PRACTICES Food and Beverage: Keeping up with

Reduce Energy Use and Wear

With Automatic Speed Control

Why run your convey and sort system at top speed all day? Your operation’s activity goes up and down. With Automatic Speed Control, the convey and sort system adjusts its speed up or down to match the actual flow required. The speed of the merge, induct, sorter and take- away conveyors all adjust automatically to accommodate surges and declines in carton flow. In a typical system, the speed will vary from 250 feet per minute up to 540 feet per minute depending on the rate of carton flow. This means LESS: energy, wear, maintenance, and sound. In addition, Automatic Speed Control improves carton control, extends the life of your system, and reduces the overall cost to operate.

To find out how more about how to optimize your convey and sort operation visit www.dematic.com/na/automatic-speed-control or contact us at usinfo@dematic.com or 1-877-725-7500.

www.dematic.com/na/automatic-speed-control

UP FRONT Breaking news you should know

MHia and aiM co-sponsor allan gilligan award

The MaTerial handling indusTry of america (Mhia) and the association for automatic identification and Mobility (aiM) recently announced the establishment of a joint award honoring allan gilligan, a revolutionary developer of supply chain standards across multiple industries. The award will be presented to a member of the industry who has made outstanding contributions to the development of automatic iden- tification and data communications (aidC) applications. The recipient

of the award will be announced at the aiM industry awards during the aiM summit on sept. 10, 2012 in rosemont, ill. “aiM is pleased to collaborate with long- standing partner, Material handling industry for

this award,” said Chuck evanhoe, aiM board chairman. “aiM’s roots are in Mhi, and our organizations are synergistic enough to warrant significant recogni-

are synergistic enough to warrant significant recogni- allan gilligan tion for individuals who contribute to

allan gilligan

tion for individuals who contribute to both.” “Mhia is happy to jointly sponsor this award with aiM to honor allan gilligan. allan led committees and participated anywhere he was needed to bring together a wide range of interests in the name of cre- ating automatic identifica- tion standards that made the industry work better,” said george Prest, CeO of Mhia.

storopack to open division in Brazil

sTOrOPaCK, WhiCh sPeCializes in protective packaging and headquartered in germany, has announced the establishment of business operations in Brazil to serve the Brazilian market and other south american markets more effectively. The Packaging division not only offers protective packaging for flexible use such as air cushions, paper pads, Pu foam packaging systems and loose fill cushioning materials, but also system integration into customers’ packaging processes. The air cushion system and the paper pad system will initially be marketed into the region. The introduction of the packag- ing system for smaller requirements is in preparation.

avery Weigh-tronix acquires Central Weighing

avery Weigh-TrOnix liMiTed, a business unit of illinois Tool Works, has acquired Central Weighing limited. avery Weigh-Tronix is a global supplier of weighing solu- tions, operating out of Fairmont,

supplier of weighing solu- tions, operating out of Fairmont, research center focuses on robotics for human

research center focuses on robotics for human safety

as The neWesT siTe in the national science Foundation-funded industry & university Cooperative research Program for safety, security, and rescue research Center (ssr-rC), The university of north Carolina Charlotte (unCC) is the only center focused on robotic technologies for human safety in the materials handling, manu- facturing and healthcare industries. The unCC center is seeking to partner in research with manufacturing and materials handling indus- try stakeholders. Manufacturing and materials handling part-

try stakeholders. Manufacturing and materials handling part- the UnCC center focuses on robotic technologies for human

the UnCC center focuses on robotic technologies for human safety.

ners can join the unCC ssr-rC

as members to leverage and expand their investment in robots for automating assembly and materials handling processes.

in the world. The acquisition of Central Weighing will bring a new depth of innovative products, allowing us the opportunity to expand our global reach and bring added value to the market by leveraging existing distribution networks,” said Peggi Trimble, general manager of the industrial division at avery Weigh-Tronix.

manager of the industrial division at avery Weigh-Tronix. Minn., with head- quarters in the uK. Central

Minn., with head- quarters in the uK. Central Weighing specializes in

vehicle weighing, tracking and man- agement systems. it also offers a unique Web-based tracking and monitoring system developed for

municipal vehicles and the waste industry marketed under the exactrak name. “avery Weigh-Tronix is one of the leading industrial scale and weighing system manufacturers

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Modern Materials Handling /

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Handling Corporation 2012. All Rights Reserved. is a Registered Copyright in the United States and other

VOL. 67, NO. 7

Adam Wood, director of logistics, and his team at Tognum America implemented a new order fulfillment solution.

COVER STORY

SYSTEM REPORT

16 Around the world in one to three days

Tognum America’s service parts DC in Brownstown, Mich., services the company’s diesel engine needs worldwide with a new order fulfillment solution.

22 Bringing goods to the person

Tognum’s mini-load automated storage and retrieval and warehouse management systems are the primary engines behind order fulfillment in the Brownstown DC.

FEATURES

SPECIAL REPORT

24 Top 20 SCM software suppliers

Modern’s annual look at the supply chain software market revealed that the industry grew significantly in 2011.

EQUIPMENT REPORT

28 Palletizers: Putting product in its place

Here’s a look at how palletizing equipment improved productivity at these five operations.

FOOD & BEVERAGE

36 Keeping up with the SKUs

The food and beverage sector is ripe with unique and difficult materials handling challenges due in part to the growing number of product choices.

PRODUCTIVITY SOLUTION

40 Mobile computing equipment furnishes

real-time data

City Furniture installs forklift-mounted computers to track inventory in real time and honor its promise of same-day, seven-day-a-week delivery.

SUPPLEMENT

58 Lift trucks: Understanding the

economic lifespan

More savvy lift truck fleet managers are realizing that buying, renting or leasing practices set the tone for future savings.

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leasing practices set the tone for future savings. mmh.com ® PRODUCTIVITY SOLUTIONS FOR DISTRIBUTION, WAREHOUSING AND
leasing practices set the tone for future savings. mmh.com ® PRODUCTIVITY SOLUTIONS FOR DISTRIBUTION, WAREHOUSING AND
leasing practices set the tone for future savings. mmh.com ® PRODUCTIVITY SOLUTIONS FOR DISTRIBUTION, WAREHOUSING AND
leasing practices set the tone for future savings. mmh.com ® PRODUCTIVITY SOLUTIONS FOR DISTRIBUTION, WAREHOUSING AND
leasing practices set the tone for future savings. mmh.com ® PRODUCTIVITY SOLUTIONS FOR DISTRIBUTION, WAREHOUSING AND

®

PRODUCTIVITY SOLUTIONS FOR DISTRIBUTION, WAREHOUSING AND MANUFACTURING

SOLUTIONS FOR DISTRIBUTION, WAREHOUSING AND MANUFACTURING 60 seconds with Greg Aimi, research director, Gartner

60 seconds with Greg Aimi, research director, Gartner

DEPARTMENTS & COLUMNS

3/ Upfront

7/ This month in Modern

12/ Lift Truck Tips: Leasing

14/ Packaging Corner: Sustainability

41/ Special Section: Corporate Profiles

66/ Focus On: Overhead handling

70/ Product Showcase

74/ 60 seconds with

NEWS

9/ Permira funds to acquire Intelligrated

10/ Intelligrated aims at growth

11/ NACCO seeks to spin off materials handling business

Modern Materials Handling ® (ISSN 0026-8038) is published monthly by Peerless Media, LLC, a Division of EH Publishing, Inc., 111 Speen St, Suite 200, Framingham, MA 01701. Annual subscription rates for non-qualified subscribers: USA $119, Canada $159, Other International $249. Single copies are available for $20.00. Send all subscription inquiries to Modern Materials Handling, 111 Speen Street, Suite 200, Framingham, MA 01701 USA. Periodicals postage paid at Framingham, MA and additional mail- ing offices. POSTMASTER: Send address changes to: Modern Materials Handling, PO Box 1496 Framingham MA 01701-1496. Reproduction of this magazine in whole or part without written permis- sion of the publisher is prohibited. All rights reserved. ©2012 Peerless Media, LLC.

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Supply chain’s best friend IDEXX Laboratories, one of the world’s fastest-growing providers of diagnostic and

Supply chain’s best friend

IDEXX Laboratories, one of the world’s fastest-growing providers of diagnostic and information technologies for animal health, needed to analyze its global distribution to better serve the more than 50,000 veterinary practices that rely on their products.

Complex orders with diverse temperature requirements were processed manually as multi-box shipments, resulting in high operating costs and potential customer confusion. With our help, IDEXX implemented an automated system to consolidate orders, simplify material movement and decrease labor travel. Most importantly, it was done ahead of schedule and without interrupting their operations.

With a 27% improvement in labor efficiency, a 6% reduction in material costs and steep declines in shipping charges, IDEXX doesn’t worry about the health of its distribution center. Thanks to a successful partnership with FORTE, they can stay focused on improving the well-being of their customers. To learn more about how FORTE can help you, visit forte-fastest.com.

The fastest-growing companies are making distribution their FORTE.

