When Mercedes Benz decided to open a Northeast regional distribution center, the company's objectives were threefold.

First, it needed a new, more productive DC to replace an outdated one in Maryland. Second, Mercedes wanted to establish a central location, known as a regional master DC, for all of its slow moving parts in the United States. Third, the automaker needed a greenfield facility to launch its new lean distribution initiative in North America.

And by all indications, Mercedes met all three objectives.

Based in Robbinsville, N.J., the DC's design mirrors that of a DaimlerChrysler DC in France that is known for its efficiency and productivity at storing and distributing parts throughout that country. The Robbinsville DC is more than 450,000 square feet and processes 15 truckloads daily to 105 dealers across the Atlantic seaboard. In addition, between 800 and 1,200 packages of air freight shipments are delivered to 230 dealers across the U.S.

Located just one hour from a major Northeast shipping port, Robbinsville proved ideal for the automaker to relocate its smaller DC in Baltimore. "The Baltimore site [200,000 square feet] couldn't accommodate our needs for a regional master (DC)," says Lori Gonzalez, supervisor of regional master operations. "We feel that this site not only accomplishes our goals currently, but allows for future expansion as well."

In fact, the DC has already made its mark. "Very quickly, we increased our overall productivity by over 30%," Gonzalez says. And, thanks to the new distribution strategy, "our line counts went up, and our touches went down."

Meanwhile, the DC is in the process of receiving all slow movers from the automaker's other four DCs in the U.S. When that is completed, Robbinsville will be the sole U.S. supplier of slow-moving parts, which equals 80% of all stocked part numbers.

Central to the DC's overall success now and in the future is a conveyor system (Gebhardt USA, Inc.) that "allows us a more efficient operation," Gonzalez notes.

Serving as the cornerstone of the operation, the conveyor coordinates path placement with the warehouse management system (WMS) to determine appropriate routes for each tote. Routes maintain proper direction through a series of bar code readers that relay information to the WMS that then directs the conveyor to either divert parts or keep them on their way.

At the end of the conveyor causeway is a three-level picking tunnel that Gonzalez and others call the stollen—the German name for a tunnel dedicated to medium-sized, fast-moving parts. Within the tunnel, workers putaway and replenish. Armed with handheld bar code readers and directed by central computer terminals located at each of the three levels of the tunnel, workers ensure that outgoing totes are verified for contents and directed on their proper path (see layout drawing for details on the flow of inventory in the DC).

With more than 160,000 separate storage locations, the Robbinsville DC is in constant motion. A complex series of checks—through manual and automated bar code readers—keeps inventory flowing.

Built on a standards-based work environment for associates, the management team has developed a series of expected work benchmarks—a high and low range by area—to each worker and "through coaching, we expect each individual to meet those goals," Gonzalez explains. "Identifying those efficiency gaps makes jobs easier and increases productivity."

Central to the standards-based environment, Gonzalez explains, is the company's push into the regional master strategy. In fact, Robbinsville processes one-third of all parts sales orders in the U.S.

Mercedes' operational philosophy is based on seven core concepts:

• Minimize processes and unnecessary steps to quicken work flows
• Identify product defects before shipping to decrease returns
• Discover methods to eliminate occurrences of damages
• Eliminate double handling in transportation to decrease touch and/or handling costs
• Attempt to eliminate excess motion to cut down on unnecessary worker strain and curbing the possibility of injury
• Eliminate waiting for product in picking, putaway or delivery to ensure even work flows—reassigning people to the most appropriate work area to maintain the ideal flow and
• Identify barriers or gaps to correct inefficiencies in the work flow—helping to increase standards.

"We are cutting down on extra handling, which is wasteful, and we continually search for ways to streamline our processes," Gonzalez mentions as results of the their new operations philosophy.

While the DC operates smoothly now, Gonzalez concedes that integrating the workforce into the new facility posed some of the more daunting challenges.

Having closed the Baltimore DC on the Friday before July Fourth weekend, Gonzalez and her team were charged with opening the new facility the following Tuesday, without the benefit of the Baltimore facility operating as a backstop in the event of monumental breakdown in Robbinsville. Instead of closing one DC and immediately opening another, Gonzalez says she would have gradually diminished Baltimore's operations—to ensure customer demands were met—and to take some of the initial pressure off Robbinsville.

"That first week was a killer" with 60% of the warehouse workforce and 90% of the management staff being new, Gonzalez says. "Our workers had questions that our team leaders couldn't answer because they hadn't been trained yet."

A prime example was the conveyor system, an installation with more than two miles of track and multiple overhead and side bar code readers. Associates needed time to learn how to best use the conveyor to maximize productivity.

Similarly, associates faced a learning curve with the DC's WMS. Establishing picking zones was an initial challenge that was overcome by experimentation with various pick paths.

"Once we got through the initial phase of implementation," she says, "we were much better off."

Playing a huge role in Mercedes' move to Robbinsville from Baltimore is the company's commitment to the people who execute on the floor. Taking pride in the aesthetics of the facility, Gonzalez says little details go a long way in keeping associates satisfied.

"Switching from a facility that was well over capacity in Baltimore to what we have now makes a big difference," she says. From the brilliant blue color permeating every aspect of the infrastructure, to natural light and full-time air conditioning, "employee comfort was obviously a major priority in the initial design," Gonzalez says.

Despite the more than three-hour drive from Baltimore, 35 of the 75 Mercedes employees made the trek north and continue to work for the distribution operation. "These guys are my eyes and ears in here," Gonzalez says of the employees she oversees. "They make it all go."

Gonzalez explained that the move to a larger facility precipitated the hiring of more than 20% additional associates than were present in the Baltimore facility. And, while the larger workforce was able to ramp up throughput at roughly the same 20% margin, the company eliminated both overtime and temporary workers.

Currently, the Robbinsville facility is processing 11,800 line items daily— compared with 9,500 daily at the Baltimore site. And, she says, "Our hours-worked compared to our lines-out is improving every month."

Going forward, Robbinsville is capable of massive expansion—the company expects to be operating at 1.2 million square feet in coming years. Gonzalez says she expects the small items storage area to add another level, bringing that locale to three floors of picking space.

She adds, "We're happy with what we have in place now, and are excited about the possibilities for the future."