Allied Electronics & Automation’s DC makeover

Who out there isn’t a fan of those home makeover shows? The ones where the designer, contractor or flipper comes across a property that’s a little long in the tooth and traditional, then works their magic. At the end of the show, after finding clever ways to reuse existing space and add on where possible, it’s a to-die-for property with a whole new lease on life.

Allied Electronics & Automation did just that in Fort Worth, Texas. A leading omni-channel distributor of electronic parts and automation controls for industrial customers, Allied was fulfilling all of its North American orders from an existing 300,000-square-foot facility that went live in 2007. While the facility featured some automation, including one of the first shuttle systems Knapp installed in North America, its equipment and processes couldn’t enable the company’s ambitious growth plans.

Take an inside look into the layout of the new Allied distribution center.

Chris Hewerdine (left) and Scott Jayes standing in front of their Shuttle system shelving units.

“About 40% of our business today is through our e-commerce channel, but we anticipate that will grow to 60% over the next four years,” says Scott Jayes, vice president of business operations. Allied also has ambitious plans to more than double the number of SKUs stocked in the facility.

Not only did the DC need a refresh to keep up with anticipated growth, it also needed to become more labor efficient, according to Chris Hewerdine, head of operational improvement for the Americas. “We needed to bring in more automation to ensure that we have the right resources, and to hang onto talented people, in a challenging job market,” he says.

The solution: Working with a systems integrator (Knapp), Allied went into makeover mode. The company added more than 200,000 square feet to the existing building, bringing it to 520,000 square feet, and implemented a variety of automated materials handling systems including:

• a shuttle system in the new addition for high density storage and delivery to 35 goods-to-person workstations;
• a pocket sortation system for efficient overhead staging and consolidation of multi-line orders before delivery to packing;
• automated packaging;
• and, finally, a refresh of the warehouse management and warehouse control and execution systems (WMS and WCS).

On the to-do list for 2021 is automated pallet and container transportation using automatic guided lift trucks for pallets and automatic guided vehicles (AGVs) for containers.

An added twist, as a result of the project guideline, the facility went live last summer during the height of the Covid-19 pandemic.

The result, like the home makeover shows, is a to-die-for DC purpose-built for Allied’s needs today with flexibility to expand in the future: The additional space will enable the facility to double the SKUs in stock from 200,000 to 400,000, with room to expand the shuttle to accommodate well more than 600,000 down the road. “The additional square footage enables us to keep adding and growing stock,” says Jayes.

Automation expertise

Allied Electronics & Automation is a leading omni-channel, single source supplier of automation and control products. The company is the Americas arm of Electrocomponents, a $3 billion global distributor to industrial customers that are designing, building or maintaining industrial machines and facilities. Outside of North America, the company is mostly known as RS Components.

Allied’s customers have access to more than 3.5 million parts from more than 500 brand-name suppliers, including some 200,000 that were stocked and ready to ship in Fort Worth prior to the distribution center expansion project. About 75% of orders are picked, packed and shipped the same day as they are received. The remainder are scheduled to ship when the customer needs them or are non-stock purchases.

Also key to the company’s go-to-market strategy are customer value-add solutions and world class levels of customers service. “Many would consider us as experts in distribution across the world,” says Hewerdine. “That’s at the core of what we do as a business.” As such, he adds, the distribution network has to enable Allied’s service offerings.

The original distribution center was commissioned on Aug. 15, 2007, and it is the sole DC in the United States, serving customers in the U.S., Canada and Mexico, as well as some international customers. At 300,000 square feet, it was a conventional facility by today’s standards.

Conveyor was used to move things through the facility; a bulk storage area was serviced by lift trucks; and picking took place in a forward pick face. Allied did install a small shuttle system, but it was used for buffer storage and order consolidation. “We used it to control the workflow to packing, much like a re-circulating conveyor,” Hewerdine notes.

By the end of 2017, the facility was 10 years old, and, as it stood, wasn’t up to the task of taking the company into the future. Space constraints limited the addition of new stock to the 200,000 SKUs that were presently in the building. Yet, Allied viewed doubling, and then tripling, the amount of available stock as key to growth. “Our digital channel brings another level of transparency for customers,” says Jayes. “They have choice and knowledge at their fingertips to compare solution providers and what they offer.”

Multi-line orders are picked to a pocket sorter and then sequenced to packing.

At the same time, the increase in e-fulfillment orders was accompanied by an increase in the number of units per customer lines, which meant more labor-intensive piece picking. That was happening in a very tight labor market.

Finally, Allied wanted to develop a distribution center that reflected its core business. “We wanted to demonstrate that we practice what we preach in automation and control and facilities maintenance,” Hewerdine says. “We believed we would do that by ensuring simple, scalable and efficient solutions utilizing leading technologies.”

Design for the expansion got underway early in 2018, with approval that August followed by groundbreaking in September of that year. The original go-live date was June 2020.

Design for automation

The design process was guided by a number of big picture goals, according to Hewerdine and Jayes.

