DrVita’s healthy take on automation

It’s conventional wisdom: Only the biggest retailers and e-tailers can afford automated picking systems. Everyone else starts with a manual system and eases their way into automation as the volume of orders scales up.

But what if conventional wisdom is wrong? That’s a question that was answered by Wayne Gorsek, founder and CEO of DrVita.com, an e-tailer of dietary supplements, vitamins, minerals, herbs and other products to enhance a healthy lifestyle. When Gorsek launched DrVita about four years ago, he and Charles Woods, the company’s chief operating officer, decided to invest in materials handling automation from day one, but do it in a way that would allow them to scale their solution as order volume grows.

The heart of the facility is a goods-to-person picking engine (Integrated Systems Design, isddd.com) that stores 10,000 stock keeping units (SKUs) in just 855 square feet. Including the picking station, the system occupies roughly 1,400 square feet.

The system includes:
• Two pods of horizontal carousels that take advantage of the facility’s 32-foot ceilings. Each pod consists of three carousels with 46 bins per carousel and eight shelves per bin for a total of 368 bins. In total, the system can provide as many as 17,664 SKU inventory locations. The company currently stores 10,000 SKUs.

• Robotic extractors that remove and replenish storage totes from the carousels and deliver them to a conveyor line that feeds the goods-to-person picking module.

• One goods-to-person pick module where items are picked into totes that are then conveyed to a packing station, and one replenishment module where an associate prepares totes for putaway into the carousel by the robotic extractors.

• Cubing and weighing technology to optimize storage in the reserve storage area and the carousels; and automatic carton erecting and taping equipment in the shipping area.

In this system, warehouse and fulfillment processes are tied together by the order picking system and the warehouse management system (WMS). Read more about how the system works.

While the facility is currently handling 1,000 orders per shift with an average of three lines per order on an eight-hour shift, it is designed to scale up to 10,000 orders per shift by adding carousels and picking stations.

According to Gorsek, the competitive nature of e-commerce today meant that the 72,000-square-foot facility, which includes manufacturing and quality testing, had to be as efficient as possible in every way. “When I formulate a high-quality supplement, such as a multivitamin that works based on science, it often contains 10 to 100 times the active ingredients compared to the typical supplement sold on the market, which in our view is worthless. Yet, we must still make the product affordable and a good value,” he says. “We knew we had to maximize the storage space in the facility and minimize picking and replenishment labor to manage our costs.”

Automation also enforced discipline and repeatability into processes. That reduces picking errors and tracks everyone who touches a product from manufacturing to shipping, adds Woods. Those are important factors for a company that prides itself on the quality of its products. “The system allows us to establish a chain of custody,” says Woods. “We can track product from our manufacturing lines to our test lab, our temperature-controlled distribution facility and onto our carriers’ trucks. That allows us to fill orders accurately, quickly and in a way that they arrive in tact and without damage.”

He adds that the accuracy rate is 99.9% and the return rate associated with inaccurate items being picked is less than 0.01%.

Designing for quality
DrVita marks Gorsek’s second entrée into the nutritional supplement business. In 1994, he was a founder of Vitacost.com, a company that made the Inc. 500 Hall of Fame five years in a row, and went public in September 2009. Gorsek left the company in December of 2009. The company was recently acquired by Kroger.

Restless in retirement, Gorsek decided to launch a new company with manufacturing, testing and distribution of its proprietary products in one facility. He chose Las Vegas for DrVita because of its strategic location. “Thirty percent of our customers are within one-day ground shipping of the facility and many of our suppliers ship into the West Coast,” he says.

Gorsek’s goal was to do what he had done in the past, but do it better, including higher quality products and a superior, integrated manufacturing and distribution process. The distribution center began shipping its first orders about 2.5 years ago. While the DC currently picks on just one shift, orders received by 5 p.m. EST are filled and shipped the same day.

When it came to designing a distribution solution to support the business, Gorsek and Woods chose to improve on the processes and systems they had worked with in the past. At their former company, they used some carousels, but also relied on A-frame technology and pick-to-light and bar code scanning for slow movers. “There were six pick zones, and there was a lot of walking in the pick-to-light area,” says Woods. “You’d see a lot of fatigue among the workers by the end of an eight-hour shift.” In the new system, an order picker covers just 5 feet of space in the goods-to-person workstation.

