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m m h . c o m
PRODUCTIVITY SOLUTIONS FOR DISTRIBUTION, WAREHOUSING AND MANUFACTURING
October 2011
Random House cuts turnaround in half 16
SPECIAL REPORT
Pallet reader survey: Usage on the rise 24 + Webcast: Results of the
Pallet Usage StudyThurs., Oct. 27 at 2:00 p.m. ETwww.mmh.com/2011pallet
INFORMATION MANAGEMENT
The top 20 ADC suppliers 30EQUIPMENT 101 SERIES
Data capture basics 34
Annette Danek, vice president of fulfillment, Random House
MMH1110_Cover.indd 1 10/13/11 10:55 AM
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mmh.com Modern Materials Handling / O c t O b e r 2 0 1 1 3
FAST FACT
45Percentage of readers who say their pallet usage has
increased over the last two years (See Pallet Reader
Survey, p. 24)
Source: Peerless Media Research Group
The Conveyor equipment Manufacturers Association (CeMA) recently reported that overall indus-try orders (bookings) for the first six months of 2011 increased 38.28% compared to the same period in 2010, with total orders of $4.58 billion. CeMA estimates industry billed sales (ship-ments) for the first six months of 2011 increased 39.51% compared to the same period in 2010, with total ship-ments of $4.13 billion.
The executives representing CeMA member compa-nies who attended the Fall Meeting expressed cautious optimism for the remainder of 2011 and forcasted an 18% increase in shipments for 2011 (changed from March 2011 forecast of an 8% increase).
Conveyor industry orders up 38.28% in first six monthsInTellIgenT globAl PoolIng
Systems (igPS) recently announced that richard “Dick” DiStasio has been appointed chief executive officer of the company. DiStasio brings more than 30 years of executive-level experience at leading manufacturing, distribution and service companies.
“igPS’ innovative pallet and its associated tracking and tracing capabilities are truly revolutionizing how products are being shipped in north America,” DiStasio said. “The marketplace’s enthusiastic response to igPS is a tremen-dous base from which to accelerate the company’s growth.”
DiStasio has served as president, Ceo and chairman of USF, formerly known as USFreightways, and Ceo for global operations of Martin-brower, the world’s largest distributor of products to McDonald’s. Prior to joining igPS, DiStasio served as an operating advisor to Arbor Investments, a Chicago-based private equity firm.
igPs names richard distasio Ceo
The MAnUFACTUrIng sector expanded in September for the 26th consecutive month and the overall economy grew for the 28th consecu-tive month, according to the latest edition of the Institute for Supply Management (ISM) report.
“The PMI registered 51.6%, an increase of 1 percentage point from August, indicating expansion in the manufacturing sector for the 26th consecutive month, at a slightly high-
er rate,” said bradley J. holcomb, chair of the Institute for Supply Management Manufacturing business Survey Committee. “Comments from respondents generally reflect concern over the sluggish economy, political and policy uncertainty in Washington, and forecasts of ongo-ing high unemployment that will continue to put pressure on demand for manufactured products.”
A PMI reading above 50%
Manufacturing grows for the 28th consecutive month
indicates that the manufacturing economy is generally expanding; below 50% indicates that it is gener-ally contracting.
CroWn eqUIPMenT CorP. announced that it has built its 500th new forklift to be operated with fuel cells. This is in addition to the Crown forklifts already in operation that have been retrofitted during the last few years to accommodate fuel cells. The achievement represents a notable milestone signifying the increased adoption of this technology in the materials handling industry.
A Crown Sr 5000 Series moving-mast reach truck was the 500th truck to be built with a fuel cell. The truck designed for fuel cells, which will be delivered later this year as part of a larger order, maintains similar features and benefits present-ed by the standard model.
MMH1110_Upfront.indd 3 10/12/11 1:21 PM
mmh.com MODERN MATERIALS HANDLING / O C T O B E R 2 0 1 1 5
PRODUCTIVITY SOLUTIONS FOR DISTRIBUTION, WAREHOUSING AND MANUFACTURING
VOL. 66, NO. 10
DEPARTMENTS & COLUMNS 3/ Upfront 7/ This month in Modern14/ Lift Truck Tips: Operator training43/ Focus On: Automated Storage58/ 60 seconds with...
NEWS 9/ MHIA announces leadership changes10/ Modex 2012: Keynote speakers,
conference details announced12/ Manufacturers are becoming less
optimistic about economy, says Grant Thornton
COVER STORYSYSTEM REPORT
16 Random House cuts turnaround in halfThanks to a tilt-tray sortation system, Random House is beating the competition to market and improving turnaround times by nearly 50%.
20 Speed to marketRandom House’s new picking methodology aggregates orders for faster turnaround times and speedier delivery to the market.
