DC saves with more cost-effective orderpicker fleet
By Staff -- Modern Materials Handling, 9/15/1999
"Cost-conscious distributors must spend their dollars wisely," says Tom Consedine, director of operations and transportation, Owens & Minor. At its Dallas Division, this distributor of medical supplies has been able to find low-cost materials handling solutions that avoid high-cost capital spending while they improve productivity.Reconfigured racking, for example, saves on annual warehousing costs. Restructuring the fleet of orderpicking vehicles reduces industrial truck leasing and maintenance costs, moreover.
Previously, the Dallas warehouse maintained a fleet of 20 orderpickers (replacement value, $500,000). The fleet has been cut to seven of the original vehicles working the reconfigured, reslotted warehouse plus three more trucks. Instead of using the more expensive orderpickers exclusively, O&M also has added a new, more economical orderpicker to its operations. This vehicle is specifically designed for low-level picking; three have been added to O&M's fleet. Result: a cost savings to the Dallas Division of $100,000 yearly in maintenance and leasing costs.
At the Dallas facility, the storage racking in the 80,000 sq ft warehouse there appeared to be full. But by using warehouse configuration software, a project team learned that O&M did not need to add storage space.
In a next step to increase cost efficiency, Pareto's 80:20 theory, the configuration software, and velocity slotting management software were all applied. The goal: store 20% of SKUs (stockkeeping units) that account for 80% of all picking activity into low-level storage locations within 6 to 8 ft of the floor.
Moving high velocity product to new primary storage bins on the first three shelves has succeeded. Some 75% of all picks are now made from these lower level slots. Picking time to fill orders for some large customers has been cut by up to 40%.
Building a quick pick area has led to significant efficiency gains as well. Within this consolidated area are items formerly scattered throughout the warehouse in full pallet and hand stack bins. Pulling many of these orders had required the use of $25,000 orderpickers.
Now about 50% of total daily picks are from new locations in the quick pick area. O&M teammates now wheel inexpensive carts through the area for their picking instead of driving through the entire warehouse on the more costly orderpickers.Raymond
FACT FILE
Owens & Minor
Dallas, Texas
Application: Distribution of medical supplies
Facility: 80,000 sq ft warehouse
Challenge: Find low-cost solutions to materials handling problems that avoid high-cost capital spending, yet still improve warehouse productivity.Solution: Reconfigure storage racking and reslot products so that 20% of SKUs (stockkeeping units) that account for 80% of picking activity are in locations within 6 to 8 ft of floor. Restructure fleet of orderpicking vehicles to use economical vehicles designed for low-level picking and reduce total fleet size for an annual savings of $100,000.
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