Multi-modal voice replaces paper after WMS upgrade

It’s an all-familiar scenario for most beverage manufacturers and distributors: an immense number of stock-keeping units (SKUs) combined with rising wages and concerns around productivity, inventory visibility, breakage and stock rotation.

For New Jersey-based Pepsi-Cola & National Brands Ltd., the company’s efforts to distribute throughout the northeastern United States were increasingly challenged by a breadth and volume of offerings greater than the industry average. The company reacted by upgrading its facility’s “spinal column,” the warehouse management system (WMS), and replacing paper-based systems with handheld, multi-modal scan- and voice-enabled “nerve endings.” Combined, the facility’s information management system now performs like a star athlete.

Pepsi-Cola & National Brands is an independent retail distributor and bottler of Pepsi-Cola and Dr. Pepper Snapple Group brands, as well as many other nationally distributed waters and teas, including Canada Dry, Schweppes, 7UP, Snapple, Mott’s, Lipton and private-label brands. In an effort to help reduce costs, improve processes and enhance its relationship with union employees, the company deployed WMS, (JDA, jda.com) and workforce management (WFM) technology informed by the new operator scanning and voice system (Vocollect, vocollect.com).

“When we started the project, it was the first time we had a real serious dialog about getting into the 21st century in the warehouse,” says George Heinold, senior vice president of operations for Pepsi-Cola & National Brands. “A lot of things have changed on the manufacturing side, and we’ve moved from hand stacking to automation, for instance. But on the warehousing side—and I don’t think we’re alone here—things were very stagnant for many years, probably 25 or 30. The WMS was our stepping-off point for big change.”

Fair day’s pay for a fair day’s work
Traditionally, Heinold says, other than forklifts, the work of the warehouse was manual, with no real measurements of productivity other than how many trucks are loaded per hour. In Pepsi’s case, the systems it used to track picking and loading standards were paper-based and required manual interaction to calculate daily results. Facility figures were troublesome to compile, and assessing an individual’s performance was impossible.

Case handling standards were not dynamic or task-based, and created results that did not always reflect a fair day’s work for a day’s pay. For example, handling a case of water took more time than a four-pack of coffee drinks, but both still counted as cases. To make matters worse, full pallet case picks were also lumped into the daily case list pick results.

The old system took orders coming in, broke them down and built them throughout the day to determine the routes, all by paper. “It was not very dynamic or sophisticated,” Heinold admits. “Even after a pallet was built, we had no idea if it was done in a timely way or if there was any opportunity for improvement. There was no data on the the age of the product, inventory rotation, how we built the pallet, how we got it on the truck, or how much time it took. We didn’t know what anything looked like over a period of time.”

With the previous paper-based system, part of the problem was that to get assignments, employees would look through and pick from the stack of orders based on which is easiest, Heinold recalls. “Then there’d be arguments and little accountability or discipline. We’ve now eliminated all of that. There’s no favoritism when things are picked by voice.”

Another big advantage, says Heinold, is 100% inventory visibility. “We won’t allocate something we don’t have. When you hand out paper you don’t know if you actually have something in inventory. This creates delays.”

The new system facilitates and streamlines the process both for pickers and managers who no longer have to discuss a short or spend 20 minutes going into the inventory or warehouse to investigate whether the product should be cut from the order. The system also rotates inventory by first-in, first-out (FIFO) and first-expired, first-out (FEFO).

After the new system, the facility began adjusting labor levels and engineered labor standards (ELS) to match reality. Within two months, the company was able to reduce headcount, and it now uses ELS for tasks beyond picking including replenishment, fluid loading, bulk loading and transport loading.

Gaining the ability to maintain performance records for each individual employee has helped the company streamline and improve labor results. “We have reduced our warehouse wage expenses, excluding fringe benefits, by 15% in four years—despite contractual union wage increases of 8%,” Heinold explains. “To put it another way, our current actual wages are 85% of what they were four years prior. Total warehouse headcount, including management, non-union and union, was 148 full-time equivalents (FTE) four years ago and is now at 112 FTE, which represents a 24% decrease.”

Abandoning assumptions
Once the new system went live in March 2010, a database was created by each picker with a time-stamp using voice picking for every transaction within the picking task. This process added total accountability for individual results based on the assigned task using predetermined engineered standards, which allocated more time for difficult tasks and less time for easy tasks. The creation of a parameter to hold back full-pallet picking and fluid-load these pallets at the time of loading reduced double-handling, as well as eliminated the opportunity to inflate the prior list-picking results.

The system’s benefits extend beyond the facility. With FEFO, the company can calculate shelf life, which has resulted in a reduction of out-of-date product that previously had to be destroyed. The ability to first create various breakage write-off codes and then track and measure those codes has resulted in a new focus on accountability. Shrinkage and breakage have been cut by 15% to 20%, and driver turnaround and load accuracy have been improved by replacing manual checkout process with express checkout for conventional and bulk deliveries, which total between 85 and 100 routes per day. In the past, the driver had to check the truck to confirm what was supposed to be there in the absence of any time stamp or identification into who built a pallet or loaded a truck.

Heinold says Pepsi-Cola & National Brands is positioned for future success and now enjoys a competitive edge with its new capabilities. “Before we implemented the new solutions, SKU proliferation had been an ongoing issue in our end of the industry, so we wanted to be prepared to handle all of that by working smarter, not harder,” Heinold says. “The enhanced warehouse management efficiencies improve customer service. We can allocate products more effectively while maintaining appropriate safety stock levels. The company’s employees are more accountable and productive, and they have embraced the solutions as part of their daily routines. If you were to ask any of the management staff who work in this particular facility if they would go back to the old system given the choice, they would tell you ‘no.’”

At a larger scale, Pepsi has begun closing other facilities in favor of bringing production to the new system. In 2014, they will add four million cases of production to the facility. “We never would have been able to do that before,” Heinold says. “It was all we could do to move 16 to 17 million cases and now we can handle 20 million cases comfortably.”