• Double the stocking capacity from 200,000 to 400,000 SKUs and double throughput capacity from day one.
• Design in the flexibility to scale increased demand and product expansion going forward.
• Continue to maintain the same high levels of customer and supplier service throughout construction and implementation.
• Introduce leading edge technology where relevant.
• Deliver the solution on time and on budget.
• And, address labor challenges through a facility that people are proud to work in and that others want to be part of.

To create a people-friendly work environment, the building is climate controlled and has large windows that let in natural light. More importantly, automation was designed to simplify processes and to reduce or remove repetitive and repeatable activities. That, in turn, would free up some associates to learn how to perform the value-added tasks that are among Allied’s competitive advantages. “You can’t automate away the value that people bring,” Jayes says. “But you can automate away repetitive tasks and allow associates to use their brains.” While some people view automation as a threat, Jayes and Hewerdine viewed is as creating “an opportunity” for associates to advance in their careers.

Pocket sortation enables space-saving, high-density staging in an unused area above the mezzanine in the new addition.

One of the first steps to delivering on those goals was to design the more than 200,000-square-foot addition that is joined with the old space by a hole in the wall. The new space was designed to be the order fulfillment engine, with the existing space designated for receiving, bulk storage and value-added services.

The company reviewed three design proposals, with varying degrees of automation and different approaches to picking and high-density storage. The solution they chose incorporated shuttle technology as the medium for high density storage and delivery to goods-to-person workstations; and a pocket sortation system to stage and consolidate multi-line orders in otherwise unused overhead space.

“When we evaluated the different proposals, one of the things we looked at was how to densify storage and reduce walking time,” Hewerdine recalls. “That steered us away from a conventional pick module and toward the shuttle system, which gave us the dense storage we were looking for and the benefits on the picking side.” In addition to having familiarity with shuttles, the technology also showcased “the automation products that we sell, and that was a driver,” he adds.

Along with the technology selection, Jayes notes that a significant amount of time was spent evaluating and re-engineering processes to remove waste, take out any unnecessary steps and simplify processes. “We spent a lot of time thinking about how we flow product through the building as we bring it in, stock it, take it out of storage and pick, pack and ship it,” he says. “That’s something we continue to work on.”

Orders are packed (left), conveyed to an automatic sealing and taping line (middle) and then conveyed into an outbound trailer (right).

Going live

One of the original goals was to finish on time and under budget with a go-live date in 2020. The good news: The project was two-months ahead of schedule with a new go-live date planned for April 2020. The bad news: That’s when Covid began to shut down the economy. As Jayes puts it: “We were 8.5 months pregnant when Covid hit.”

The company had already paused a similar project in Europe and considered putting on the brakes in the United States before deciding to push on. “We believe it was exactly the right decision, and we’re proud of what we delivered,” Jayes says. “We definitely learned a lot about resiliency and what we can deliver under difficult conditions.”

While Allied essentially built a second facility connected to the first, the system operates as an integrated solution. “It’s a big box, with a U-shaped model for warehouse flow,” Hewerdine notes.

Inbound is on the east side of the original building. As product is received, large, bulky and non-conveyable products are stored, picked and packed on that side of the wall. There’s also a bulk storage area in the original building for fast movers purchased in large quantities. Those items are transported for replenishment by conveyor on an as-needed basis to the shuttle system in the new side of the building.

Newly received inventory that can be stored in the shuttle system is sent directly to the shuttle system for induction. Meanwhile, inventory that was already in the facility when it went live is picked from the original two-level pick face and then conveyed into the new building, where it ultimately can be directed to packing. As of this writing, about 70% of demand is still being satisfied in the original building, with plans to phase that down over an 18-month period.

In the new building, picking takes place across 35 goods-to-person workstations. Single line order totes are conveyed directly to a single-line packing area on a mezzanine level in the new building. There, items are automatically packaged for delivery and then sorted to the right shipping lane.

Inventory for multi-line orders is batch picked to totes and conveyed to an induction station for the pocket sorter. Items are then placed in one of the sorters and staged overhead until all of the items for an order have been picked. The right pockets are then delivered in sequence to a packing station. “The beauty of the pocket sorter is that it allows us to consolidate multi-line orders without the space required for a huge putwall,” Jayes says. “We were concerned about whether the pockets would work for the broad range of products we sell, but they more than meet that need.”

After about 10 months of operation, further improvements are in the works. Allied is implementing automatic guided vehicles from Raymond and Seegrid to automate pallet movement where possible, along with an “open shuttle,” or a case handling autonomous vehicle from Knapp, to move cartons across the floor from one side of the building to the other. “It’s our next step into robotics,” says Hewerdine, “and we plan to build on this further.”

Improvements have also been made to other processes. In the summer of 2020, for instance, Allied invested in 3D printing, which it plans to offer as a service to customers. Allied also just developed a virtual innovation lab where suppliers can demonstrate their products in a live environment. Both investments are in keeping with a company that not only sells automation, but is investing in it as well for its own use.

“The expansion, along with the shuttle system and pocket sorter, is allowing us to much better utilize our space,” says Hewerdine. “They will enable us to keep adding stock and grow.”

Adds Jayes: “We’re already seeing the benefits of bringing in new suppliers and products through positive sales growth. There are just so many things we can now do in the box we built.”

The home makeover experts could not have said it better.