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This monTh in modern

MICHAEL LEVANS

GROUP EdItORIAL

dIRECtOR

Recession’s silver lining

I n business, as in life, the tougher the chal- lenge you face the smarter you have to work to see your way through to a resolu- tion—and never did the readers of Modern meet a tougher battle than “doing more with less” during the recession. But according to the latest numbers that our research partners at Gartner dug up on the worldwide market for supply chain man- agement (SCM) software, it appears that many Modern readers have indeed learned some tough lessons and are preparing to be equal to the task, especially when it comes to working smarter by leveraging the enabling benefits of technology. According to Gartner, the worldwide market for SCM software applications, main- tenance and services came in at $5.2 billion in 2011, an extremely impressive 12.1% jump over 2010. In fact, Gartner has projected a compound annual growth rate of SCM soft- ware of 8.7%, which should just about double the size of the market over the next 10 years. So, what’s driving supply chain orga- nizations to finally be more aggressive in SCM software adoption? Gartner’s Chad Eschinger, vice president of supply chain research, tells our Bob Trebilcock this month that the recession era validated six key driv- ers that will continue to push the adoption of SCM software—and none of them should come as any surprise considering the lean environment Modern readers now find them- selves managing within. I’ll certainly won’t give away too many of the details that Trebilcock unveils starting on page 24, but I will touch on just one of the drivers that illustrate the broader supply chain thinking that is pushing warehouse and DC management professionals to bet-

ter integrate operations with that of other aligned supply chain functions—and soft- ware adoption is proving to be the enabler. Clearly, the top driver that caused the most acute pain point for many of our readers during the recession was the call to “improve customer service” while your equipment and labor budget were being cut to the bone. According to Eschinger, it will certainly remain the top reason companies will continue to invest in SCM software in the future. “More with less” is a mantra that stuck, but your internal and external customer demands are now greater than ever. According to Eschinger, what many sup- ply chain organizations learned once they adopted supply chain planning (SCP), more robust warehouse management systems (WMS), and started to integrate data from transportation management systems (TMS) was that they were able to improve demand planning, orchestrate supply chain activities, and gain an overall visibility that they had never had in the past. “The floods in Asia and the earthquakes put a spotlight on the complexity in today’s networks,” says Eschinger. And in turn, many users were able to manage the dis- ruptions, be more nimble, shift freight and inventory on a dime and keep costs in line all while meeting customer expectations. We continue to discover more and more case studies of readers who have used the management pressures of the recession as a springboard to software adoption, and the Gartner numbers certainly validate that fact. And when you think about it, the recession has generated many silver linings; but the fact that we’re working smarter through technol- ogy may have the longest-lasting benefit.

Member

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AUTOMATION Follow Modern Online facebook.com/mmhmagazine Twitter | @modernmhmag Web | mmh.com Permira funds to acquire

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Permira funds to acquire Intelligrated

LEADING AUTOMATED MATERIALS HANDLING SOLUTIONS PROVIDER HAS ENTERED AGREEMENT TO BE ACQUIRED BY A HOLDING COMPANY IN A TRANSACTION AT A VALUATION IN EXCESS OF $500 MILLION.

INTELLIGRATED, A LEADING North American-based provider of auto- mated materials handling solutions, services and products, announced that it has entered an agreement to be acquired by a holding company owned by the Permira funds in a transaction at a valuation in excess of $500 million. Intelligrated’s manage- ment, led by founders Chris Cole and Jim McCarthy, will maintain a signifi- cant stake in the company as part of the transaction and will continue to lead the company. Intelligrated designs, manufac- tures and installs complete materials handling automation solutions for the warehousing, distribution, consumer product manufacturing, postal and parcel markets. Solutions include conveyor systems, sortation systems, palletizers and robotics, order fulfill- ment systems, warehouse control software and advanced machine con- trols. Intelligrated will remain head- quartered in Mason, Ohio, a suburb of Cincinnati, and has operations throughout the United States and in

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Canada, Mexico and Brazil. Intelligrated is No. 10 on Modern’s Top 20 Systems Sup- pliers list reporting $435 million in 2011. According to company offi- cials, the Permira funds’ invest- ment will support the company’s growth opportunities, including further penetration of its customer base in North America, emerging markets expansion in partnership with its global customers, increased product offerings and global capabili- ties through investment and selective M&A. “Intelligrated is well-positioned to capitalize on the growing demands on companies to increase supply chain efficiency and better serve the evolving needs of their custom- ers,” said Richard Carey, partner and co-head of the Global Industrials Group at Permira. “Already a market leader, the company is continuing to grow, as evidenced by the ongoing expansion of the facilities in Mason, which will enhance Intelligrated’s

ability to provide advanced solutions for its blue-chip customers.” John Coyle, partner and head of North America at Permira added, “This investment fits squarely into the Permira funds’ strategy. It involves a team working across three of our core investment sectors—industrial services, consumer and technology— and is wholly consistent with our approach in North America, which is to find leading companies in the U.S. who can utilize our unique ability to leverage our deep ties in Europe, Asia and Latin America to realize their international potential.” “This is a very exciting new chapter for our company, and we are thrilled that a world-class in-

MODERN MATERIALS HANDLING /

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and for our request your Talk

Sales to next a

one

Engineers

of quote

frEE

project!

vestment firm such as Permira has recognized the growth potential in our business,” said Chris Cole, CEO of Intelligrated. “This is a strong endorsement for Intelligrated and our highly talented workforce, and we look forward to taking advantage

of the unique global perspective and industry insight that the Permira funds will bring.” The transaction, which is subject to regulatory approvals and custom- ary closing conditions, is expected to close in the third quarter of 2012.

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MODERN MATERIALS HANDLING

ANALYSIS

Intelligrated aims at growth

By Bob Trebilcock, Executive Editor

THE MATERIALS HANDLING INDUSTRY was in the news recently with an acquisi- tion valued at more than $500 million. This time I’m not talking about Amazon’s $775 million acquisition of Kiva Systems. Rather, it was the announcement on June 8 that Intelligrated has agreed to be ac- quired by a holding company owned by the Permira funds. The deal is expected to close in late July or early August. While Kiva has seemingly gone quiet since the Amazon acquisition, leading

many in the industry to wonder whether

it will remain in the market, Intelligrated’s

management remains firmly in control of the company’s operations, said Chris Cole, Intelligrated’s CEO. “I want to make very, very clear that the company man- agement remains very heavily invested in Intelligrated and that will continue,” Cole told Modern. “There is no change in the operations of the company.”

Instead, the deal represents a recapi- talization that will give Intelligrated the financial strength and international ex- perience to grow “as we want to grow,” Cole said. In many ways, Intelligrated’s is a story of rapid and noteworthy growth. The com- pany was launched on Sept. 4, 2001, one week before the 9/11 attacks. Since then,

it has grown into a serious international

player. By Modern’s estimates, Intelligrated

is likely the No. 2 systems integrator in

North America behind Dematic. Along with a significant presence in Central and South America, Cole said the company has had real success north of the border with companies like Canadian Tire and Forzani.

“Frankly, we’ve been very popular with U.S. multi-nationals expanding into Canada,” he said. He expects to approach or top $500 million in worldwide sales in 2012. That growth led to the change of financial partners. Along with capital from Cole, co-founder Jim McCarthy and the Intelligrated management team, the start-up was funded by Gryphon Inves- tors. Additional capital was added in 2006 by Tudor Investors. Nearly 11 years later, Gryphon remained an investor. That’s a lifetime in the investment world. What’s more, Intelligrated was the largest investment in Gryphon’s portfolio. To take the company to the next level meant bringing on investors with more financial strength. Enter Primera. “They’re

a $26 billion family of funds,” Cole said.

“They not only have the financial strength

to help us grow, they have resources and

a footprint outside of the U.S. that can help us expand our geographic reach.” What’s next for Intelligrated? Cole

m m h . c o m

outlined several plans:

International expansion: With Europe slowing, Intelligrated plans to expand its existing presence in Latin America and look for opportunities in Asia. Expansion of services: Expect to see more of an emphasis on concepting, analysis, design and after-market services. “Right now, we’re running the maintenance departments for some of our customers,” Cole said. “That’s something we couldn’t provide as a start-up company. Now that we have an installed base, we can flesh out those services.” Expansion of hardware and software offerings: “I think we have a very strong product line, but there are segments and niches that we don’t fill,” Cole said. “We’ll continue to look for ways to broaden our appeal.” While Cole declined to specify the hardware and software technologies he’s interested in adding to Intelligrated’s portfo- lio, don’t be surprised if there are acquisi- tions in the future. With 10 years behind him, where does Cole want to see Intelligrated 10 years from now? “What I want to see 10 years from now is what I want to see now, which is to be a trusted partner for our customers,” he said. “We want to give them the best materials handling system to drive their bot- tom lines.”

NACCO seeks to spin off materials handling business

HYSTER-YALE MATERIALS HANDLING announced that it has filed a registra-

tion statement with the U.S. Securities and Exchange Commission relating to

a proposed spin-off by NACCO Indus-

tries of its materials handling business to NACCO stockholders. Hyster-Yale Materials Handling, as an independent public company, will own and oper-

ate the NACCO Materials Handling Group (NMHG) subsidiary of NACCO Industries. “Hyster-Yale Materials Handling is

a strong, established company, with

leading brand names and an experi- enced management team. As a result of the spinoff, Hyster-Yale Materials Handling will have greater flexibility to pursue strategic growth opportunities such as acquisitions and joint ventures in the materials handling industry,”

September 9-12 Park City, Utah

said Al Rankin, chairman, president and CEO of NACCO Industries. He added that the spinoff will reinforce management’s focus on serving each of Hyster-Yale Materi- als Handling’s market segments and customer application needs. Following the spinoff, Rankin will become the chairman, president and CEO of the new company. Michael Brogan, current and continuing presi- dent and CEO of Hyster-Yale Materi- als Handling’s operating company, NACCO Materials Handling Group, will also be an officer. It is expected that the spin-off will be completed during the third quarter of 2012. In Modern’s annual lift truck rank- ing, NACCO Industries reported $1.8 billion and was ranked No. 4 on last year’s list.

