3PL powerhouse

Third party logistics provider Ingram Micro Logistics has positioned itself as the distribution backroom for the information revolution.

By -- Modern Materials Handling, 2/1/2001

Ingram Micro Logistics is the distribution arm of Ingram Micro, the world's largest wholesaler of technology products and services. For several years now, the company's seven U.S. distribution centers have additionally served as the distribution portals for leading computer-related firms, such as Microsoft, 3-Com, Comp-USA, Buy.com and Egghead.com. This third-party-provider (3PL) approach has been so successful that IM's logistics division has become a force of its own, with IM's own wholesale business as its largest client.

The dismal performance of many dot com companies last year further prompted IM Logistics to expand its offerings to Web-based vendors.

"What has developed with the Internet is a new business that was not there before," says Terry Tysseland, senior vice-president of U.S. operations for IM Logistics. "We have virtual companies using us now for their complete backroom. What we do well is take in full cases of product and ship out very small orders to end users in our customers' names."

It was the small orders that crippled dot com DCs during Christmas of 1999, according to Tysseland. Most of these facilities had experience with case distribution, but not with the ones and twos that are the bread and butter of Web businesses.

Several years ago that was also the situation with IM Logistics. Over 80% of products then shipped in cases to wholesalers and resellers. Now it is the reverse-83% of outgoing parcels are sent directly to end-users. Most contain only a small number of items in each order.

"What we have done is take that entire cost element out of the business by shipping directly to end-users," adds Tysseland.

To better prepare to meet this challenge, IM Logistics built a state-of-the-art distribution center in Jonestown, Pa. that replaced an aging warehouse. The facility serves the Northeast, the company's busiest region.

Six miles of conveyors, most of which are located overhead, and five sliding shoe sorters help the facility to process over 30,000 cartons each day. The square building design was also a departure from the other IM Logistics distribution centers, most of which are long, narrow facilities.

"We have taken what we have learned from our other centers, and built upon that. Every system has improved," says Tysseland. "But the main improvement in this facility is the centralized design. It is almost a square building with the automation running down the center."

The facility consists of four adjoining buildings with firewalls in between them. The firewalls are needed because of the high value of the items stored there. Together the four buildings form a centralized structure that brings product closer to the automation, saving time and improving efficiencies.

While the facility has been open only since April, it has already become the most efficient IM Logistics DC, with room yet to grow.

Bringing technology to the masses

Jonestown currently processes 14,000 orders each day with a capacity for 50,000. The building is designed to add pick modules and to expand the exterior walls as growth demands.

The company is also meeting its goal of same day processing, with an impressive 99.9% on-time shipping performance.

Just as the industry breaks product into hardware and software, so does IM Logistics. Software is received at docks on the west side of the building, while hardware items arrive at east-side docks. Receiving on both sides of the building allows for improved space utilization.

Replenishment of the efficient pick modules takes place during the overnight shift with most items pulled from pallet storage. Primary order filling in Jonestown takes place between 2:00 p.m. and midnight. Picking is done in about 100 daily batches, each scheduled to ensure that all orders are complete before hitting the cutoff for the carrier that will transport that batch.

Man-up order pickers pull full slower-moving cases from pallet rack storage. They use pick-to-label selection for these picks.

The hottest case products come from a three-level pick module. The west side of the module holds software, while the east houses software and systems. Again, workers use tickets/labels to direct their picking.

Orders requiring less than full cases are selected in a re-pack picking module. Workers select stock as instructed by tickets/labels directly into shipping cartons. The module contains three levels and 13 picking zones with pick-and-pass conveying.

Orders received at IM Logistics by 5:00 pm ship that day. The company prides itself on its ability to reach its customers quickly.

"That's the magic to the IM system," says Tysseland. "We can cover 100% of the U.S. with second-day ground service and 69% with one-day ground service. Everyone is trying to take cost out of business. I think the last cost to take out is the transportation piece."

Tysseland says that much of the center's success is the facility's unique design. Several of IM Logistics' other facilities began as spec buildings where the materials handling system had to be adapted to the building's footprint. Erecting this facility from the ground up allowed the company to build to its new business model, while the square design has also brought the desired performances.

"We continue to be efficient because our distances run are very short," says Tysseland.

He admits that the design was a risk, as the square shape makes it very difficult to subdivide at a later time if the need arises.

"We gambled a bit with it," Tysseland says, "but everything we have done with this center has been very good. This one is a thoroughbred."

System Snapshot

Ingram Micro Logistics Northeast Distribution Center, Jonestown, Pa.

3rd party logistics provider for high-tech manufacturers

Current daily throughput:

30,000 cartons, 14,000 orders

Order capacity: 50,000/day

Accuracy: 99.92%

Same day shipments: 99.9%

Pallet rack locations: 24,182

Employees: 625

Stock keeping units: 23,800

System integrator, conveyors, sortation systems:

Rapistan Systems, 616-451-6525, www.rapistan.com

Lift trucks, order pickers:

Raymond Corp., 800-235-7200, www.raymondcorp.com

Racking systems:

Frazier Industrial Co., 908-876-3001, www.frazier.com

Fixed scanners:

Accu-Sort Systems, 215-723-0981, www.accusort.com

Hand scanners:

Symbol Technologies, 516-738-4915, www.symbol.com

Loosefill packaging equipment:

FP International, 650-364-1145, www.fpintl.com

Case erectors:

A-B-C Packaging Machine Corp.,

727-937-5144, www.abcpackaging.com

Shrink wrappers:

Lantech, 800-866-0322, www.lantech.com

In-line scales:

Mettler-Toledo, 614-438-4511, www.na.mt.com