Scotts Miracle-Gro: The grass is greener…thanks to lift trucks
April 01, 2013 - MMH Editorial
April showers bring May flowers. And, if you’re The Scotts Miracle-Gro Company, the start of the growing season also brings orders for lawn and garden products. Between January and May, Scotts receives and ships 9,150 pallets of product a day from its 780,000-square-foot warehouse and distribution center in Marysville, Ohio, to support the busy growing season. The Marysville facility is just one of the distribution centers operated by Scotts, which markets the Scotts, Miracle-Gro, Ortho and Roundup brands in North America.
Forget conveyor, AGVs and automated storage. The primary tools at the Marysville facility are stretch-wrapped pallets stacked on the floor and moved by a fleet of lift trucks (Toyota Material Handling, U.S.A., toyotaforklift.com) operating 24/7.
See the system layout of how Scotts Miracle-Gro keeps up with peak demand.
To keep the fleet running during the peak season, Scotts implemented a fleet management program several years ago in Marysville. “We have a short window to ship our product, and we operate in a demanding environment,” says John Smith, manager of global raw materials. “Prior to putting in the fleet management program, it wasn’t uncommon to have two or three lifts a day down for repairs.”
That downtime led to lost productivity and increased rental charges to keep pallets moving. Since putting in the program, Smith adds, “I can’t remember a day that a lift has been down for more than a shift. If a lift can’t be fixed at our facility, our local dealer brings over a replacement to keep us running.”
In addition to keeping the trucks up and running, the fleet management program is creating a wealth of information about the repair history of each truck, operator performance and fleet utilization. Although Scotts is not taking advantage of that information at the moment, the lawn and garden company is compiling data generated by the program to improve performance and control costs in the future.
“This will help us define what we’re spending on planned maintenance and identify our unplanned repairs,” says Matthew Chute, senior buyer of indirect sourcing. “By comparing the performance of vehicles in different plants and with different operators, we believe we will be able to identify best practices and change the habits of people, which can reduce maintenance costs.”
Scotts’ implementation of a fleet management program has been a gradual but steady process that reflects three warehousing and distribution trends:
• The importance of uptime and productivity in a conventional warehouse;
• The evolution of lift truck technology; and
• The need to better understand, control and reduce supply chain costs.
Like many manufacturers that produce and palletize product in batch runs, Scotts is primarily a conventional full-pallet-in and full-pallet-out warehouse. It does build a small number of mixed SKU and mini pallets for big box retailers—a practice that may increase in the future. For now, however, the vast majority of pallets are shipped out exactly as they come off the palletizing and stretch-wrapping line. As a result, productivity at most Scotts facilities is all about the number of pallets moved from manufacturing into storage and from storage onto the back of a trailer. Company wide, Scotts operates about 260 lift trucks.
At the moment, Scotts does not have operating metrics for the percentage of time a specific vehicle is operational or the cost of down time. However, given that the company spends about 6 months building up inventory followed by a short, intense period of shipping activity, it is acutely aware when lift trucks are out of service.
That was the case several years ago, when Scotts re-evaluated its lift truck requirements as a way to increase productivity. Part of that effort was the addition of single-double lift truck attachments in 2007. These allow Scotts to handle two pallets at a time. “We wanted to increase efficiency,” says Smith. “And we wanted to create a more ergonomic environment for the driver on the lift.”
To accommodate the single-double attachments, Scotts brought in a new model of lift truck that could lift loads of up to 5,150 pounds to a height of 15 feet 7 inches to reach the top of Scotts’ pyramid floor stacking pattern.
With the change in trucks, Scotts implemented a fleet management program managed by a local dealer. Initially, the program included a plan for regularly scheduled maintenance along with monthly and quarterly reports detailing what had been done to the vehicles and the parts and components associated with those repairs.