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lift truck TIPS

Leases give lift truck customers more leeway

Traditionally viewed as restrictive, new finance practices tailor leases to customer needs.

By Josh Bond, Editor at Large

leases to customer needs. By Josh Bond, Editor at Large finance partner to adjust lease payments

finance partner to adjust lease payments or lease term on the fly, says Goodwin. “A customer should never be afraid to call us and no- tify us of any change,” she says. Many finance partners now offer the option to bill by the hours of use, and might contract for 12,000 hours that could take anywhere from 40 to 70 months to accrue. In one variation of the hourly lease model, an 80% minimum usage charge is reconciled annually, meaning a customer with a lift truck that goes unused in any given month will pay zero dollars for that month. Though heavily depen- dent on robust fleet data measurement, the hourly lease model allows customers to more accurately tie revenues to expenses. After all, says Goodwin: “Fleet and finance go hand in hand.”

Josh Bond is an editor at large for Modern and can be reached at josh.d.bond@gmail.com.

T he concept of leasing lift trucks once meant adher- ence to a rigid contract that could result in steep penalties at the end of a term. Payments might have

been consistent through that term, but they’d remain

consistent despite low utilization. Tina Goodwin, director of financial services for NACCO Material Handling Group, says leasing is no longer a restrictive premise. “Customer demand has forced finance partners to be- come much more flexible,” says Goodwin, who adds the numbers tell the tale. “I’ve seen it flip from one side to the other. I’d say 80% of our customers lease equipment, as opposed to the 30% to 40% just 15 years ago.” Fifteen years ago, big companies bought equipment outright, kept it too long and ended up with very high maintenance costs, says Goodwin. Customers figured since they owned the equipment they would get as much use out of it as possible and run it into the ground. Now, fleet management techniques have established economic life cycles and have enabled customers to do much more efficient replacement planning. Of NACCO’s national accounts with fleets of 50 or more, nearly 95% lease, says Goodwin. “Customers can now spend as little as possible for the best possible value,” says Goodwin. “If you want to keep your costs as low as possible, consider leasing.” Rule one, according to Goodwin, is to never underesti- mate or overestimate the hours of use over the course of

a

lease term. Underestimation may reduce the payment

in

the short term, but the customer could see massive

overage costs at the end of the term. Underestimation can also add up, says Goodwin. For instance, a lift truck that sees only 2,000 of its 2,500-hour annual allotment will cost the customer a full 2,000 hours of unused time. Goodwin says as many as 80% to 90% of lift trucks have unused time when returned at the end of the lease term. The first step to accurate planning is data collection,

and customers should dial in their usage figures to within

a couple percent margin of actual before signing a lease. But if business picks up or slows down in the months and years to come, a customer can always contact their

12

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Modern Materials Handling

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network infrastructure, overhead costs and points of failure • Handles large amounts of data without corruption

packaging corner

Turn trash into treasure

Reverse logistics service converts used packaging waste into a valuable asset.

By sara Pearson specter, editor at Large

Y ou might call Rehrig Pacific Logistics’ director of innova-

tion and operations, Todd Rodewald, a modern day Rumpelstiltskin. But instead of turning straw into gold, he’s spearheading his company’s efforts to help retailers and manufacturers uncover the value hidden in their trash. Rehrig Pacific Logistics (RPL) offers asset manage- ment and reverse logistics with a specific emphasis on packaging (pallets, cor- rugated boxes, reusable plastic containers and shrink wrap). The company has two facilities to recycle wood and industrial plastic waste. “This is an evolution of a full circle service,” says Rodewald. “In addition to tracking assets, customers work with us to manage their waste. We turn their waste streams into a value-add.” RPL’s Pennsylvania micro-mill takes 100% post-con- sumer pallet wood waste, grinds it, mixes it with formal- dehyde-free binding resin, and subjects the blend to heat and pressure. “Typically, pallet wood waste is converted into low-value fuel or mulch,” explains Rodewald. “This process yields a usable building material similar to par- ticle board.” Both boards and manufacturing process are in the process of gaining Forest Stewardship Council certifica- tion and California Air Resources Board (CARB) II com- pliance. The sustainable boards can be used for green construction or manufacture of laminated furniture. Or, in the ideal closed-loop system, “boards made from wood waste generated in a retailer’s supply chain could be re-

waste generated in a retailer’s supply chain could be re- directed back for the manufacture of

directed back for the manufacture of furniture marketed in their stores, as shelving in their warehouses or as display fixtures,” he adds. Similarly, in Rancho Cucamonga, Calif., an RPL facil- ity provides closed-loop recycling by processing post- industrial, high-density polyethylene (HDPE) plastic and converting it into regrind material that can be reused in plastics manufacturing processes. “Before the recession, there was an increasing empha- sis on sustainability. Now, companies are looking at it as another way to reduce operating costs—and waste is a large expense,” he says. “We help identify items of value in a waste stream, or find ways to further maximize that value. And it’s good for the environment, too.”

Sara Pearson Specter is an editor at large with Modern and can be reached at sara@moxiemarketingllc.com.

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modern system report

Around the

tognum america’s service parts dC in Brownstown, Mich., services the company’s diesel engine needs worldwide with a new order fulfillment solution.

By Bob trebilcock, Executive Editor

H ow do we turn out a consis- tent product day in and day out? That’s a question chal- lenging companies around the globe. It’s hard enough to

be consistent from one production or order fulfillment run to the next within a plant or distribution center. It’s even more of an issue for companies operat- ing multiple facilities. The hurdles rise exponentially when those facilities are located in different geographic areas around the globe. Tognum America, a manufacturer of off-highway diesel and gas engines and power generation systems, answered that question with a new parts and logistics center in Brownstown, Mich. Formerly known as MTU Detroit Diesel, Tognum America is a subsidiary of Tognum AG, the corporate entity behind MTU engines, MTU Onsite Energy generator sets and L’Orange fuel-injection systems. The new 350,000-square-foot ser-

vice parts distribution center was designed together with a consultant (i+o Industry Planning + Organization, www.io-consultants.com) to deliver

spare parts to customers of MTU die- sel engines in North America and around the world within one to three days. More importantly, the order ful- fillment engine is a mirror of the sys- tem Tognum AG implemented in Überlingen, Germany, about four years ago and which will be rolled out in another logistics center in Asia in the near future. “Our global parts logistics strategy is to have the same systems and processes worldwide,” says Adam Wood, direc- tor of logistics for Tognum America. “While we tailor our processes a little to a region, we want a system that looks and feels the same to a customer no matter where they are located.” By the same token, the order fulfill- ment system is designed to deliver the exact same product in the same man- ner, regardless of whether that order is filled in Michigan, in Germany or in

the tognum team (left to right):

ervil smith, ed irvine, adam Wood, Kim rowe and Mike Monahan.

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world in one to three days

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modern system report

“While we tailor our processes a little to a region, we want a system that looks and feels the same to a customer no matter where they are located.”

—Adam Wood, director of logistics for Tognum America

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Asia. “There will always be some dif- ferences as far as legal requirements and country of origin are concerned,” says Wood. “But the part out of the box should be in the same condition regard- less of where we fill the order.” To achieve that level of consis- tency, Tognum used the same system and design consultancy firm on the German and North American proj- ects. It also installed the same auto- mation equipment and software from the same vendors, including the same mini-load automated storage and retrieval (AS/RS) and warehouse man- agement (WMS) systems. Together, they are the primary engines behind order fulfillment. The facility is managing 40,000 stock keeping units (SKUs) with the ability to manage 80,000 SKUs. Located near the outbound docks, the AS/RS holds 22,500 storage trays and uses an ultra-quiet conveyor system to deliver trays to five ergonomic goods- to-person workstations with light- directed picking operations. Using a goods-to-person configuration reduces the amount of time associates spend walking and reduces the amount of conveyor in the facility. Live since October 2011, the system is handling 360 picks per hour during normal operations. “This configuration gave us the most flexibility and enabled us to fit our main order fulfillment operations in about 25,000 square feet, including the conveyor and staging areas,” says Kim Rowe, senior manager of after sales logistics.

A history rooted in power Tognum America has a heritage and history that stretches back more than 100 years. Founders Karl and Wilhelm Maybach formed Maybach Engines in Germany in 1909 to power the first

Using automated storage and retrieval and WMs technologies, tognum is handling 360 picks per hour, with room to grow.

mmh.com

Zeppelin airships. Over the years, they expanded into Maybach engines for automobiles, diesel-electric locomo- tives and other off-highway engineers. In the 1960s, the company merged with Daimler-Benz to form MTU, which stood for Motor and Turbine Union. In 1994, MTU formed a partnership with Detroit Diesel to develop two series

of engine families. A little more than

a decade later, Tognum GmbH was

launched in Friedrichshafen, Germany, as the parent company of MTU and MTU Detroit Diesel. U.S. operations were renamed Tognum America in 2011 and include eight locations in the U.S., including two manufacturing facilities, located across the country. The Brownstown facility manages service parts for the MTU family of die- sel engines in North and Latin America

and supports legacy Detroit Diesel two- cycle engines parts worldwide. “We are supporting Detroit Diesel engines that were manufactured as early as the 1940s and MTU engines that are even older than that,” says Wood. The global parts logistics initiative was launched about four years ago, when Tognum began to investigate an order fulfillment solution that could be rolled out wherever Tognum did busi- ness. A number of different solutions were explored. “We looked at every- thing from miles of conveyors to multi- level pick mezzanines driven by pick-to- voice and pick-to-light technologies,” says Rowe. The goal, adds Wood, was a facil- ity that could fill a customer’s order from anywhere in the world, regard- less of where the customer is located.

