This Month in Modern: Big automation, small space

When we wrapped up our “Warehouse and Distribution Center (DC) Operations Survey” at the end of 2015, we found more than a few positive signs that Modern readers and their organizations are facing up to omni-channel pressures—better managing SKU growth and item and split-case handling—and making the changes necessary to adopt to a new and dynamic world.

Overall, we found square footage for the average facility grew 25%; the average for annual inventory turns topped nine; 40% of respondents now service an e-commerce channel; the demand for value-added services is strong; and organizations are more eager to staff up to meet these demands. But one of the most encouraging stats indicates that not only is investment in software and automated materials handling equipment growing, but some of the most robust investment is happening in smaller facilities—operations under 150,000 square feet.

“Often times, smaller organizations have to simply make the best use of the space they have,” says Don Derewecki, senior consultant with St. Onge Co., our partner in this annual project. “In that case, a savvy, smaller operation is becoming less reliant on manual processes and more eager to put advanced software and automation to work to make sure they’re optimizing every square inch—it’s often their only choice.”

This month in Modern, we share a prime example of one of those “savvy, smaller operations” that’s packing a lot of automation into a compact space. Marshall Retail Group (MRG) is the largest independent specialty retailer in the United States, operating 160 stores. Many of these locations are kiosk sized and can be found in casinos and resorts—in fact, 80 of their locations can be found throughout Las Vegas.

When MRG set out to design its new Las Vegas DC, the team faced the same challenges as any “big box” DC operation. However, they have to keep many smaller shelves stocked frequently—one or two cases a day—and quickly, requiring an inordinate amount of labor-intensive each picking.

What MRG and its integrators designed is a level of automation we’ve seen in any number of leading retailers we’ve covered, including narrow aisle reserve storage, a conveyor and sortation system driven by a warehouse control and execution system and put-to-light directed picking.

“But what’s intriguing is that all of that automation was scaled down to fit in a DC measuring 64,000 square feet,” says executive editor Bob Trebilcock, the author of this month’s System Report. “Think of it as a miniaturized version of a typical retail DC measuring 500,000 square feet or more.”

Starting on page 18, Trebilcock walks us through this remarkable facility and the discovery process that MRG’s director of distribution Esther Diedrich went through to arrive at these final automation decisions. Her journey should serve as an awaking for any small- to mid-sized operation faced with “big box” challenge, but minimal square footage.

“What excites me about this story is that the tools and tricks of our trade that used to only be accessible to large corporations with deep pockets are now within reach—and absolutely required—by small- to -mid-sized organizations,” adds Trebilcock. “I think it bodes really well for the future growth of the industry.”