Store: VLMs Match Smoking-Fast Order Processing - Winner 2013 Innovation Award
Hauni supplies manufacturing technology for the international tobacco industry. The company's Richmond, Va., facility focuses specifically on spare parts sales for North America, Canada and Mexico and machine remanufacturing for the world markets. At this site Hauni specialists completely dismantle and remanufacture machines using verified, overhauled and new OEM quality components.
Challenges:
The company has more than $14 million dollars in parts inventory on hand (16,000 SKUs). A three-aisle man-up narrow aisle order picking system used five vertical carousels to manage this inventory. Using a paper-based manual system, the order picker would work from a pick ticket and drive the order picker to the location of the part.
The vertical carousels were managed in a similar manner. The paper pick ticket would tell the order picker which carrier number the part was stored on. The picker would enter the carrier number and the vertical carousel would rotate to the desired carrier for the order picker to retrieve the part.
Parts for multiple orders were picked into one large tote and delivered to shipping or kitting where the worker would sort through the box to create multiple orders. Using paper work tickets, the worker would match up the correct parts from the box to fulfill an order.
"We couldn't reduce our quantity of parts on hand without slowing down manufacturing," says Clarence Cox, divisional manager at Hauni Richmond. "We had to find a solution to manage the same number of SKUs in 60% less space so we could make room for other revenue generating actives."
Solutions:
Hauni Richmond installed five vertical lift modules (VLMs) (Shuttle XP from Kardex Remstar) and integrated inventory management software (FastPic5) with SAP and an 18-position batch station. They also incorporated pick-to-light technologies and label printers to manage the stockroom inventory.
Since the installation, though order volume and SKU count have remained the same, the company is picking 75% faster with 47% less labor. With an average of 628 picks and 278 puts a day, Hauni Richmond performs over 223,000 transactions per year.
"We're easily picking the same number of orders in a quarter of the time," says Cox.
The previous manual system required 17 workers and overtime was common.
"Previously we were working an average of 3,200 overtime hours a year," said Cox. The new automated system requires nine workers and virtually no overtime, providing a 47% reduction in labor.
The original stockroom occupied 9,069 square feet of floor space. The new VLM stockroom and bulk area occupies 3,180 square feet, allowing Hauni Richmond to free up 5,889 square feet of floor space. "We were required to reduce the stockroom footprint by 60%, and we exceeded the requirement by reducing our footprint by 65%," said Cox.
The initial project was justified and approved based on space and labor savings. The company reached its return on investment in 12 months.
Judges' Comments
"Slam-dunk for Kardex Remstar who must have put together a compelling value proposition and ROI analysis. And, congrats to Cox for opening his mind to the less traditional alternative and supporting it."—John Hill
"A strong ROI by using the proper technology to accomplish objectives. Practical and innovative, while working with a variety of solutions to an interesting mix of challenges."—Jim Tompkins
"Hauni Richmond reduced stockroom floor space by 65% while fulfillment is picking faster using half the labor."—Joe Andraski
"When the storage area was packed full, they reduced the stockroom footprint by 65% with VLM technology and in addition, they improved pick and place accuracy and speed by 75% with less labor and no more overtime. Now, that innovation is amazing!"—Roger Bostelman
"Hauni Richmond selected the best and most appropriate technology in order to efficiently use their existing facility. They exceeded their performance goals while eliminating duplication of labor-intense tasks."—Al Will
"Faster and more accurate picking while using less space and labor, all while achieving an ROI in 12 months and ‘proving a concept' to invest in more. I don't think a manager and innovator could ask for more!"—Alex Scott
"Smart way to free up space with a rapid ROI."—Ron Giuntini