If Germany was out of a part, then it

could just as easily get shipped from Michigan or Asia if it was in stock there. As importantly, the part should arrive looking the same to the customer, regardless of which facility shipped it. “To do that, we have to have the same packaging and the same process so it has the same look and feel, regardless of where the product was stocked,”

Wood says.

mmh.com

of where the product was stocked,” Wood says. mmh.com tognum’s new service center replicates a distribution

tognum’s new service center replicates a distribution center in germany. a third, similar facility will soon be built in asia.

Tognum also decided it needed com- mon equipment at all three facilities. Otherwise, there would be inherent differences in orders filled by manual processes compared to highly auto- mated processes. According to Wood, the only real difference between the first two facilities to go live with the system is the layout of the shop floor. “Germany built a greenfield facility and we had to adapt the design to a brown- field facility,” Wood explains. “Some of our manual materials handling systems are different.” In choosing between technolo- gies, a conventional light- or voice- directed piece picking mezzanine with a conveyor and sortation system was rejected. “One of our concerns was that a system with a lot of conveyor would obstruct the flow of material to other areas of the facility,” Rowe explains. “We aren’t always picking to an outbound shipment. Sometimes, we are picking for the kitting area and then those kits will go back into stor- age. This system allows the materi- als handlers to easily go wherever the system tells them to go without the obstruction of a conveyor system.” As a service parts business, most

orders consist of a few parts picked by the piece. The mini-load AS/RS was designed to handle about 85% of the picks from the facility. Parts are stored in specially designed configurable trays that can have up to 32 compartments each and hold up to about 550 pounds. The AS/RS is located close to the outbound docks. Associates manning the five workstations pick into a cus- tom designed shopping cart. When the order is complete, the cart is pushed to an outbound staging lane. They are then delivered to a packing area about 200 feet away. In addition to order ful- fillment, the facility does a lot of kit- ting, such as kits for an engine over- haul or for a turbo replacement. Those parts, which may come from multiple suppliers, are packaged together. Then, depending on their size and weight, are stored in the AS/RS or on shelving in a reserve storage area. One unique aspect of the design is that the goods-to-person philosophy was extended to picking in a storage area for medium-sized parts that won’t fit in the AS/RS. Instead of picking from a pallet rack to a pallet jack, a tur- ret truck retrieves a pallet from storage and delivers it to a picking station at the

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modern system report

modern system report front of the area. Once an associate completes a pick, the pallet is

front of the area. Once an associate completes a pick, the pallet is returned to storage.

Lean thinking The design of the system was also driven by lean manufacturing principles. For that reason, the facility is very visual. “Everything has an identifiable location right down to the brooms, garbage cans and printers,” says Wood. “If something is out of place, we can address it immediately.” Visibility also led to

Specially designed and fabricated metal containers manage the parts in storage.

the implementation of Extended Warehouse Management (EWM), the new warehouse management system from SAP, on a global basis. The WMS controls all of the warehouse functions, including putaway operations and pick- ing operations at the goods-to-person workstations. The warehouse control system is only responsible for storing and retrieving trays in the AS/RS. Having one common WMS pro- vides a new level of visibility into the Brownstown operations. “We used to use a third-party logistics provider in Ohio for distribution,” says Wood. “We weren’t integrated into their system, so we had little visibility into their pro- cesses or the people that were control- ling that facility.” However, having a common WMS has also provided visibility into opera- tions on a global basis. All three facili- ties are able to benchmark their per-

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formance against a common set of key performance indicators. If one facility is outperforming or underperforming the other two, it is readily apparent. Similarly, if one facility makes a minor change in the WMS that improves operations, that system improvement is available to all three centers. “The WMS is a big part of our global quality improvement program,” says Wood. The facility exceeded expectations from day one. While the company had expected to spend up to two years get- ting the new warehouse and equipment up and running, it was all installed in nine months. Meanwhile, Tognum America set aside 12 weeks to move 17 million indi- vidual pieces into the new warehouse, starting with the slow-moving parts first and including a two-week shutdown to move the 26,000 fastest-moving parts. The work was finished in 10 weeks.

the mini-load as/rs holds 22,500 storage trays and manages about 40,000 sKUs.

modern system report

Tognum knew the original plan would need to be accelerated when the first shipment that arrived in Brownstown con- tained a slow-moving part that hadn’t sold in 10 years but sud- denly had an urgent order for it. “We hadn’t planned to launch shipping that day, but printed out a shipping label online and hand-carried the order to the carrier,” says Wood. Adds Rowe, “Our original goal was to hit 2,000 line items a day, and we did that within the first 4.5 weeks on a sustainable basis. Now, we’re watching our costs go down.”

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MODERN system report

Bringing goods to the person

Tognum’s mini-load automated storage and retrieval and warehouse management systems are the primary engines behind order fulfillment in the Brownstown DC.

By Bob Trebilcock, Executive Editor

Receiving: Most inbound product is shipped from over- seas in shipping containers. Prior to shipment, Tognum America receives an advanced ship notification (ASN) from the freight forwarder that aggregates the shipments. Domestic suppliers provide a notification through electronic data interchange (EDI). Regularly scheduled deliveries by specific trucks are created in the warehouse management system (WMS). As soon as Tognum receives a bill of lad- ing and packing slips for a load, that delivery is assigned to one of the trucks scheduled in the system. That allows them to post the delivery as soon as it is unloaded from the truck in the receiving area (1). Once the load is counted and inspected in the staging area (2), the receipt is confirmed and the product can be prepared for putaway. Preparation for storage: Prior to putaway, inventory is prepared for storage. A significant amount of material is removed from its transport packaging and repacked in a pre- packing area (3) according to how it will be handled in the future. For instance, an item that is sold as an individual part will be packed in its final packaging before putaway. Other products may be kitted with companion items before they go into storage. Small parts are stored on carts that can be rolled to an induction point for the AS/RS. Larger parts are palletized. Once all the parts have been counted, accepted and are ready for storage, an associate places a green cone on the material. That is a visual cue that the product is ready for storage. Putaway/replenishment: Once a cone is on product that is ready for putaway, an associate will scan a bar code on a pallet or cart. The system will then direct the materials handler to a storage location. As much inventory as possible will be directed to the automated storage and retrieval sys- tem (AS/RS) (4). At the induction station, an associate scans

Tognum America

Brownstown, Mich.

SIZE: 350,000 square feet PRODUCTS: Heavy duty diesel engine parts STOCK KEEPING UNITS: 40,000 SKUs with capability to expand to

80,000

THROUGHPUT: Designed to handle up to 4,000 lines filled per day EMPLOYEES: 100 employees SHIFTS/DAYS: 2 shifts/5 days per week

mmh.com

System suppliers

area (5) or on the floor in a bulk storage area (6). Medium size parts are stored in racks in a spe- cial area (7). A lift truck operator is directed by the WMS to a putaway loca- tion in the right reserve storage area. The opera- tor scans the location bar

code on the rack to con- firm the putaway. Picking: Nearly 85% of orders are picked at one of five goods-to-person picking stations located at the AS/RS (8). When an order selector logs on to their station, they choose an order that is available to pick. The AS/RS then begins to deliver trays for that order to their workstation. A pick-to-light system identifies the part to be picked from the tray. The order selector confirms the pick by scanning a bar code label on the part and then places it in a cart. Once the order is complete, the order selector scans the cart, which is then delivered to an outbound staging and packing area

Consultant: i+o Industry Planning + organization, io-consultants.com as/Rs and ConveyoR: tGW systems, tgw-group.com lIft tRuCks: Crown equipment Corp., crown.com WMs: saP, sap.com BaR Code sCannInG: Motorola solutions, motorolasolutions.com

RaCk systeM: Pallet rack, Ridg-u-Rak, ridgurak.com; Cantilever rack, unarco Material Handling, unarcorack.com

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a bar code label on a cart holding multi- ple parts. The scan releases all the nec- essary trays from storage to the station. When the tray arrives in the station, an operator scans the parts and a light system identifies the slot on the tray for that part. Once all the parts have been loaded, the operator releases the tray. It travels through an automated weight and height check station. This verifies that the weight and ensures that no parts are hanging over the tray that may get caught in the automated system. The tray is automatically putaway into the correct storage location. The rest of the material will go into one of several reserve storage areas. Large parts are stored in racks in a large parts

6

Bulk storage

4

Mini-load

AS/RS

7

Medium parts

storage

(9) where it is married to any other parts for that order. Parts may also be picked and sent to a kitting area (12). Examples may include all of the parts for an engine overhaul. Once kitting is complete, it is returned to a storage location according to its size. Packing and shipping: Tognum uses a series of colored lights as visual cues in the packing area (9). Each packer has a monitor that displays the available orders for that station. A yel- low light indicates that some of the items for an order are available for packing. A green light that all of the items are available for that order. Once the packer decides to begin packing an order, parts belonging to that order are pulled from the staging area. Items are packed in a shipping carton and placed on a pallet or cart. Once the order is complete, a materials handler delivers it to the appropriate outbound staging lane (10) based on planned mode of transportation. There, a shipping coordi- nator verifies that the right items and the right quantity have been prepared for shipment, and the required paperwork/ labeling has been attached. Once the quality check is complete, the order is loaded onto an outbound truck or a ship- ping container at the shipping docks (11). Once the truck or container is fully loaded, the order is closed

and the inventory is removed in the WMS. M

mmh.com

5

Large parts

pallet rack

3

12

Kitting

Pre-packing

2

Staging

1

Receiving

8 Outbound packing
Goods-

to-person

picking

station

9

10 Staging

11

Shipping

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MODERN special report

ANOTHER GOOD BOUNCE:

Top 20 supply chain management software suppliers
Top 20 supply
chain management
software suppliers

Modern’s annual look at the supply chain software market revealed that the industry grew significantly in 2011.

