Coty was at the point where managers realized that more than cosmetic changes were needed in their distribution operations. The company, well known for its Coty and Lancaster fragrances, had increased its volumes by 135% over the past five years. Most of the increase during that period was due to the addition of bath and body products, toiletries and cosmetics.

'While our order volumes were increasing greatly, our order assembly and dock areas in our main distribution center saw little investment during the past ten years,' recalls Mark Newberry, Coty's vice president of logistics. 'We had very little automation. We were auditing with a clipboard and a pencil. Our processes were papers passed from person to person. That did not make a lot of sense.'

Newberry looked at the company's forecasts for near-term growth and examined costs for fulfillment based on projected volumes. He also observed a growing trend that now requires Coty to plan order picking according to customer stores instead of as bulk picks. This allows customers to cross dock cartons more easily once they reach the customers' DCs.

'We quickly saw that we could not add people to solve our problems from a cost and space standpoint,' he says.

To meet these new demands, Coty chose to upgrade its facility, located in Sanford, N.C. The building was basically gutted before adding automation and paperless processing systems. At the same time, the company closed three other facilities and consolidated those operations into Sanford. All of North America is now served from the building, which is adjacent to Coty's 500,000 square foot manufacturing plant.

The new materials handling systems have increased capacities and provided greater control and flexibility. Accuracy is now above 99% and continuing to improve. Orders can also be turned around more quickly, which provides better service to customers, including leading department stores and mass retailers.

Many of the new systems support the extensive small-piece picking and packing performed in the facility. Central to this is a pick-to-light system used in split case fulfillment (King-Way Material Handling). Also added were new receiving docks near the storage and processing areas. Before, both raw materials that went to the manufacturing plant and finished products, such as cosmetics and toiletries from outside suppliers, were received at a common dock in the manufacturing area. From there, the finished products had to travel a quarter mile to outbound shipping. The new docks eliminate this long trip.

'We want to be equipped to follow the company into new distribution channels,' says Newberry. 'Every single thing we do here has changed. Nothing is done as it was a year ago.'

It is easy to see that the beauty of this distribution center is more than skin deep.

Fragrances, as well as bath and body products, are created in the adjacent manufacturing facility and brought to the distribution center for finished goods storage.

All other products, such as cosmetics and toiletries, arrive at the facility's ten new receiving docks. Most suppliers send advance ship notices to speed receipts. A bar code license plate is printed and attached to each pallet to permit tracking within the facility. This is scanned into the warehouse management system (WMS).

Coty has a fast turnaround on most of its products and practices first-in/first-out processing whenever possible. About 80% of receipts first head to reserve storage, while 20% are assigned to forward pick areas. Most of these 20% are stock keeping units (SKUs) that are new to the facility and therefore are sent to forward pick to represent those SKUs for processing.

Fast-moving items that ship as a full pallet are stored at floor level in a bulk storage area. These are primarily promotional items that are sent to a customer's distribution center. A lift truck operator picks up these pallets in receiving, scans them, and is told where to place them in the adjacent bulk area. Each floor storage position there also has a bar coded sign hanging from the ceiling that the driver scans upon putaway.

In a similar manner, other pallet loads are taken by reach truck to double-deep reserve racks, five levels high. Incoming receipts and finished goods from manufacturing are stored together here. Typically, identical SKUs are placed in front of each other in the racks, but this is not always possible and often involves some juggling of the pallets to reach the SKU stored in the rear position. Eventually, Newberry would like to replace the reserve racking with narrow aisle storage.

'The cost benefit is just not there yet,' he says, 'but it should be once our volumes increase.'

Received product may also be taken to one of the forward pick modules if those items are needed immediately and no older product is available in the reserve racks. The forward pick areas consist of modules housing pallet and case flow racks, an A-frame unit and two horizontal carousels. Lift truck drivers are instructed through their on-board radio frequency devices where to transport the pallet loads.

The forward areas are designed to hold about eight hours of demand. Most of the product that fills this area is brought from reserve storage as part of the regular replenishment function. At that time, lift truck operators are directed to pull needed full pallets from the reserve racks. These are brought to the indicated module and scanned upon delivery. Floor workers then load the flow racks as needed.

Picking usually occurs in six daily waves. Most selections take place within the forward pick modules, though some full pallets may be pulled from bulk floor storage and reserve racks. Lift trucks handle these selections, again primarily promotional items that ship as a full pallet to stores. Since the receiving docks are located right next to the bulk storage, Coty designed these docks to double as shipping areas for full pallet loads only. These are taken to staging areas near the docks where a worker attaches a shipping label and prepares the pallet for loading onto an outbound truck.

The facility has two, three-story modules that hold full cases. About three-quarters of the cases are stored in pallet flow racks, with the remainder in carton flow racks. These modules primarily serve drug store accounts, with the cases typically sent to the customer's distribution center. Pick-to-label is performed here.

