System Report: Random House cuts turnaround in half
Associates are directed by voice in the piece picking area. Once all the items have been picked, a tote is conveyed to an induction point for the tilt-tray sortation system.
Hitting the distribution wall
In addition to choosing great authors and publishing hundreds of bestsellers and many Pulitzer and other prize winners among its more than 8,000 new titles a year, Random House considers distribution one of its core competencies. The company prides itself on having the finest distribution system in the book publishing industry. It was recently named Amazon.com’s “Distributor of the Year” for its efforts on behalf of the third-party publishing clients that are overseen by the Random House Publisher Services group.
At present, Random House operates two national distribution centers. In addition to the Maryland facility, which is the largest DC in the publishing industry, it operates a second facility in Indiana. The facilities differ by the products they ship: Indiana primarily ships children’s books while Westminster ships titles for adult readers.
Prior to the tilt-tray sorter going live in October 2009, the Westminster facility was up against a distribution wall that was hindering its growth. “We put in our first conveyor system for piece picking in 2000, before we entered the third-party distribution business,” says Danek. “The system was designed with fewer than 20 pick modules to handle 16,000 SKUs.” That system was also installed before the e-book phenomenon took off.
Once Random House began taking on distribution for other publishers, that picking system proved inadequate for two important reasons.
The shelving and pick modules were added on an as-needed basis to accommodate new customers and not in an integrated fashion. “We were tearing out carton flow rack and replacing it with shelving in our picking areas,” says Danek. “We got more density, but we had to replenish those locations more frequently.”
With additional pick modules, cartons visited more modules to complete an order using a pick-and-pass picking method. “When we only had 20 modules, a typical carton would visit three or four modules to complete an order,” Danek says. “Once we got up to about 35 modules, a carton would go to nine or 10 modules before an order was complete.” Approximately 66% of orders were shipping in three business days or less.
During this same period, e-books became a potent force in the consumer marketplace. This explosive-growth, reading and distribution format further altered a business model that was already under pressure. Random House’s customers were returning more excess titles than in the past. All those returns had to be processed and returned to inventory, which further slowed down processes.
“One of our strategic initiatives was to reduce our returns by speeding up our supply chain,” says Danek. The idea was to encourage large customers to become demand-driven: Instead of ordering once a week or once a month and then returning unsold titles, Random House urged its largest customers to carry less inventory and order daily, based on the titles that were selling. That way, fewer unsold books would be returned.
From a distribution point of view, that meant customers would be ordering fewer full carton or multiple carton orders and more mixed carton or loose items. “To do this successfully, we had to reduce our lead times because our customers would be placing an order once a day and we would be doing more with each picking,” says Danek. “Since we already had a bottleneck in the each picking area, we had to devise new picking and handling processes.”
Sorting through bottlenecks
A tilt-tray sorter proved to be the most effective solution for the Westminster facility. One of Random House’s priorities was to replace the pick-and-pass picking with a new methodology that would allow it to send a book from a pick module to the shipping dock without routing it through nine or 10 pick modules.
With a tilt-tray sorter, Random House could aggregate the picking process. Instead of sending a shipping container from one module to the next, all of the items from a single-pick module are sent to a sorter induction point. The sorter then routes all of the items for an order to one of 500 packing destinations. Once all of the books for a carton have accumulated, a light flashes to notify a packer that an order is ready to be packed.
In this system, one packer can handle several packing locations at a time. Once a carton is packed, it’s placed on a takeaway conveyor, and then automatically scanned and conveyed to a final pack. There, it’s weight-checked, bubble-wrapped, sealed, labeled for shipping, and sent to shipping, where it is loaded for delivery.
By aggregating orders, approximately 98% of orders ship in three business days or less. The system is flexible enough to maintain that level of productivity through the inevitable order-cycle peaks and valleys.
Once Random House settled on a technology, there were logistical problems to address. One was a matter of layout. “We already had a mezzanine and we knew we needed certain operating speeds,” says Danek. “But we didn’t have a lot of space and we had issues like I-beams in the way.”
A second concern was whether the process of moving books from the sorter to a packout station would cause damage. “The pitch of the chute is pretty important to prevent damage,” says Danek. A team from Random House spent a day at the integrator’s facility in Frederick, Md., testing more than 100 sample books that varied from large and heavy coffee table books to textured children’s books. “We looked at a number of sorter designs, and this one handled our books in the gentlest way,” Danek says.
Danek adds that the picking processes in the loose pick area remained the same. “We were already using voice technology to direct our picks,” she says. “By creating a denser picking area, we picked up a 15% gain in productivity and the sorter improved our accuracy. But the change with the most impact was improving our throughput rate by almost 50%.”
As Random House approaches its second anniversary with the sorter, returns are on the decline. More importantly, with the increasing shift to e-books, the speed to market enabled by the sorter has kept Random House a big step ahead of the competition.
“By putting in this system, we can accommodate our growth and we can get our physical books to our customers faster than other publishers,” she says. “We have a mandate to have the best supply chain in book publishing, and with it we will grow both the profitability of our customers with Random House titles, as well as our own.”