Mercedes-Benz USA: Fast lane for slow movers

Higher productivity, more efficient warehousing and a new approach to handling slow movers are the drivers behind Mercedes' newest parts DC.

By Staff -- Modern Materials Handling, 1/1/2007

When Mercedes-Benz USA 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First, it needed a new, more productive DC to replace an outdated one in Maryland.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.

By all indications, Mercedes met all three objectives.

The new DC in Robbinsville, N.J., is more than 450,000 square feet. On a daily basis, it sends 15 truckloads to 105 dealers across the Atlantic seaboard and between 800 and 1,200 packages of air freight to 230 dealers across the United States. The design of the facility mirrors that of a DaimlerChrysler DC in France known for its efficiency in storing and distributing parts throughout that country.

The Robbinsville facility has already made its mark. "Very quickly, we increased our overall productivity by over 30%," says Lori Gonzalez, supervisor of regional master operations. And, thanks to the new distribution strategy, "our line counts went up, and our touches went down."

Located just one hour from a major Northeast shipping port, Robbinsville proved an ideal location for establishing a regional hub. The DC is in the process of receiving all slow movers from the automaker's other four domestic DCs. When this is completed, Robbinsville will be the sole U.S. supplier of slow-moving parts, which equals 80% of all stocked part numbers.

"The Baltimore site [200,000 square feet] couldn't accommodate our needs for a regional master (DC)," says Gonzalez. "We feel that this site not only accomplishes our goals currently, but allows for future expansion as well."

Central to the DC's overall success now and in the future is a conveyor system that "allows us a more efficient operation," says Gonzalez.

The conveyor coordinates path placement with the warehouse management system (WMS) to determine appropriate routes for totes. Totes maintain proper direction through a series of bar code readers that relay information to the WMS, which then directs the conveyor to either divert parts or keep them moving.

At the end of the conveyor causeway is a three-level picking tunnel 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, workers ensure outgoing totes are verified for contents and directed on their proper path.

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.

Mercedes' lean distribution philosophy, which has been implemented in earnest in Robbinsville, 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 minimize worker strain and the possibility of injury
• Eliminate waiting for product in picking, putaway and delivery to ensure even work flows, reassigning people to more appropriate work areas if necessary
• Identify barriers or gaps to correct inefficiencies in the work flow.

Thanks to the new philosophy, says Gonzales, "we are cutting down on extra handling, which is wasteful, and we continually search for ways to streamline our processes."

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 workers 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.

The move to a larger facility precipitated the hiring of more than 20% additional employees than were present in the Baltimore facility. The larger workforce has been able to ramp up throughput at roughly the same 20% margin, and the company has eliminated 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, says Gonzalez, "Our hours-worked compared to our lines-out is improving every month."