Tognum America ships around the world in 1 to 3 days

How do we turn out a consistent product day in and day out? That’s a question challenging 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 operating 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 service parts distribution center was designed together with a consultant (i+o Industry Planning + Organization, http://www.io-consultants.com) to deliver spare parts to customers of MTU diesel engines in North America and around the world within one to three days. More importantly, the order fulfillment engine is a mirror of the system 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, director 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 fulfillment system is designed to deliver the exact same product in the same manner, regardless of whether that order is filled in Michigan, in Germany or in Asia. “There will always be some differences 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 regardless of where we fill the order.”

To achieve that level of consistency, Tognum used the same system and design consultancy firm on the German and North American projects. It also installed the same automation equipment and software from the same vendors, including the same mini-load automated storage and retrieval (AS/RS) and warehouse management (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 Zeppelin airships. Over the years, they expanded into Maybach engines for automobiles, diesel-electric locomotives 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 diesel 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 business. A number of different solutions were explored. “We looked at everything 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 facility that could fill a customer’s order from anywhere in the world, regardless 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.

Tognum also decided it needed common equipment at all three facilities. Otherwise, there would be inherent differences in orders filled by manual processes compared to highly automated 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 brownfield facility,” Wood explains. “Some of our manual materials handling systems are different.”

In choosing between technologies, 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 storage. This system allows the materials 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 custom 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 fulfillment, the facility does a lot of kitting, such as kits for an engine overhaul 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 turret truck retrieves a pallet from storage and delivers it to a picking station at the 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 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 picking 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 provides 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 processes or the people that were controlling that facility.”

However, having a common WMS has also provided visibility into operations on a global basis. All three facilities are able to benchmark their performance 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 getting 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 individual 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. Tognum knew the original plan would need to be accelerated when the first shipment that arrived in Brownstown contained a slow-moving part that hadn’t sold in 10 years but suddenly 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.”