In addition, manual systems were subject to error and required more people. “If you need six people in a pick zone, you have to figure in a seventh to cover for sick days and vacations,” Woods says. Robots, on the other hand, “never take time off or get tired,” he adds.

As they looked at various goods-to-persons solutions, Woods recalled evaluating a carousel system with robotic extractors in the past. He and Gorsek got in touch with the system integrator. “The first design was a $10 million system with six pods, 18 carousels and multiple pick modules that could handle 10,000 orders in a shift,” Woods says. “We scaled down that design to meet our initial requirements, but did it in a way that we can scale back up by adding equipment as the business grows. We won’t outgrow the existing equipment; we’ll just add on.”

A second consideration for the new system was integration between the various software systems. In this instance, the order fulfillment system that directs the carousels, robotic extractors and picking station is integrated with the WMS, which is integrated with the enterprise resource planning (ERP) system. The overall system is integrated into the Web site software to facilitate customer orders and ensure that only inventory on hand is promised for delivery. “It’s that integration that allows us to track the chain of custody and provide customer service,” Gorsek says. “We also installed a HEPA filtration system in the manufacturing area and distribution is climate controlled, even though those are not required. Put them all together, and we believe we have a significant strategic advantage.”

The system represents a significant investment for a new company, but it is one Gorsek believes was vital to the company’s early success. “I think a lot of new businesses fail today because they are not investing in automation early on with the intention of expanding it in the future,” he says.

Filling orders accurately and efficiently
The system was designed to fill orders accurately and efficiently. The inventory management software uses advanced algorithms to create intelligent batches of orders with the highest levels of commonality. When a wave of orders enters the system, the six carousels rotate and pre-position independently of one another. As soon as the first carousel is in position and ready to be picked, one of the two robotic extractors moves into position to retrieve a blue inventory tote.

When the tote is retrieved, it is brought down to the conveyor station and routed to the order-picking module. While at the conveyor station, totes waiting to be stored simultaneously move onto the robot. Totes are extracted and received simultaneously, helping to increase throughput. The dual-transaction system can restock a tote while moving to pick.

After each pick or storing activity, the carousel is free to pre-position again for the next action. The system keeps repeating this process until the day’s orders are completed. On the storage side of the operation, a random storage algorithm based on first-available position helps eliminate dwell time.

During the order-picking process, operators usually only have to move about 5 feet in their workstation. The workstation consists of a conveyor, pick lights and inventory control software that works in conjunction with the robotic system to dynamically queue totes in logical sequence and commonality. One operator per shift currently does all of the picking.

The system relies on lights and images to ensure accurate picking. The monitor uses a 3D model of the tote to depict each SKU location/cell in the tote. The active SKU location is highlighted in yellow showing the operator where to pick. An image of the item to be picked is displayed for verification purposes and the number of items to be picked is displayed prominently by the workstation’s pick-to-light system.

“Being able to pick with pictures and showing the SKU or UPC number of that item along with the description virtually eliminates errors,” Woods says. The system can also use laser pointers in addition to the graphics to direct the operator. Product labeling can be added at the station for automatic print and count validation, as well as recording lot or serial numbers.

Since going live, the most important change to the system has been the addition of a replenishment station. “As our order volume grew, we noticed that we had to stop picking to replenish the system,” Woods says. “The extractor has a picking and putaway side. After it delivers a tote to the takeaway conveyor, it can pick up at tote ready for putaway and handle that before the next pick.”

As the company continues to grow, it is configuring its WMS to drop ship orders for large retail customers selling DrVita products on their Web sites. “It makes no sense for us to ship to their warehouse only to reship the product directly to a consumer,” Gorsek says. “By handling their distribution, we’re a true partner to our retail customers.”

Gorsek believes that the investment in automation has put his young company on the right path. “We’re going in the right direction in terms of our distribution expenses as a cost of sales,” he says. “We have the highly efficient operations we need to get orders out accurately and damage free.”

System suppliers
System integration, robotics, order picking software and workstations: Integrated Systems Design (ISD), isddd.com
Horizontal carousels: Sapient Automation, mdciautomation.com
Conveyor: TGW Systems, tgw-group.com/us
Lift trucks, Raymond, raymondcorp.com
Warehouse management system: Accellos, accellos.com
ERP: Microsoft Dynamics, microsoft.com
Cubing and weighing: CubiScan (Quantronix), cubiscan.com
Carton erector and taping systems: Lantech, lantech.com
Plastic totes for carousel system: Flexcon, flexcontainer.com