Automation: Automated storage helps Valpak improve manufacturing operations

Each month, a familiar blue envelope stuffed full of money-saving coupons and promotions arrives at more than 45 million U.S. and Canadian households from Valpak, a Cox Target Media Company and North America’s leading direct marketer.

Do the math, and that works out to more than 500 million envelopes, and more than 20 billion coupons, mailed annually by Valpak.

To print, assemble and distribute those mailings, Valpak invested $220 million to build a new 470,000 sq ft state of the art production and distribution facility in St. Petersburg, Fla. The first envelope was shipped in July of 2007.

Valpak describes the new facility as a hub of technology where automation and robotics are at the core of the operation. The solution designed and implemented by Valpak’s system integrator (Daifuku America, 801-359-9900) has resulted in one of the most advanced and automated manufacturing centers in the world:  While 430 workers are employed in the production areas, the movement of raw materials and finished goods from the receiving dock to the shipping dock is almost entirely handled by automated materials handling systems, including:

• A 4 crane unit load automated storage and retrieval systems (AS/RS) with room for 8,250 pallets for the storage of pre-printed inserts and mailing materials used in production as well as the temporary storage of palletized mailing trays prior to shipment.

• A 2 crane unit load AS/RS used as buffer storage between the printing and collating processes.

• A 17 crane mini-load AS/RS with 8,900 tray storage locations for the storage of pre-printed inserts in totes after sorting.

• 14 automatic guided vehicles (AGVs) used to transport reels of printed materials from the production area to the collating area.

• 7 rail-guided automatic transfer vehicles (ATVs) used to move pallets to various points on a transportation loop within the facility.

• A conveyor and sliding shoe sortation system that transports totes from the mini-load AS/RS to the collating area.

• Four robotic palletizers used to load finished mailers onto pallets for shipment.

In fact, lift trucks, the only conventional materials handling technology in the facility, are limited to loading and unloading trucks.

Valpak, however, did not include automation for automation’s sake. Each of the systems was chosen to minimize the number of times printed and pre-printed inserts and promotions are handled before an envelope leaves the facility for a consumer.

“In our old facility, we might handle an insert ten to twelve times before we got it out the door,” says David Fox, vice president of manufacturing. “Today, the inserts we receive from suppliers are handled just once when we break down full pallets of inserts into totes. The inserts that we print in the facility won’t be handled until the consumer opens the envelope at home.”

Thanks to automation, the facility can now turn around an order in four to six hours, compared to four to six days in the past. But the most important benefit from all of that technology is that the facility can accommodate the aggressive growth targets Valpak has planned for the future – handling up to 54 billion inserts annually - without adding additional labor or compromising accuracy, quality or efficiency.

Meeting growing demand

Founded in 1968 with a mailing of 14 coupons to 20,000 households in Clearwater, Fla., Valpak was purchased by Atlanta-based Cox Enterprises in 1991. After the purchase, the company created Cox Target Media, which has grown into one of the leading direct marketing companies in North America. The Valpak Web site is the largest local coupon site on the Internet. The new manufacturing facility is one of the largest single capital investments in Cox’s 107-year history.

Valpak has not always been at the forefront of automated materials handling technology, according to Fox. Prior to building the St. Petersburg location, Valpak had a nearby plant in Florida as well as a second facility in North Carolina. The last major systems upgrades had been performed in the 1960’s and 70’s. Meanwhile, Cox Target Media, Inc. had seen its business increase significantly over the previous 10 years, outpacing the growth of the direct mail industry.

“Our two facilities were at capacity in our printing operations and near capacity for envelope stuffing,” Fox explains. “Our processes were very labor intensive. We were storing product on the floor or in pallet racks, and we were moving everything with fork lifts, pallet jacks and hand trucks. We had to add so much labor to keep up with our growth that we were getting less efficient as we grew.”

To improve Valpak’s leading position, a dramatic change was necessary to help sustain the company’s long term outlook. With the support of its parent company, Cox
Enterprises, the company set out to design a premier manufacturing facility that would achieve its business model and meet its growth needs over the next 10 to 20 years.

Flexible automation

The new system was designed specifically to meet the way Valpak’s business was evolving. Yes, the business was growing, but it wasn’t necessarily a growth in the number of envelopes the company was mailing to households every month. That is limited by the growth of the overall population.

Rather, the number of inserts and promotional offers being offered to customers was expanding at a phenomenal rate. The number of inserts may vary from 20 to up to 100 different inserts in an envelope, with an average of around 33 pieces per envelope. “But that average was growing to around 40 pieces per envelope,” Fox says, “and our goal is to get to 60 pieces per envelope.” 

What’s more, businesses and marketers wanted the flexibility to target specific households rather than every household; and to create different incentives for customers based on where they live relative to a retailer or business sponsoring the promotion.

In order to “version” their advertising, Valpak wanted the capability to do print runs in increments of 10,000 inserts. That would allow a business to break a metropolitan area down into targeted neighborhood trade areas of 10,000 households. Rather than send out the same 100,000 inserts to 100,000 households in a region, a business could send a different insert to each of ten different neighborhood trade areas of 10,000 households in that region.

“We have national accounts that want to be in every envelope we mail,” says Fox. “But a significant portion of our business comes from local businesses. We wanted to be able to offer different versions of an advertisement so that the consumers living closest to a store may get one offer and the people living further from the store may get a better offer to bring them in.”

That created challenges for the system. “The printing industry is used to creating economies of scale around long press runs,” says Fox. “We wanted to be the fastest short-run printer in the industry.”

A second over-riding goal was to design this new facility using lean methodologies that would take as many touches out of the process as possible. In the old system, there were a number of different work-in-process buffers. Product would be printed, stored as work-in-process, staged for another process, stored again as work-in-process and so on for up to 12 touches for an order. Since each of those movements was done manually, increasing sales meant increasing the labor on the floor to keep the product moving.

“We knew we needed to automate so that if we grew we could add volume with minimal labor,” says Fox. “And since this was a Greenfield operation, that allowed us to make our processes as efficient as possible from the outset.”

The approach: Valpak and its system integrator first designed and optimized a process. Once the optimal process was in place, the engineers designed the most efficient and cost effective way to automate that process.

The last goal was to be as lean in the implementation process as in the design process. “We wanted the best technology for each process,” says Fox. “But we also wanted to minimize the number of partners that were involved to minimize risk.”

The final solution made use of a variety of automated materials handling technologies as well as warehouse management and warehouse control software systems to accomplish all of those goals.

While printed material is still moved into buffer areas, today the material may only sit for four to six hours – just long enough to ensure that neither the printing nor the collating areas are impacted by an unexpected shutdown. Coupons that used to be handled ten to twelve times, are now only handled once, when employees take preprinted coupons received in bulk and store them in totes in increments of 10,000. Coupons printed at the St. Petersburg facility aren’t touched at all until a consumer opens them at home. Finally, the facility can quickly respond to demand, turning around an order in as little as four to six hours, compared to four days in the past.

“I don’t think there’s another facility in the country that has implemented the level of automation that we’ve done here,” Fox says.

This article previously appeared in the June 2009 issue of Modern