By Bob Trebilcock, Editor at Large

I

f the supply chain management soft-

ware industry was a mutual fund, it would have been a growth fund in 2011.

And, if revenues reflected stock prices,

it would have been a good investment.

The worldwide market for supply chain management (SCM) software applications, maintenance and services came in at $7.74 billion in 2011, includ- ing applications for procurement soft- ware. Without procurement, the market was nearly $5.2 billion, according to Chad Eschinger, vice president for sup- ply chain with Gartner (www.gartner.

com). That’s an impressive 12.1% jump over 2010 revenues for the group of applications excluding procurement that are most relevant to Modern’s readers. “The industry built off of 2010’s momen-

tum,” Eschinger says. Looking forward, Gartner is predict- ing a compound annual growth rate (CAGR) for SCM software excluding procurement of 8.7%. At that rate, the market will double in less than 10 years. The top five market leaders will look familiar to readers of last year’s sur- vey. SAP ($1.018 billion) and Oracle ($935.6 million) continue as the Hertz and Avis of the industry. Those companies were followed by JDA Software ($368.5 million), Manhattan Associates ($141.5 million) and RedPrairie ($99.7 million), accord- ing to Gartner’s analysis. The most impressive move was that of Epicor, which jumped from No. 12 ($57 million) in 2010 to No. 6 ($92.9

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million) thanks to the purchase of Activant. That was also the most note- worthy acquisition of the year. One other important note on the numbers: The Big Three of SAP, Oracle and JDA accounted for 44.7% of the total supply chain management soft- ware market. Together, they picked up an additional 2% of market share from the prior year. While it was a slow year for SCM news, the most impactful event was the continued roll out of EWM from SAP, a warehouse management system that includes automation control.

Making the list Modern began tracking this space back in 2001, following the Internet boom.

mmh.com

Although we initially focused on the top providers of warehouse management system (WMS) solutions, the
Although we initially focused on the top providers of warehouse management system (WMS) solutions, the
Although we initially focused on the top providers of warehouse management system (WMS) solutions, the
Although we initially focused on the top
providers of warehouse management
system (WMS) solutions, the lines
between supply chain execution (SCE)
and supply chain planning providers
are no longer clearly drawn—enterprise
resource planning (ERP) providers sup-
ply WMS and supply chain execution
providers supply planning and optimi-
zation solutions.
For that reason, Modern now partners
with Gartner to create the list. It is a
numbers game and not a value judgment.
The rankings are based on Gartner’s esti-
mates of a provider’s annual sales for
2011. Gartner’s estimates are based on
revenues related to supply chain man-
agement software excluding vendor-gen-
erated services and hardware and not a
company’s total revenues.
Admittedly, this is an imperfect
science. Gartner, for instance, strips
out hardware sales from its estimates.
Those are the reasons, for example, that
Gartner credits Manhattan Associates
with $141.5 million when the compa-
ny’s overall revenues are more than dou-
ble that amount. What’s more, Gartner
does not follow the warehouse control
(WCS) or manufacturing execution
(MES) spaces for the purposes of their
chart. However, it is an apples to apples
comparison. More importantly, whether
you agree with all of the numbers, the
order provides a good ranking of the
major providers across the supply chain
management space.
Modern’s one addition to the chart
is Retalix, a provider not covered by
Gartner, but which is relevant to our
readers in the retail supply chain. That’s
the reason our Top 20 has 21 vendors.
says Eschinger. SCM tools enable com-
panies to deal with supply chain com-
plexities, volatility and disruptions.
Several trends were also at work,
including:
• The customer is king: Improving
Notable trends
Several trends were at work last year
in each of the four categories relevant
to our readers: ERP and supply chain
planning (SCP), WMS, transportation
management (TMS) and MES systems.
ERP/SCP: Last year’s growth may
have been a continuation of 2010’s
momentum. But interest in supply
chain management was also sparked by
economic volatility. “The floods in Asia
and the earthquakes put a spotlight on
the complexity in today’s networks,”
productivity and cost reduction have
historically been the leading reasons
why companies invest in supply chain
software. Last year, meeting customer
service demands rose to the top of
the list. “Companies are looking for
improvements in demand planning,
supply chain visibility and the orches-
tration of their supply chain activities,”
says Eschinger. “They’re asking how
they can do a better job of meeting cus-
tomer expectations.”
• The supply chain as an engine of
growth: The supply chain is increasingly
Top 6 SCM drivers
looked at as a market differentiator and as
an engine for business growth at forward
looking companies. That was the second
reason for investing in SCM tools.
With a focus on the supply chain,
here are the key drivers behind
those projects going forward.
• Innovation: Think of it as the Apple
1. Improve customer service
2. Target supply chain contributions
to drive business growth
3. Innovation
4. Improve efficiency or
productivity
5. Reduce costs
6. Improve business processes
effect. Increasingly, companies are
looking to innovation to separate them
from the pack in the market. SCM is
seen as a tool to enable innovation.
• Cloud computing and mobile
devices continue to get traction: The
market for subscription-based sup-
ply chain services is growing at about
20% a year, says Eschinger. He adds
Source: Chad Eschinger, Gartner
a year, says Eschinger. He adds Source: Chad Eschinger, Gartner mmh.com MODERN MATERIALS HANDLING / J

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MODERN special report

 

Top 20* supply chain management software suppliers

 

No.

Supplier

2011 Revenue

URL

SCP

WMS

MES/MRP

TMS

1

SAP

$1.018 billion

www.sap.com

x

x

x

x

2

Oracle

$935.6 million

www.oracle.com

x

x

x

x

3

JDA Software

$368.5 million

www.jda.com

x

   

x

4

Manhattan Associates

$141.5 million

www.manh.com

x

x

 

x

5

RedPrairie

$99.7 million

www.redprairie.com

 

x

x

x

6

Epicor

$92.9 million

www.epicor.com

x

x

 

x

7

Descartes Systems Group

$87.7 million

www.descartes.com

     

x

8

Servigistics

$64 million

www.servigistics.com

x

x

 

x

9

Kewill Systems

$63.7 million

www.kewill.com

     

x

10

IBS

$58 million

www.ibsus.com

x

x

x

x

11

Totvs

$57.8 million

www.totvs.com

x

x

 

x

12

Logility

$52.3 million

www.logility.com

x

x

 

x

13

Lawson Software

$51 million

www.lawson.com

x

x

x

x

14

Retalix

$50.9 million

www.retalix.com

x

x

 

x

15

IBM

$50.8 million

www.ibm.com

x

     

16

Infor

$50.5 million

www.infor.com

x

x

x

x

17

GTNexus

$46.2 million

www.gtnexus.com

x

   

x

18

HighJump Software

$45.8 million

www.highjumpsoftware.com

 

x

 

x

19

Quintiq

$39.5 million

www.quintiq.com

x

 

x

x

20

Accellos

$35 million

www.accellos.com

 

x

 

x

21

Kinaxis

$34.6 million

www.kinaxis.com

x

 

x

 

* Source: Revenue estimates provided by Gartner (www.gartner.com) with the exception of Retalix, which was provided by the company.

 

that the most aggressive companies are implementing 40% to 45% of their supply chain software on premise and outsourcing the rest. A company may have a core product like advanced planning and scheduling from SAP on premises but add a specialized cloud- based sales and operation planning tool for integrated business planning activi- ties. “Going forward, we think about 70% of those specialized applications will be in the cloud,” Eschinger says.

