Schumacher Triples Throughput in Existing DCs, Gains a Scalable Solution for Continued Growth

Business Challenge
Manual order fulfillment processes were limiting Schumacher’s potential for growth.

A large percentage of Schumacher’s daily orders were high case volume shipments to major retailer clients, which can range from a single carton mixed SKU parts order up to an order of 50,000 units.

All mixed case order picking was done using fork trucks, staging, hand labeling and re-palletizing the orders, a process that required a dedicated staff of ten to sixteen people a day to accomplish the task.

Fulfillment was further complicated by the fact that many of Schumacher’s large retail customers require vendor-compliant shipping labels on every case shipment. The risk of applying the wrong compliance labels to a customer’s shipment could result in costly shipping and compliance fines imposed by the retailer.

Additionally, due to an increasing volume of Internet orders, parcel shipping was becoming a fast growing segment of the business and adding new complexity to the fulfillment workflow.

As business continued to grow, Schumacher hit a ceiling on order throughput with its existing paper-driven order fulfillment processes. “On our best day, we could only process $1.5 million in order shipments between our two DCs” said Chris Hadsall, Executive Vice President for Schumacher. “We needed more throughput and higher efficiency.”

As a first step, Schumacher introduced barcode scanning to the order picking process to improve picking accuracy. However, the potential for fulfillment errors were still present due to manual batch printing and hand-applying the compliance labels to each case at the pallet build operation.

To alleviate the bottleneck in growth, Hadsall took on the initiative to improve throughput and accuracy in the company’s distribution centers (DCs). Hadsall, a seasoned business professional with a background in civil engineering, computer science and business operations, knew that significant efficiency gains could be achieved by applying the right automation expertise and technologies. 

Solution
Schumacher engaged The Numina Group, a leading order fulfillment automation integrator with 30 years of experience in the design and implementation of automated warehouses and distribution centers, to perform a design study. The Numina Group studied the company’s current DC operation and made recommendations on better practices and technologies to improve efficiency and order throughput.

Design Study Yields a More Efficient Picking Strategy
Numina’s design study gave Schumacher a clear game plan to improve efficiency and throughput by reengineering its order fulfillment operation to eliminate labor-intensive manual processes, maximize throughput and provide the projected ROI through an investment in automation.

Numina Group analyzed SKU movement and the DCs’ existing slotting to identify inefficiencies in storage and improve product movement by designing a more efficient pick path. This included locating the highest moving SKUs along the conveyor line to eliminate wasted walk time and fork truck travel. This led to improved efficiencies in picking and reduced replenishment cycles.

The new DC design slotted slow-moving SKUs in locations separately from the high-velocity SKUs. High movers were located in an accessible and ergonomically friendly pallet flow in an efficient pick path, resulting in fast picking and easy replenishment. The key to adding efficiency was the step of slotting the highest moving products in pallet flow lanes directly along the conveyor. This was an essential step to gaining productivity by locating the A and B products in the closest locations along the conveyor line to eliminate wasted walking time.

The second component of the design study assessed the potential of improving efficiency through automation technologies such as voice-directed picking, automated print-and-apply labeling and the use of a conveyor and order sorting system to reduce the use of fork trucks for the majority of case picking.

New Conveyor and Order Sorting System Streamlines Fulfillment
In addition to reconfiguring the warehouse to improve slotting, Schumacher implemented a new conveyor and order sorting system with in-line scan, weigh and print-and-apply labeling capabilities to automate the application of both the shipping and retail compliance label. Voice picking is used throughout the operation with voice managing the slow movers more efficiently by batch picking these SKUs using a fork truck. When a mixed pallet of cases for the pick wave is complete, the operator is directed to drop off the pallets for loading onto the conveyor system.

To streamline Schumacher’s growing small parcel shipping volume, Numina also recommended adding voice picking technology to direct workers in the mixed SKU order picking process. Items are now picked and scan validated, using totes with a manual pack to carton process. This area is also streamlined using print-and-apply technology for automated manifesting and parcel labeling.

Warehouse Execution & Control System Manages Automated Order Flow
The entire order fulfillment operation is managed by Numina Group’s Real-time Distribution System, a top-tier Warehouse Execution and Control System, (WES-WCS). RDS’s order fulfillment automation software includes voice directed picking along with in-motion case barcode scanning, print and apply labeling and the pallet build sorting process control. RDS manages the batch case pick-to-conveyor process, assigns and scan-weight validates each case to the customer’s order and ensures the cases are labeled with the retailer’s UCC compliance label and pallet-build shipment rules, all without human intervention!

Moving to voice picking has increased accuracy to 99.99% and efficiency by over 70% at the DC. Now, order pickers are directed in the most efficient walk path to the product storage location. Using the combination of voice instructions and hands-free barcode scanning of the storage location and SKU barcode batch case, picking now occur across multiple orders at pick rates above 600 cartons per man hour.

Operators receive voice commands to pick the required quantity and scan validate each case as they are placed on the automated MDR conveyor line that transports and measures each case through the in-motion scan-weigh audit station. The case SKU barcode is captured, the case is weight audited and the print-and-apply applicator automatically applies either a compliance label or both a compliance and parcel shipping label to the case.

The scan weigh audit also performs pick count verification and the RDS labeling software module assigns the case and count matched to the customer’s specific order and prints and applies the required labels. Barcode scanners after the labeling process are used to validate the entire pick and ship process. Each case is then conveyed to a pallet and shipping sorter where cases are again scanned and sorted to the order pallet build stations or directly to FedEx® or UPS® shipment lanes.

Benefits:

• Increased throughput by 70 percent

• Reduced staffing from 16 to three to five employees for LTL case picking

• Eliminated manual fulfillment practices

• Achieved 99.99% order picking accuracy

• Eliminated the majority of retailer charge backs and fines

According to Hadsall, one huge benefit of speaker-independent voice technology is that it has virtually eliminated worker training. “When we need to bring temps in for the heavy season, it used to take us one to two weeks to train somebody so we were confident they weren’t going to screw up a customer shipment,” he said.

“Now, with the speaker-independent voice picking system, there is zero voice training, so we can train workers in less than five minutes. Our CFO came in and we strapped the headgear on him. In less than five minutes he was a picking professional.”

Hadsall also noted that employees are fully onboard with the new system. “At first, our DC staff was really skeptical about the new technologies we were putting in place. But once we got the system in and running they were beside themselves. They couldn’t figure out why we didn’t pull the trigger on this system five, six, even ten years ago,” he said.

Automation is Free – With the Right Return on Investment (ROI)
Schumacher was able to implement their new fulfillment system in a six-month period. Equally important, the company’s ROI has been very rapid. “When we put the first voice pick and labeling automation system in, it was just slightly under $600,000 and we certainly saw the payback within the first year,” said Hadsall.

Overall Schumacher has invested $1.4 million across both DCs including the conveyor system. “The investment has proven to be well worth it,” Hadsall said. “We’ve not only improved picking and shipping accuracy, but we’ve also increased throughput capacity from $1.5 million to more than $5 million in order shipments per day.”

By carefully investing in automation expertise and the right technology, Schumacher has eliminated operational bottlenecks and has positioned itself well for a future of continued growth.

Related: Building a Better Materials Handling Distribution Center