A worker enters a picking zone with a stack of picking/shipping labels, locates the case location indicated on the label, pulls a case from the flow rack and slaps the label onto it. The case is then placed onto a conveyor belt that runs within the module. The conveyor eventually carries the case to the facility's shipping sorter.

A combination of materials handling equipment is used to house items for split case orders. Five modules, featuring pick-to-light systems, handle faster movers and are the heart of order filling at Coty. The A-frame holds 27 small-size SKUs of mixed-frequency picks, while carousels contain small-cube slow movers.

Three carton erectors build boxes to gather the split-case orders, each creating one of the three sizes used for picking. The size is based on SKU weights and dimensions-information that is gathered as an SKU first enters the building. Cartons then pass to a print and apply station where a shipping and bar code label is attached. An ink jet printer also sprays an ID number onto the carton flap. The carton is next conveyed to the split-case area.

Pick-and-pass fulfillment is used for gathering items. The carton is conveyed only to those areas that hold products for the order, with processing starting in the area that contains the first pick. If the order contains a pick stored in the A-frame, then it is diverted to that unit. If no A-frame item is needed, then it passes to the next area-the pick-to-light lanes.

Click here to see the layout diagram

Four of the five pick-to-light modules contain identical SKUs-the 365 fastest-moving items in the building. The SKUs are mirrored to balance workload while limiting travel time within the module. If orders are light, only one or two modules will operate at a time. If orders are heavy, such as during the Fall in preparation for the holiday season, all four modules may be deployed for filling orders.

Zone picking occurs within the lanes. As the carton enters a zone, it passes a scanner that reads the box ID. The number then appears on the pick-to-light display and the worker in the zone checks to see that the ID matches the number printed on the carton flap. The scan also triggers lights and quantity indicators located on the carton flow racks. The lights direct the worker to items needed for that order. After picking the items, the worker presses a button on the pick-to-light module to confirm the selections and places the product into the box. The carton is then conveyed to the next zone until all picks from the module have been completed.

The carton then passes, if necessary, to the fifth module that holds Coty's 609 medium-moving SKUs. Pick-to-light is also used here to select needed items.

The two carousels units hold the very slowest-movers at Coty. They are the next destination in the pick-and-pass system.

'Carousels are a good place to store a large number of SKUs in a small space,' says Newberry.

Eight cartons can be staged at a time at the carousel station. Each carton ID is scanned as it is placed into staging. This causes the carousels to spin to the storage locations of the assigned picks. Lights next to the shelves illuminate, identifying the storage tray and quantity needed. Lights also illuminate next to the carton in the staging area requiring that item. Once all picks for a carton are completed, the worker is instructed to push it off onto a conveyor.

About 10% of cartons next stop at the value-added stations.

'This area takes care of anything that might be done to the carton or the contents once broken-case picking has been completed,' says Newberry. He says this includes ticketing, special labeling, or adding a brochure or holiday stickers. 'It is part of the flexibility that we wanted in the design.'

When completed, the cartons are pushed off onto the conveyor to join cartons that by-passed value-added services.

All boxes are conveyed over an in-line scale that compares actual weight to what is expected, based on the known weight of each SKU. Any cartons with discrepancies are diverted to an auditing station. About 10% of all cartons are also diverted to auditing as part of Coty's quality assurance program. If desired, the system can also divert all cartons for a particular customer as another value-added service.

Upon arrival in auditing, all products are removed from the box and passed over a flatbed scanner, similar to that used at a supermarket checkout. Each SKU is recorded and compared to the items that should be in the order. If any items are missing, the carton is set aside until product is brought from a picking area to complete the order.

All cartons next head to a packing station where air pillow dunnage is added and a packing slip, if requested by the customer, is attached. The carton is then sealed and placed back on a conveyor for incline transport to a sliding shoe sorter, located on an upper mezzanine.

The cartons then merge with cases brought from the full case pick modules. The full case products also are weighed before entering the sorter. Any weight errors will cause the carton to be delivered to a reject lane for evaluation.

The sliding shoe sorter diverts cases and cartons down to 16 lanes based on carrier and destination. Two of the lanes serve parcel deliveries and have extendable conveyors to assist in loading.

Cartons gathered in the other sorter lanes are manually palletized and stretchwrapped, then loaded onto outbound trailers with a pallet jack. Shipping personnel attach a pallet label, scan it, and also scan a label on the trailer to confirm that the product has been loaded properly.

One of the diverts is used for processing fine fragrances that contain security tags provided by the manufacturer. The fragrances are passed through devices that either activate or de-activate the tag, depending on which security system is used by the customer.

Newberry says that the company's more than $6-million investment in the upgrade has already made a huge improvement in operations.

'It has simplified our management and given us greater control,' he says. 'Every dollar that we save in distribution goes right to the bottom line.'

The company expects to see a return on investment in less than two years.

'We have planned for our needs for the next five to seven years,' adds Newberry. 'And we now have an intimacy with our customers' requirements.'