Similarly, there has been a steady adop- tion of mobile technologies, especially for field personnel. “The cloud, mobil- ity and even social networking are forc- ing businesses to rethink some of their processes,” Eschinger says. WMS: Like supply chain planning, the market for warehouse management software grew about 15%, and once again topped $1 billion, according to Gartner. While there were no significant mergers or acquisitions in 2011,

Top 5 SCE software suppliers

 

(by Revenue – 2011)

Suppliers

2011 Revenue

Share (%) of market 2011

Oracle

$ 405 million

17.4%

SAP

$ 231 million

10%

Manhattan Associates

$ 133 million

5.7%

RedPrairie

$ 100 million

4.3%

Descartes

$ 88 million

3.8%

Source: Chad Eschinger, Gartner

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MODERN MATERIALS HANDLING

Gartner’s Dwight Klappich, vice presi- dent of research, noted some signifi- cant market drivers. One is that core WMS, which man- ages the basic processes of a ware- house, is a mature technology. “We’re approaching parity across WMS suppli- ers,” Klappich says. “That doesn’t mean that all WMS providers are the same. Like buying a car, there are differences in quality. But, also like a car, any WMS should cover the basics.” Instead, the most important differ- ences are the applications that extend the value of the core product, such as labor, yard management and perfor- mance management. “To a large extent, the market is being driven by upgrades and replacements because the 10-year- old WMS that was installed to pick cases can’t handle piece picking,” says Klappich. “And in nine out of 10 replacement deals, it’s those add-on

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improve productivity

components that are driving the deal.” Considerable growth is also coming out of emerging economies like Latin America. In those areas, the focus is still on core WMS. “A retailer in Mexico City may not care about labor management because labor is cheap,” says Klappich. “But they can’t afford to ship the wrong product or send an order that is short three items.” TMS: Once again, the market for transportation management software clocked in at just under $1 billion. The market grew at a 15% rate, driven by tight capacity and high fuel costs. “We’re back to 2007 and 2008 levels,” Klappich says. While major shippers have been using TMS applications for years, growth is now coming from mid-size shippers spending $25 million to $100 million a year on freight. “Maybe 10% to 15% of those companies have a TMS, so there’s a lot of growth poten- tial,” says Klappich. Those companies are typically implementing transporta- tion sourcing and benchmarking mod- ules rather than optimization engines. “A company running five loads a day doesn’t need optimization,” Klappich says. “But they do want a platform to manage their freight.” Meanwhile, more sophisticated companies are looking at supply chain execution convergence—technologies such as the supply chain execution plat- forms from Manhattan and RedPrairie that can integrate data from a TMS into a WMS to synchronize an end-to-end process. MES: The market for manufac- turing execution software solutions, or MES, for discrete manufacturers reached an estimated $1.5 billion for licensing and revenues in 2011, accord- ing to Simon Jacobson, a vice president who covers the MES space for Gartner. While the benefits of WMS and TMS are now widely accepted in the board room, Jacobson says it is still a challenge to sell the benefits of an MES systems to a C-level executive who thinks the bases are covered by

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their ERP system. That has inhibited the growth of the space. “The benefits from MES are clear,” says Jacobson. “There are also real efficiencies to be gained by standardizing on an MES platform on a global scale. But there’s still a need to educate executives to

MODERN special report

understand that MES can add value to an ERP system.” Looking forward, Jacobson expects to see a wave of consolidation in the industry as large MES players buy up point solution providers to add func- tionality to their offerings.

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MODERN equipment report

Palletizers:

Putting product in its place

From manual devices to robotic arms, there’s more than one way to build a pallet. Here’s a look at how palletizing equipment improved productivity at these five operations.

By Lorie King Rogers, Associate Editor

B

five operations. By Lorie King Rogers, Associate Editor B 28 J U L Y 2 0
five operations. By Lorie King Rogers, Associate Editor B 28 J U L Y 2 0
five operations. By Lorie King Rogers, Associate Editor B 28 J U L Y 2 0
five operations. By Lorie King Rogers, Associate Editor B 28 J U L Y 2 0

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uilding a pallet, especially a mixed SKU, or

rainbow pallet, can be a challenge, but it’s a vital link in the supply chain. While the palletizing needs of a manufac- turer with limited SKUs may differ from a

DC

with hundreds, both can see the bottom

line

impacted by the palletizing process. “In

all cases, companies today are working from a continuous improvement perspective,” explains Tom Eagan, vice president of indus- try relations for the Packaging Machinery Manufacturers Institute (PMMI). Here’s a look at how five companies took proactive steps to solve their palletizing prob- lems and how those solutions have contrib- uted to successful process improvements.

mmh.com

Pallet positioners reduce strain, increase control HVAC industry leader, Belimo invests in pallet positioners to

Pallet positioners reduce strain, increase control

HVAC industry leader, Belimo invests in pallet positioners to safeguard workers from fatigue and injury.

belimo customization in danbury, Conn., designs and manufactures damper actuators and control valves for HVAC systems. While Belimo is focused on creating comfort, safety and efficiency in buildings, they are also keen to those same needs for their employees. To lend employees a helping hand as they transfer boxes from conveyor belts to pallets, Belimo purchased nine pal- let positioners (Southworth Products, southworthproducts.com) that are ergo- nomically designed to virtually elimi- nate the bending, reaching and stretch- ing that can lead to fatigue and injuries. Six of the pallet positioners at

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Belimo are traditional spring models that maintain the top layer of a pallet load at a convenient height and can be modified by changing the springs in its scissor lift to run lighter or heavier loads. But on three of the conveyor lines, the boxes vary greatly in dimen- sion and weight every day, so Belimo installed three powered hydraulic pal- let positioners, each with a 2-ton load capacity. With this model, the operators can work at a comfortable height by pre- cisely adjusting the positioner with a foot pedal, which adds or releases compressed air from an airbag under

the platform. And because electrical cables and shop air lines run beneath the concrete floor and come up only where needed, tripping hazards are eliminated. The pallet can also be rotated on the positioner’s turntable, allowing the operator to work on the nearside of the load rather than walking around it. “Because our products have many different configurations, the cartons aren’t always similar weights, says Lenny Casacalenda, Belimo’s plant logistics manager. “So the pneumatic model gives employees the power to make sure the pal- let is always in the best spot for them.”

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modern equipment report

modern equipment report Palletizing system increases throughput, cuts labor costs Graphic Packaging International

Palletizing system increases throughput, cuts labor costs

Graphic Packaging International installs a complete palletizing solution to meet throughput goals and reassign workers to more skilled positions.

graphic packaging international (GPI) is a leading provider of paperboard packaging solutions, including folding cartons and specialty bag packaging. Headquartered in Marietta, Ga., GPI serves customers in 10 countries with manufacturing in 22 cities and consumer packaging facilities in 43 locations. A recent expansion and a labor-inten- sive process at GPI’s Fort Smith, Ark., facility resulted in decreased produc- tion and increased ergonomic issues. Five lines were being manually pallet- ized, which was physically challenging for workers who were falling short of throughput requirements. So, GPI looked for a solution to optimize the workforce and relocate people from manual palletizing to other skilled positions. After working with a supplier (Bastian Solutions, bastianso- lutions.com) that analyzed the manual process, GPI installed a complete pal- letizing solution from in-feed conveyor to stretchwrappers. The final system includes low pressure in-feed con-

veyor, 90-degree rotation conveyors, row-forming conveyors, pallet conveyor, layer building table, shuttle car sys- tem, palletizers, a gantry system with a specially designed end-of-arm tooling, stretchwrapper and control system. This approach provided the mechan- ics to support product from the bottom, while offering the versatility of multiple palletizing patterns. The end design resulted in a traditional palletizing sys- tem handling eight cases per minute in 50 unique stacking patterns. “This solution is user friendly and easily set up by the operators,” says Gregg Ruple, GPI project engineer. “Adjustments to each pattern are stored in the system so that those adjustments are automatically made the next time the pattern is selected and run.” According to Ruple, “The palletizer sys- tem has allowed us to reduce manual pal- letizing by 50%, run more of our finishing equipment without adding any additional headcount and allowed workers to take on other positions in the facility.”

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Modern Materials Handling

Palletizer offers flexible patterns and eliminates hand stacking

High-infeed palletizers at Producers Rice Mill increase production and uptime while reducing expenses.

when producers rice mill was formed in 1943, it milled 143,500 barrels its first year and had assets of $125,000. Today, its annual milling rate is more than 60 million bushels and sales have topped the $500 million mark. One of the plants contributing to the companies success is the packaging parboil rice division plant in Stuttgart, Ark., which packages raw rice into a commercial grade, consumable prod- uct to be distributed throughout the United States. Unfortunately, its hand stack line and old palletizing equip- ment were contributing to high labor

United States. Unfortunately, its hand stack line and old palletizing equip- ment were contributing to high

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MODERN equipment report

costs and limited throughput. So, Producers Rice implemented a new system that conveys two finished products out of the packaging room up to an elevated height to new palletiz-

ing machines. Previously each line dis- charged on to a common hand stack- ing line. Now, each product moves on a conveyor and is then automati- cally fed to two high-infeed palletizers

is then automati- cally fed to two high-infeed palletizers 32 J U L Y 2 0
is then automati- cally fed to two high-infeed palletizers 32 J U L Y 2 0

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MODERN MATERIALS HANDLING

(vonGal, vongal.com). The new pal- letizers eliminate the hand stacking line as they stack the cases before dis- charging them on a pallet. By installing a new conveyor and two new palletizing machines, Producers Rice was able to increase productivity from 8,000 cases per day over a 12-hour production shift to 13,000 cases over an eight-hour shift and decrease its workforce by two people over a two-shift period. Jeremy Herring, parboil packaging manager at the Stuttgart facility says, “I was very impressed with the easy instal- lation and start-up of these machines. We installed the system over the week- end and both lines were running full production by mid-week with no issues.” Also impressed with the palletizers’ flexibility, Herring says the pattern editing software allows them to make changes to patterns and machine functions on the fly, which cuts down on machine down- time. As a result, Herring reports, “We’re at a steady 99% uptime to date.”

