Two years ago, Joe Stannard, vice president of logistics for CooperVision, a $400 million division of the Cooper Companies, developed a vision for the future: an expanded distribution center in Rochester, NY, that could meet the high customer service requirements of the contact lens industry and keep pace with the company's growth for at least five years.

'In late 2002, my three big issues were inadequate space, a capacity crunch, and cost reduction pressures,' Stannard remembers.

In addition to the big three problems to be solved, productivity was also lagging. 'We were working large amounts of overtime, and we were struggling to keep up with high customer-service standards that the contact lens market demands.'

That customer-service standard is pretty straight-forward—an order placed by 2 p.m. ships that day.

To develop the solution to this litany of challenges, Stannard and his team worked with an outside consultant to upgrade the DC and free up space, improve productivity and accommodate growth for at least the next five years.

The key to hitting these goals was the strategic introduction of automation into a manual warehouse, including:

• A voice-directed picking system that doubled picking rates;
• Gravity-fed rack in the main storage/picking area serviced by wire-guided man-up lift trucks;
• Two sortation systems that automatically scan and sort packages;
• A three-tier conveyor line that links picking and packing areas; and
• An upgrade of the carousel control software package.

The multi-million dollar project was designed with a return on investment of less than two years. That return, however, was not predicated on direct cost reductions but on cost-avoidance.

'Our goal wasn't to lay off people,' Stannard says. 'It was to minimize the number of people I have to hire in the future as we continue to grow. That's where the savings will come from.'

The stakes were higher than just meeting customer service levels, as important as that is to CooperVision. Unless changes were made, the 68,000 square foot manual warehouse could have become a bottleneck to CooperVision's plans to continue growing 15% annually into the foreseeable future.

'We have a history of making friendly acquisitions every few years,' Stannard says.

For instance, CooperVision recently agreed to acquire Ocular Sciences, Inc., which will double sales to $800 million a year, and create the third largest contact lens company in the world, and the second largest in the U.S.

To understand the challenge facing Stannard as he began those plans, it helps to put the facility into perspective.

CooperVision has been in business for over 50 years. The Rochester facility, the company's only U.S. warehouse, ships half of the company's total orders. A staff of 200 working three shifts, five days a week, distributes approximately 10,000 small packages daily of contact lenses to eye care professionals in the U.S. That translates into an average of 60,000 items picked and shipped each day.

In addition, the facility ships some larger quantity orders of up to 1,000 items per order to a few high quality contact lens distributors. To top it off, the DC also provides inventory to nine smaller warehouses located around the world, including Canada, Brazil, Italy and the UK.

Stock keeping unit (SKU) management is a huge challenge. CooperVision stocks 30 million contact lenses, including 600,000 different SKUs. About one-third of those represent 80% of their business. The other two-thirds of the SKUs are custom lenses that customers ask them to stock for them. 'While it's a huge number of SKUs, we may only stock one or two units of some prescriptions,' Stannard says.

In comparison, CooperVision may stock 5,000 units of its fastest-selling prescription. The good news: since contact lenses have a shelf life of more than five years, first-in/first-out is not an issue.

One big reason for lagging productivity and difficulty meeting customer service demands was that CooperVision was essentially a paper-based manual warehouse.

'I had a lift truck, a conveyor and some carousels for our slowest moving items,' Stannard says.

For instance, the facility did not have a formal warehouse or inventory management system. Picking was done one invoice at a time, with order pickers walking up and down aisles and crossing off the items as they deposited them in dedicated plastic totes.

Orders ready for shipment were placed in a bag and manually brought over to the shipping area, often with stops for socializing along the way. 'We had a lot of inefficiencies because we had so many manual steps and a lot of travel time,' Stannard says.

Working with consultants, the CooperVision team developed a comprehensive plan that would allow the DC to grow in an orderly fashion by introducing various forms of automation in a cost-effective manner. With the plan in place, the team then visited over 30 DCs around the U.S. to see the different forms of automation in action from the vendors they were considering.

During the planning process, it was decided to phase in the new systems.

The first step was to expand the existing space by an additional 56,000 square feet, bringing the total to 126,000 square feet including 14,000 square feet on two mezzanines. Stannard also has a lease on an additional 80,000 square feet for future expansion.

Voice picking technology was the first system to be installed, and is used in the main storage and picking area, which represents about 65% of the business.

'Voice picking allows us to do batch picking rather than pick by invoice,' Stannard says. 'That speeds up picking rates, because we can pick according to the most efficient path.'

Pickers can also pick to one tote on the cart, rather than multiple totes for multiple orders.

In addition, voice picking allowed CooperVision to go to a location-based system. 'Before, a picker had to differentiate between 26 different brands and to understand how to read prescriptions,' Stannard says. 'Now, they are directed by voice to a location and to pick a certain number of items at that location.'

In addition to a doubling of picking rates, there was a side benefit to going to a location-based system. Training time was dramatically reduced since pickers don't have to understand brands.

The system gives managers the ability to closely monitor the performance of their associates on the floor. 'I can track pick rates by individual picker,' says Stannard, 'And I publish pick rates by shift. Before, I couldn't track anything.'

After the voice system was implemented, CooperVision worked on handling and storage methods. They were installed in the reverse order of the flow of material, which was decided to be the smartest way to manage the project.

A package sortation system automatically scans packages and then sorts them to hampers in the shipping area based on service levels and carrier.

The conveyor system was retrofitted with a new three-tier conveyor line that links picking, packing and shipping areas. Meanwhile, an existing carousel for the slowest moving product was upgraded with new software controls.

Gravity-fed rack was doubled in height from 14 to 28 feet in the new warehouse space. The racking is serviced by two, man-up lift trucks. They travel along a custom in-floor wire-guidance system that protects the racks.

The last piece to be implemented was a custom-built item sorter that automatically scans the UPC codes on picked items and sends them to the right packing station.

'That increased our picking efficiency by another third after the voice system,' Stannard says.

While the new equipment is in place, Stannard says the job is still not complete. The company recently installed a box former that will fold 30,000 boxes a day of their two most popular sizes. 'That's going to reduce workman's compensation issues,' Stannard says.

This month, CooperVision is scheduled to go live with a new manifest shipping system.

'We've outgrown our current shipping system doing 10,000 packages a day,' says Stannard, 'and when we integrate the Ocular Sciences orders we will be shipping more than that.'

'This system will handle up to 50,000 packages a day. That will prepare us for the growth we're expecting over the next five to ten years with very little additional software work. We'll simply add additional carousels or packaging stations as needed.'

The new shipping system will not only handle more packages per day than the current system, it will also do the labeling and document generation for less-than-truckload and international shipments. That paper work is currently done manually.

In fact, as Stannard begins setting the plans to integrate operations from Ocular Sciences' 95,000 square foot warehouse into his facility, the option to lease an additional 80,000 square feet in the Rochester facility is looking pretty smart. 'That may pay off sooner than I thought when I did it,' Stannard says.

Depending on how CooperVision continues to grow, Stannard may soon have to create another new vision for the future.

'Change,' he says, 'is our middle name. But for now, we're very, very happy with everything we've done.'