Over time, a dedicated, onsite technician was assigned to Scotts for one shift a day. During the busy season, that technician is available to make emergency repairs during the other two shifts. If a truck can’t be fixed and put back into service onsite, the dealer provides a replacement lift while the Scotts truck is out of service.
Part of this change was a result of an effort to reduce emergency rental costs during the busy season. “With our old provider, it wasn’t uncommon to have multiple days where we had to have rentals because two or three lifts were out of action,” Smith says.
Part was also the fact that today’s lift trucks, like today’s cars, are increasingly sophisticated, computer-controlled machines. It now takes technicians, rather than mechanics, to keep them running. “As the technology evolved, it became increasingly difficult for a general repairman to make an adjustment to get a lift truck back into service,” says Smith.
While uptime is of paramount importance, Scotts’ fleet management program is playing an emerging role in the company’s efforts to manage its distribution and supply chain costs.
For example, the program includes the planned maintenance of specific components based on hours of use. It also includes a certain percentage of unplanned maintenance for certain components, up to a negotiated price threshold.
At the moment, Scotts is realizing two financial benefits from the program, according to Chute, the senior buyer who is responsible for purchasing the lift truck fleet.
The first is that Scotts has better control over its rental costs during the peak season. That’s not just the cost of renting lifts because a Scotts-leased truck is out of commission. Rather, Scotts is able to make informed decisions about when to lease versus rent a unit to meet peak demand. “We can lease a truck for about 25% less than we can rent a truck,” Chute says. “However, we don’t need all those trucks all year long. So, it’s important that we are fully utilizing our leased fleet to minimize how much we spend in rentals. The information we’re getting from the fleet management program helps us strike the right balance.”
The second benefit is that Toyota offers a better residual rate to lessees who use the fleet management program. “We’re able to offset part of the cost of the maintenance programs by lower lease payments,” Chute says. “Toyota is willing to do this because they believe in the program.”
Going forward, Chute intends to utilize the fleet and repair data in several new ways to further reduce costs. They include:
• Right size fleets and optimize leases: In the past, Scotts has leased all of its lift trucks for 48 months/2,500 hours. In the future, Chute wants to use the operational data to make sure it is fully utilizing all of its vehicles. If not, Scotts can take steps to right size the fleet or rewrite leases to reflect actual usage.
• Quantify the benefits of planned maintenance: “In the past, we have been reactive. We fixed things when they broke,” says Chute. “With planned maintenance, we are being proactive.” Scotts is in the process of extending the program to its other plants. The next step is to implement a third-party maintenance software tool to aggregate and compare data across facilities. “We see the value in the program,” Chute says. “However, we need the data to prove that it’s saving us money.” Chute also plans to use the data to compare operational costs across facilities. This may identify best practices in one facility that can be implemented in other facilities. “We have the same vehicles and the same operations across the company,” he says.
• Identify opportunities for operator training: Scotts assigns specific lifts to specific operators. As part of the fleet management programs, it receives a performance chart that identifies the repairs to each vehicle. “One of the things we want to identify is what are we spending on planned maintenance versus unplanned maintenance or repairs that are the result of how the truck is used,” says Chute. “We hope to be able to identify the operators that could benefit from further training.”
Most important of all, say Chute and Smith, the program ensures that Scotts gets the most value from its materials handling equipment. “A lift truck is the tool of the trade in our facilities,” says Smith. “When a driver is on it for 8 or 12 hours a day, you want that truck to have the necessary power and performance when it’s needed. Our fleet management program is getting the job done for us.”
Lift trucks: Toyota Material Handling U.S.A., toyotaforklift.com
Fleet management provider: Toyota Material Handling Ohio, tmhoh.com
Lift truck attachments: Cascade Corp., cascorp.com/americas/en
Palletizer: Packaging Systems International, pkgsys.com
Stretch and ring wrap equipment: Lantech, lantech.com
ERP/Warehouse management system: SAP, sap.com
Mobile computing: Motorola Solutions, motorolasolutions.com