Producers Rice’s new palletizing machines increased productivity from 8,000 cases per day over a 12-hour
Producers Rice’s
new palletizing
machines increased
productivity from
8,000 cases per
day over a 12-hour
production shift to
13,000 cases over
an eight-hour shift
while decreasing
labor costs.

mmh.com

robotic layer picker increases safety, quality and productivity

Nestlé turns to an integrated robotic layer picking solution to transform workplace safety and significantly improved the productivity of mixed case palletizing.

from toll house cookies to sports nutrition to pet care, Nestlé is a leading global provider of food and wellness products and a household name. So it comes as no surprise that Nestlé’s high-volume DC stores and distributes hun- dreds of SKUs from its consumer food and beverage, food service and pet food businesses.

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Modern Materials Handling /

MODERN equipment report

The high demand for Nestlé’s house- hold brands means that about 80% of its DC’s orders are distributed as full pallets. But picking the remaining 20%, which are distributed in pallet layer and full case quantities, involved the

manual handling of about five million cases per year. This created a signifi- cant, ongoing ergonomic challenge, not to mention a productivity challenge. To address those challenges, Nestlé installed a layer picking solution

The robotic layer picking system’s pallet build quality has improved transport utilization and resulted in
The robotic layer picking system’s
pallet build quality has improved
transport utilization and resulted
in less product damage and fewer
returns, all of which have reduced
Nestlé’s distribution operating costs.
have reduced Nestlé’s distribution operating costs. 34 J U L Y 2 0 1 2 /

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MODERN MATERIALS HANDLING

(Dematic, dematic.com) that elimi- nates the need to manually handle about four million cases. The robotic layer picking system achieves picking efficiency by removing layers from one pallet then creates the right case layer quantity for another order. By cross- matching orders and pairing those with compatible order profiles, the sys- tem enables about 20%, and in some instances up to 50%, of cases for orders to be distributed without each layer being physically picked. Orders from Nestlé’s warehouse management system are downloaded to the warehouse control system to initiate picking. The system calls for the stock required for layer picking in the sequence required to fulfill the next wave of orders. Full pallets are retrieved from adjacent bays of reserve storage by RF-directed forklifts and loaded onto the induction conveyor. As pallets are fed into the layer picking cell, they are scanned and the control system directs the operator to remove the required amount of stretchwrap- ping from the pallet. As new pallets of stock are fed into the system, the layer picker selects the required layers and transfers the stock to one of four customer order pallets. Any stock remaining on a pal- let either forms the basis for another order through the system software, or is returned to the reserve storage bays. Orders that need additional case picks to be added to the layers exit the robotic cell. From there, operators add the cases needed to complete the order. Since implementing the new sys- tems, Nestlé has created a safer work- place by reducing forklift operations and ergonomic risks associated with manu- ally pallitizing. In addition, the sys- tem’s pallet build quality has improved transport utilization and resulted in less product damage and fewer returns, all of which have reduced Nestlé’s distri- bution operating costs.

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R

0

E

5

G

1

5

#

.

articulated arm robotic palletizer picks up 220 pounds at one time

In its new DC, Dunn-Edwards uses a specially designed robotic system to handle today’s palletizing needs and accommodate future company growth.

dunn-edwards is a leading manufac- turer and supplier of paints and sup- plies serving professionals and consum- ers throughout the southwest, and sells most of its paint through its own 109 store network. In 2010, Dunn-Edwards consoli- dated all manufacturing and distribu- tion operations into a new, fully auto- mated facility in Phoenix, Ariz. An integral part of the automation portfolio is a high-performing robotic palletizing system that handles 5-gallon buckets of paint. In designing the system, the requirement was to palletize the buck- ets, 36 buckets to each pallet, at a rate up to 48 buckets per minute, building two pallets every 90 seconds. While the equation seems daunting, throughput numbers are met using the new palletizing system that includes a single articulated arm robot (ABB, abb. com/robotics) and a vacuum gripper that can pick up four of the 55-pound

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buckets at a time. Because the system is able to achieve such high speeds, Dunn- Edwards is able to serve two incom- ing conveyors and build two pallets at a time. The robot sits between the two conveyors and picks buckets from the left conveyor and puts them on a left pallet or from the right conveyor for placement on the right. And, if needed, the buckets from line A can be placed on pallet B, or from B to A. While the vacuum gripper is strong enough to pick up the buckets, it’s sensi- tive enough not to remove the tint plugs that are attached to the top of each pail. But the biggest consideration was the cycle time, says Clay Fenstermaker, director of engineering at Dunn- Edwards. “We first considered an over- heard gantry robot system, but [our sup- plier] came up with a simulation that showed that the fixed-position robot could deliver the rate we needed.” M

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MODERN best practices

MODERN best practices FOOD & BEVERAGE: Keeping up with the SKUs The food and beverage sector

FOOD & BEVERAGE:

MODERN best practices FOOD & BEVERAGE: Keeping up with the SKUs The food and beverage sector

Keeping up with the SKUs

The food and beverage sector is ripe with unique and difficult materials handling challenges due in part to the growing number of product choices. Here’s a look at how technology can help keep the shelves stocked and the customer satisfied.

By Lorie King Rogers, Associate Editor

F
F

ood and beverage producers are trying to be all things to all people at all times. That’s because consumers are demanding an ever-increasing variety of food and bev- erage products that satisfy the taste for ethnic organic, gluten-free, sugar-free, low-fat, high-fiber, low-sodium and caffeine-free products. And it’s not just more food choices. Products are now available in a wider array of package forms than ever before, including six packs and fridge packs, sin- gle-serve, family-size and club size. The result is warehouses and retail stores bursting at the seams with profound SKU proliferation—cre- ating a demand for flexible materials and information handling solutions that allow manufacturers and dis- tributors to deal with all those SKUs as efficiently as possible. Here’s a look at best practices that food and beverage companies use to help handle the growing number of SKUs.

Convey with care New packaging creates materials handling chal- lenges. Smaller, softer containers and less corrugate are making it more challenging to move product through the supply chain. Bottled water is a good example. “A water bottle is now more like a water bag,” says Brian Keiger, logistics account manager for KUKA Systems, “and that can have an effect on every

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piece of automation along the way.” Conveyors are used to move these products

through a facility, but varying package types, sizes, shapes and weights mean that there’s no one right conveyor for all jobs. “There are a number of types of conveyor technol-

ogy available,” explains Tom Roberts, director of man-

ufacturing systems regional sales and operations for Intelligrated. “But the variations that come into play

make it difficult to make a universal statement.”

For example, Roberts says, roller conveyor could be

the best form of conveyance if your products have a

solid base and are long enough to be supported by at least three rollers at all times, like a case of dog food, for example. But if the packages are too small, rolling could cause marring of the primary package. Nobody wants to pay top dollar for damaged goods,

so one solution is to consider a belt conveyor. “The advantage,” says Roberts, “is that the plastic belt gives

the complete support you need for small packages or

packages with soft bottoms.”

Store slow movers Along with conveyance, you should consider velocity. A

DC with thousands of SKUs, might store slower mov-

ers in an automated storage and retrieval systems (AS/ RS). Scalable and flexible, an AS/RS is a computer-

mmh.com

PHOTOGRAPHY BY NAME

PHOTOGRAPHY BY NAME controlled system that uses automated moving vehicles to put away, store and retrieve

controlled system that uses automated moving vehicles to put away, store and retrieve goods, and bring them out to the picker in sequence to fill an order. It’s a good idea to assign the fast moving SKUs a fixed loca- tion and store the slow movers in a mini-load AS/RS or shuttle AS/RS that handles lighter micro-loads, recommends Sean O’Farrell, market development director for Dematic. “Since the majority of warehouses and distribution cen- ters were established many years ago, the existing build- ings are being challenged by more SKUs. As more space is needed to accommodate more SKUs, automated storage systems can reduce the footprint required by a ratio of 8-to- 1,” O’Farrell says.

You’ve got to slot Slotting software can calculate best use of storage space by finding
You’ve got to slot
Slotting software can calculate best use of storage space by
finding the ideal location for SKUs. “Operations are shuf-
fling or re-slotting their picking slots to face the challenges
presented by more SKUs,” says O’Farrell. And, slotting soft-
ware can provide an analysis to help you know your orders,
simulate moves, and put fast moving SKUs in the ideal pick-
ing slot.
In fact, before you actually change the location of an SKU,
it’s a good idea to simulate the move. “The dynamic slotting
of pallet and case locations puts a lot of stress on the [AS/
RS] machines, so it needs to be simulated before its put
into action,” says Bill Ostermeyer, vice president of sales for
viastore. “A system with dedicated locations for all SKUs can
be more simply, mathematically calculated, but dynamic real-
location for picking makes simulation vital for its success.”
Slotting software can also determine the right size of
the picking location and effectively manage the real estate
inside the four walls. “In a perfect world, you’d have enough
floor space, but even warehouses with a million square feet
have issues with floor space,” says Tom Kozenski, vice presi-
dent of product strategy for RedPrairie.
This situation forces the best practice, Kozenski says, which
is to slot product in a very sophisticated manner, even multiple
times during the day, which requires an automated system.
There are countless reasons for an SKU’s velocity to change.
Whatever the reason, SKU velocity can change overnight and
so should SKU storage locations.
Software and robotic palletizers work together to form
store-ready mixed SKU pallets (top). Providing dense
storage, a mini-load AS/RS uses automated moving vehicles
to put away, store and retrieve goods, and bring them out
in sequence to fill an order (middle). There are a number of
ways to handle and convey product, but SKU variation and
throughput requirements presents unique materials handling
challenges for every operation (bottom).
mmh.com
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modern best practices As a bonus, in the evaluation pro- cess, you could uncover unexpected

modern best practices

As a bonus, in the evaluation pro- cess, you could uncover unexpected opportunities like being able to con- solidate a number of slow movers into a bigger tote and bringing many items to a picker in one tote. Not only does this save labor, it cuts down on wear and tear of the equipment.

