Army/Air Force Exchange: Reporting for duty

With an upgraded conveyor system and new picking technologies, the Exchange’s Waco distribution center supports our nation’s service men and women.

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The base Exchange store is both a perk and tradition of military life. Every day, millions of active duty and retired service personnel and their families shop at the Exchange for everything from candy bars to lawn mowers. Merchandise is typically less expensive than similar product in civilian stores and often carries no sales tax. What’s more, most profits from the store are used to support community activities aimed at improving morale among service members and their families.

Thanks to a major makeover completed last November, the Exchange in Waco, Texas, is speeding product to Exchange stores on Army and Air Force bases from the Florida panhandle to Texas to North Dakota and the Rocky Mountains.

Working with a systems integrator (Intelligrated,, the Waco Exchange replaced a 25-year-old conveyor system in the 650,000-square-foot distribution center with state-of-the-art conveyor technology and a new sliding shoe sortation system. In addition, the Exchange added pick-to-light and conveyor and new sortation technology to picking modules in a crossdocking area.

See the system layout that allows Exchange to keep up with demand.

The result, says Morgan Meeks, manager of the Waco DC, is a new level of efficiency and productivity.

Although Meeks and her team are still measuring the improvements in a facility that went live about six months ago, “we know we can do more cases now in an eight-hour shift than we could in the past,” says Meeks. “What’s more, approximately 17% of our stock assortment that was handled manually in the past, such as small appliances and televisions, is now conveyable.”

The latter allows the Waco facility to stock a broader array of SKUs on site that were previously stored in California and then shipped to Waco to replenish stores. That ability has reduced transportation costs and touch points. Meanwhile, the new technologies in the crossdocking area allow the Exchange to receive and crossdock 2,500 to 3,500 cases a day with minimal handling, up from 1,000 to 1,200 a day in the old manual process.

Better yet, the improvements were made with no interruptions to ongoing operations. “We never missed a shipment,” Meeks says.

Reviewing the network
The Waco Exchange facility is part of a network of DCs known as the CONUS Network, or Continental United States Network. The facility replenishes Exchange stores, convenience stores and military clothing stores in its region. In addition, it supports retail operations in areas where the Army and Air Force temporarily locate a large troop movement for a natural disaster, such as for Hurricane Katrina.

The catalyst for the Waco project was a review of the CONUS Network conducted by an outside consulting firm. The study looked at whether the distribution centers were in the right locations, were serving the right facilities and were stocking the right merchandise to effectively meet the needs of today’s military.

The study concluded that the Waco facility was well located but had room to improve its operations in several ways, starting with the aging conveyor system. “The system was slow, and we were having trouble finding parts to maintain it when it required service,” Meeks says. 

What’s more, a significant array of SKUs wouldn’t convey on the old conveyor system. Those items were picked manually to pallets. Or, they were stored in California, shipped to Waco and manually crossdocked to the shipping area to replenish stores in the Central region.

Both processes were labor intensive. “In some instances, we had seven to 10 touches per unit because we had so many manual processes,” says Meeks. For instance, non-conveyables that arrived from California were received, sorted and palletized by hand according to their destination facility. Once a pallet was built, it was stretch-wrapped and transported by lift truck to the shipping dock.

The facility didn’t have good visibility into whether incoming product merchandise could ship to a store that day. “If a pallet wasn’t on the shipping dock and ready to go on time, it might sit for a week until the next delivery to that store,” she says.

Based on the network and facility review, Meeks and her team created three major goals for the new project: Increase productivity and throughput by replacing the conveyor and updating the picking modules; streamline the crossdock process to better service the stores; and do it all without missing a shipment.

Updating the conveyor
Once a new design was in place, work on the 14-month-long project began in September 2011.

One of the first steps was to make some layout changes. In part, this was done to create a more efficient system, but it also allowed the facility to continue operations while updating the conveyor system. In addition to replacing the old conveyor system, the Exchange also brought the control system up to date, replacing mechanical sensors with electric sensors and servo drives.

Spiral conveyors were added to the ends of the new picking mezzanines. This allowed the facility to create a more efficient conveyance system that used less conveyor overall. It also created room for more picking slots on each level of a picking mezzanine. “In the past, we had an outbound conveyor on each level of a pick module,” Meeks says. “Now, product goes from each level to the spiral conveyor that feeds one outbound conveyor from the pick module. That freed up warehouse space because we only have one spiral conveyor at the end of each pick module.” 

In all, seven outbound conveyor lines merge together before entering the sliding shoe sortation system that services the shipping area. As part of the project, that system was expanded from 24 to 34 diverts for more throughput to the shipping dock.

The facility gained additional storage space with the installation of modules specifically designed for alcoholic beverages. This allowed the Exchange to store and move spirits through the facility more efficiently.

“The new system is more ergonomically efficient than our previous design,” says Meeks. “Even if the conveyor wasn’t faster than our old system, we’re able to pick faster than we could in the past.”

Efficient crossdocking
One of the most significant improvements involved tying the crossdocking processes into the conveyor and sortation system. 

Instead of manually receiving and sorting stock, the new process begins when an associate unloads a conveyable box onto an extendable conveyor inside a trailer. The carton is conveyed from the trailer to a scan tunnel that reads the vendor’s UCC 128 bar code label. With that scan, a Waco Exchange shipping label is automatically applied to the carton. This label identifies the destination facility for that carton. The destination label is then automatically read in a second scan tunnel.

If a truck for that facility is loading that day, the carton is conveyed to the sliding shoe sortation system and sorted to the right shipping lane. “On those items, its one touch onto a conveyor and one touch off the conveyor and into a trailer,” says Meeks.

If the carton can’t be loaded that day, it’s diverted by a pop-up sorter to a picking zone. There, the carton is stored until it’s ready to be shipped. Once it enters a pick zone, an associate removes the carton from the conveyor and places it on a pallet assigned to that facility. A light at the pallet storage location notifies the associate when the items on that pallet can be loaded for shipment. “The associate doesn’t have to scan or verify the carton,” Meeks says. “When the light for that pallet goes on, all they have to do is pick a carton off a pallet, put it on the outbound conveyor and press a button to confirm the pick. The carton will be sorted right to a trailer.”

The new process was so efficient, the facility was crossdocking as many as three times more cases per day within the first few months.
As a result of the changes, Meeks says associate morale has been improved — the facility is cleaner, newer, better lit and quieter than before. More importantly, the Waco Exchange is doing a more effective job of meeting the needs of the bases it serves.

“We have the ability to get product to our soldiers and their families in a more efficient and timely manner,” says Meeks. “We want to be there for those who serve us.”

System suppliers
System integration, warehouse control system, conveyor & sliding shoe sorter: Intelligrated,
Pick-to-light: Real Time Solutions,
Network design & supply chain consulting: Tompkins International,
Vertical lift modules: Kardex Remstar,
Spiral conveyor: AmbaFlex,
Pallet & case flow rack: Interlake Mecalux,
Truck loading conveyor: Flexible Material Handling,
Lift trucks: Crown Equipment Corp.,; Mitsubishi Caterpillar Forklift America,
WMS: Developed in-house
Mobile computing & bar code scanning: Intermec,
Fixed bar code scanner: Sick,
Print & apply: ID Technology,

About the Author

Bob Trebilcock
Bob Trebilcock, editorial director, has covered materials handling, technology, logistics and supply chain topics for nearly 30 years. In addition to Supply Chain Management Review, he is also Executive Editor of Modern Materials Handling. A graduate of Bowling Green State University, Trebilcock lives in Keene, NH. He can be reached at 603-357-0484.

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