Control on the cutting edge

Kennametal sharpens up its metal-cutting tools distribution with conveyors running under PC-based direction in a new central distribution center.

By -- Modern Materials Handling, 11/1/2000

Centralizing distribution at a new warehouse in Cleveland, Ohio, and automating many order fulfillment activities for its metal-cutting tools are producing solid results for Kennametal Inc.

Gains in inventory availability, fewer order errors, and reduced distribution costs are all quite evident, even though it has been only 6 months since startup of the distribution center.

"Our goal was to create a single facility that would enable us to improve customer service with a one-order, one-shipment, and one-invoice system," explains Kennametal North American Distribution Manager Fred Bence. "This goal was the driving force behind consolidating distribution," he adds.

After relying on eight regional distribution locations for 12 years, Kennametal built the new DC. The 125,000 sq. ft. facility fills 4,000 or more orders a day for its metal cutting tools. A typical day's orders are pulled from 110,000 stocked products, and delivered to customers usually within 48 hours.

Fulfillment mistakes are minimized now. "Even though we're still technically in start-up, we track order errors by calculating the number of errors per million lines shipped," says the DC's facilities manager, Tom McNamara. "Our target is no more than 500 errors per million lines shipped. While we are not there yet, we have consistently been over our goal, which is 99.9% accuracy just during start-up.

PC-based control, not PLCs

A 4,800 ft. conveyor system equipped with advanced, computer controls (a PC-based system from project manager, Eaton Corp.'s Cutler-Hammer, 800-525-2000, www.cutler-hammer.com) is the materials handling backbone of the new DC. PCs and software (Steeplechase Software, 734-975-8100, www.steeplechase.com ), instead of the more conventional PLCs (programmable logic controllers), provide the control logic and "smarts" to run all the sections of the conveyor. They send a data stream on product/tote flows to operators so they can manage the DC's activities constantly.

With the automated system's data management capabilities, efficiencies in product/tote flows have already been generated. And the complexity created previously by multi-location distribution, which often led to multiple shipments to customers from individual locations, is avoided.

Distribution costs have been reduced as well. Indeed, Kennametal reported a significant reduction in operating expenses almost immediately after startup last spring.

Without the automated system, moreover, Kennametal would have required a 15% to 20% increase in staffing to manage its day-to-day business manually in the Cleveland facility, as Bence explains.

Why Cleveland?

"Our first step toward consolidating," Bence says, "was selecting a strategic location for the new operation. We knew that consolidation of our entire business would require that we have ready access to air and ground transportation services. Cleveland, with an international airport and a United Parcel Service hub, proved ideal."

In addition, Kennametal's largest steel toolholder manufacturing facility is in Cleveland. And one of its larger insert production plants is in nearby Orwell, Ohio. Furthermore, "We knew that we could reach 71% of our customers with a two-day ground service offering," Bence explains.

"Throughout the process of developing and implementing our new distribution solution," he continues, "there was a host of business and operational issues that needed to be addressed simultaneously and factored into an integrated plan for the change. Keep in mind, everything was new-the location, the order fulfillment system, and the majority of the employees.

"Since we planned to assimilate one regional warehouse at a time into the new facility, our primary concern was maintaining high-caliber customer service during the consolidation process. To do that, we needed to be able to use receiving and picking lanes prior to the full implementation of the system, and have a control system that would enable us to find orders fast. Therefore, we needed a superior conveyor control system, and the comprehensive project management, support, training capability and innovative technical solution of a supplier who really understood our business," Bence adds.

Linking to ERP

A key requirement of the conveyor control system was the need for linkage with Kennametal's enterprise resource planning (ERP) system. This inter-enterprise software system tracks each step in the order fulfillment process. Although the ERP system is proprietary, it is Windows NT- based as is the PC-based control software for Kennametal's conveyor system. The flexibility of PC-based control enabled creation of this essential linkage quickly. It also allowed an ERP server application to run in the same PC system as the DC uses. Through this linkage, orders are sent in from multiple order entry locations to the North American distribution center where fulfillment begins.

The PC-based control's open platform not only provides flexible information flow, but also allows real-time automated updates of product movement through the warehouse. Items are tracked from the time they arrive on the receiving docks until they leave the shipping area. Meantime, the system simultaneously provides order status updates to management.

PC-based controls also ensured the system's ease of installation and start-up as well as reduced wiring costs. This system also provides the comprehensive diagnostics critical to reducing distribution center downtime.

How it all works

Data management of orders and product flow control begins when the orders arrive and are printed out at the first storage location where materials are to be picked. When picking is completed, a bar code, which acts as an identifying license plate for the order, is printed and placed on a tote.

Scanners read the bar code and the control system routes the tote to its subsequent destinations. It can go through every station in up to 16 zones, where additional material can be picked to complete the order.

The tote then moves to the shipping area. Here, kits can be made of multiple parts for some orders. And finally the tote is reintroduced into the system where its contents can be packed and shipped directly to the customer.

The conveyor control system also is used to receive materials into the facility and send them to their proper storage locations for restocking.

Kennametal also has the ability, through PC-based conveyor control, to address a variety of time-critical situations efficiently. For example, if an order needs to be expedited manually, an operator merely goes to a computer screen, inputs the bar code of the tote that needs to be located, and in seconds, the tote's location appears on screen. The operator then can go to the designated station, remove the tote, and expedite the order.

"Because the conveyor control vendor's team understood our requirements, it was able to work directly with us and provide a number of value-added improvements that enhanced our operation," reports McNamara. "For example, we originally planned to move a tote through a recirculation loop three times if the bay it was scheduled to go to was busy. After three loops, it would go to a jackpot lane, which is a holding area requiring an operator to physically take the tote to the receiving lanes and reintroduce it into the system.

"But we changed the control logic so if a bay is busy, the tote is moved to its next destination and returned to the first bay at a later time. This solution enables work on an order to continue and makes our processing time much faster," McNamara adds.

The control system also is a key informational resource. As Bence remarks, "Once we became operational, we saw that knowing, on an hour-by-hour basis, how many totes were being handled would help us address a number of management issues.

"The vendor wrote a software program that captures the tote count. Our network person was then taught how to create a spreadsheet report that we use for analysis of key business factors. Having seen the ease of doing this and the wealth of information that is available because of the link between the two systems, we're confident this is a tool we'll be using in a variety of ways to ensure the continuous improvement of managing the system."

Staying on the cutting edge

"We're the market leader in our business in North America and second globally," says Bence. "Maintaining and strengthening those positions requires implementing new technologies and systems to continue enhancing customer service cost effectively.

"The development and success of this facility has attracted the interest of other Kennametal distribution operations worldwide as well as other organizations looking to optimize their warehouse systems. While they may not need to implement systems as large as ours, there are elements of what we have done that can provide quantifiable benefits to their operations.

Having seen this operation and learned of the results it is generating, many are assessing what role the technologies we're using can play in advancing their growth and profitability."

With the implementation of the automated system, Kennametal also is poised to accelerate its e-commerce, business-to-business initiative for expanding its own sales and increasing profitability.