Palletizing process Palletizing needs on the manufactur- ing side of the food and beverage sec- tor are different from the needs on the distribution side. On the manufactur- ing side, a single production line can be directly linked to a palletizer, repeatedly handling a single SKU.

Inside a DC however, SKU prolif- eration and the retailers’ demand for store-ready orders makes palletizing more like solving Rubik’s cube. This is where software and robotic pallet-

Fishing for a handheld device to stand up in extreme conditions

Established in 1910, Ocean Beauty Seafoods is one of the most suc- cessful seafood companies in the Pacific Northwest. During the height of fishing season, the company employs about 2,000 workers at its six Alaskan processing plants and ships millions of pounds of canned, frozen and fresh seafood to custom- ers including Chicken of the Sea and Bumble Bee Foods. To meet global food quality stan - dards and traceability requirements, Ocean Beauty installed a software solution (SIMBA, simba.com) that uses bar code technology. But they needed more rugged, ergonomic handheld equipment to operate in the cold, wet processing environ- ment. Working with a systems inte- grator (Dynamic Systems, dynasys. com) that specializes in bar code technology, Ocean Seafood incorpo- rated 15 rugged handheld devices (Psion, psion.com) to interface with its software system. Together, the technologies track the catch. After fish is processed, it’s placed in a carton with a bar code label that includes contents and product tracking information. When the carton is pulled from the freezer for shipment, an employee scans the bar code with the handheld device and product data is entered into the inventory system at the company’s Seattle headquarters. From there, they track it through distribution and delivery, ensuring accurate orders and delivery of fresh seafood. “The new equipment enables us to handle a wider variety of products and ship directly to the customer, giving us better transportation rates,” explains Tom Marshall, superintendant for Ocean Beauty’s Excursion Inlet Alaska plant. “Without these two technolo- gies, it would be impossible to track such a high number of varied ship- ments from vessel to destination.”

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izers work together. “Software tells the storage system what cases to send and in what sequence. Then it tells the palletizer, here’s what you’re get- ting and here’s how you have to put it together,” explains RedPrairie’s Kozenski. Since robotic palletizers can handle virtually any product—whether it’s frag- ile, has a solid bottom or open top— and can adapt quickly to an operation’s changing needs and changing SKUs, they are ideal for palletizing in the food and beverage sector. “Not only can the robot’s end effector be changed to han- dle multiple package types,” explains Kuka’s Keiger, “you can add a robot to increase throughput, and a robot’s arm can work 24/7 without getting tired.” With a number of end-or-arm tooling devices like grippers and vacuums, the ability to lift and rotate product, robotic palletizing solutions are designed to handle the latest big box directive called “labels out.” Keiger explains that certain retailers demand that all prod- uct in a pallet to be positioned with its front label facing out to form a type of mobile billboard.

Food-grade components The Food and Drug Administration and USDA set extremely strict require- ments for food and beverage manufac- turers, and often times those require- ments can follow a product out into the packaging areas. These require- ments can determine the specific type or style of equipment used for a certain process—like sanitary designs for mezzanines that support picking operations. “The simple rule of sanitary design in production equipment is to prevent catch points where bacteria, patho- gens, microbiological organisms or other debris could collect, grow and ultimately contaminate the food or beverage,” explains John Moore, vice president of marketing for Cubic Designs. One way to meet sanitary regula- tions is to construct food-grade plat- forms with square tubing rather than

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plat- forms with square tubing rather than mmh.com C-channel framing. The square shape is completely closed

C-channel framing. The square shape is completely closed off which prevents contaminants from getting inside. In today’s complex food and bever- age sector, regardless of the number of SKUs that come on the scene, the goal is to deliver high quality products to the consumer in a timely manner. M

Companies mentioned in this article

CubiC designs: cubicdesigns.com deMatiC: dematic.com intelligrated: intelligrated.com

KuKa robotiCs: kuka.com

redPrairie: redprairie.com

viastore systeMs: viastore.com

kuka.com redPrairie: redprairie.com viastore systeMs: viastore.com Modern Materials Handling / J U L Y 2 0
kuka.com redPrairie: redprairie.com viastore systeMs: viastore.com Modern Materials Handling / J U L Y 2 0

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modern productivity solution

MobilE coMputing EquipMEnt furnishEs rEAl-tiME dAtA

City Furniture installs forklift-mounted computers to track inventory in real time and honor its promise of same-day, seven-day-a-week delivery to customers.

By lorie King rogers, Associate Editor

C ity Furniture is one of Florida’s fastest growing furniture retail-

ers. Headquartered in Tamarac, Fla., the company currently has 15 stores and nine Ashley Home Store showrooms that sell quality home furnishings in a fun environment. But it wasn’t fun for the staff in its one-million-square-foot ware- house when the aging data collection hardware mounted to the fleet of lift trucks needed repairs. The trucks operate 23 out of 24 hours every day, and “users aren’t always gentle in a rugged industrial environment,” explains Ricky Maharaj, network administrator at City Furniture. Unreliable equipment posed a risk of downtime in the warehouse. Since City Furniture promises its customers same-day delivery seven days a week, the company couldn’t take that risk. It uses a Web-based warehouse man- agement system (WMS) to maintain real-time inventory and keep the flow of merchandise moving smoothly. And, associates use the com- puters to access the system as they are directed to specific aisles to put away new inventory or pull it for delivery. City Furniture’s evaluation team chose a new supplier

(Glacier Computer, glaciercomputer.com), and since imple- menting the new units, they have seen a lot of improvement. Maharaj reports the new units have faster boot times and include built-in smart battery technology that allows the sys-

built-in smart battery technology that allows the sys- tem to operate while employees perform battery changes.

tem to operate while employees perform battery changes. “The improvements allow us to focus on other aspects of the company, as well as increased warehouse productiv- ity with increased equipment uptime,” says Maharaj. “In our fast-paced, rugged environment we depend on equip- ment that is durable, can sustain rough usage and still main- tain great uptime. The new system has delivered for City Furniture.”

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Steel King provides a Fast Solution to material handling distributors

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A Wealth of Expertise For more than 60 years, System Logistics Corp. has been a trusted leader in the design, manufacturing and implementation of material handling systems that increase productivity, reduce costs, and improve order accuracy. Our approach is to collaborate with our customers at every step. The development process begins with comprehensive data analysis in order to understand how best to address their unique challenges. Next, system planning and design are supported by our full range of material handling technology and our suite of advanced software solutions. The end result is a flexible and dynamic system that allows for expansions and modifications as our customers grow, evolve, and pursue new opportunities.

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designed utilizing our comprehensive line of order fulfillment technologies. We provide partially and fully automated, split-case picking, full-case picking and pallet handling systems tailored to meet your specific requirements with the flexibility to expand as necessary. You can rely on our experienced sales, design and support staff to ensure that the picking solution created for you exceeds your expectations for accuracy, productivity and economy.

y our expectations for accuracy, productivity and economy . Compr ehensive World of Picking Technologies A
y our expectations for accuracy, productivity and economy . Compr ehensive World of Picking Technologies A
y our expectations for accuracy, productivity and economy . Compr ehensive World of Picking Technologies A

Comprehensive World of Picking Technologies

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Our range of order fulfillment technologies is designed to make your manufacturing plant, warehouse or distribution center more efficient, more productive and more profitable. We help you to achieve these goals by engineering ease of use, reliability, ergonomics and sustainability into every system we deliver.

and sustainability into ever y system we deliver. Our fami ly of technologies available to solve
and sustainability into ever y system we deliver. Our fami ly of technologies available to solve
and sustainability into ever y system we deliver. Our fami ly of technologies available to solve

Our family of technologies available to solve your specific material handling challenges includes:

solve your specific material handling challenges includes: AS/RS un it- and mini-load • DIAMOND Horizontal Carousel

AS/RS unit- and mini-load • DIAMOND Horizontal Carousel • POWERdepot™ Vertical Carousel

Horizontal Carousel • POWERdepot™ Vertical Carousel • MODU LA ® Vertical Lift Module • DirectPick™
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Horizontal Carousel • POWERdepot™ Vertical Carousel • MODU LA ® Vertical Lift Module • DirectPick™

MODULA ® Vertical Lift Module • DirectPick™ Pick-to-light and Pick-to-voice • Automated

Buffers/Sequencers • Conveyor and Sortation Systems • Laser Guided Vehicle • System Vehicle Loop • Palletizers and Depalletizers

Advanced Software Control From a single piece of equipment to an entirely automated distribution center, the SYSTORE ® suite of software packages streamlines your integrated material handling solution for the efficient management of all your operations.

for the efficient management of all your operations. T hink Accuracy . Think Productivity . Discover
for the efficient management of all your operations. T hink Accuracy . Think Productivity . Discover
for the efficient management of all your operations. T hink Accuracy . Think Productivity . Discover

Think Accuracy. Think Productivity. Discover System Logistics.

. Think Productivity . Discover System Logistics . 52 J U L Y 2 0 1

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MODERN MATERIALS HANDLING