FEATURESSPECIAL REPORT
24 Pallet reader survey: Usage on the risePallets are the foundation of the materials handling industry. Here’s why they are important to our readers.
Special Webcast: Results of Modern’s 2011 Pallet Usage Study, Thurs., Oct. 27 at 2:00 p.m. ET www.mmh.com/2011pallet
IMFORMATION MANAGEMENT
30 Top 20 automatic data capture suppliersAfter a challenging 2009, the ADC market bounced back in 2010 and looks strong moving forward.
EQUIPMENT 101 SERIES
34 Data capture basicsData capture technology can help an operation see its products in real time and take proactive steps to keep materials moving smoothly through the supply chain. Here’s a look at several basic data capture technologies.
PRODUCTIVITY SOLUTIONS
40 Driving efficiencies and qualityPick-to-light solutions result in improved picking performance and more reliable sensing for automotive components suppliers.
41 Picking the light solutionLight-directed put stations are designed to help an apparel retailer optimize split case fulfillment and account for a 300% improvement in pick rates.
Modern Materials Handling ® (ISSN 0026-8038) is published monthly by Peerless Media, LLC, a Division of EH Publishing, Inc., 111 Speen St, Suite 200, Framingham, MA 01701. Annual subscription rates for non-qualifi ed subscribers: USA $119, Canada $159, Other International $249. Single copies are available for $20.00. Send all subscription inquiries to Modern Materials Handling, 111 Speen Street, Suite 200, Framingham, MA 01701 USA. Periodicals postage paid at Framingham, MA and additional mail-ing offi ces. POSTMASTER: Send address changes to: ModernMaterials Handling, PO Box 1496 Framingham MA 01701-1496. Reproduction of this magazine in whole or part without written permis-sion of the publisher is prohibited. All rights reserved. © 2011 Peerless Media, LLC.
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PHOTO: EDWIN REMSBERG
PHOTO: CHRIS LEWIS60 seconds with... David Krebs
Annette Danek, vice president of fulfi llment, Random House
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m m h . c o m MODERN MATERIALS HANDLING / O C T O B E R 2 0 1 1 7
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DIRECTOR
THIS MONTH IN MODERN
If you admire companies that buck trends and aren’t afraid to invest in their business when their competition is on the ropes,
you’re going to like reading about what the distribution leadership team at Random House has been up to over the past two years.
For starters, the world’s largest English-language trade book publisher has boldly identifi ed distribution as one of its core competencies. In fact, it’s actually growing a successful third-party distribution business at a time when most of its competitors are scrambling to fi gure out a new business model as the popularity of electronic books continues to grow.
Under its Random House Publisher Services Group, the company is now ship-ping titles for more than 30 publishers to brick and mortar retailers, distribu-tors, wholesalers, as well as direct-to-consumer Web orders—not to mention handling customer service and back offi ce support functions as well.
As executive editor Bob Trebilcock details in this month’s System Report (page 16), the distribution team was watching a major shift in the profi le of the orders shipped for this new customer base and quickly realized it needed to respond and stay ahead.
“As people are buying more electronic books, you don’t need as many physical books in the supply chain,” Annette Danek, vice president of fulfi llment, tells Trebilcock. Sounds simple enough; however, with this dramatic shift, full pallets comprise fewer
than 10% of the units shipped from Ran-dom House’s 1.3-million-square-foot DC in Westminster, Md. Today, 60% of the units shipped are now full cartons while 30% are loose picks, or single titles picked to a mixed carton.
In response to the new market realities, the Random House team, with the bless-ing of company CEO Markus Dohle, made a strategic investment in a 712-foot, single tray, tilt-tray sorter. The advanced equip-ment allowed the Westminster operation to handle the mixed-case and direct-to-
consumer orders with little problem while improving turnaround time by 50%. These results helped the Services Group land 10 more clients since going live.
“We decided to invest in our physical infrastructure at a time when most publishers have put on the breaks with theirs,” says Danek. And, I believe this is where the real
inspiration of this story resides.Not only has this once-traditional
publisher capitalized on one of its core competencies to grow a supplemental busi-ness, but it was able to make a calculated investment and turn up the heat inside its four walls during a time when most materi-als handling investment had cooled.
“This is a great example of an industry leader using materials handling automa-tion to grow its business and outpace the competition at a time when investment was waning,” says Trebilcock. “It will be a positive sign for the industry if we see a few more sto-ries of this caliber over the next six months.”
Random House turns up the heat
In response to the new market realities, the Random House team, with the blessing of company CEO Markus Dohle, made a strategic investment in a 712-foot, single tray, tilt-tray sorter.
MMH1110_Editorial.indd 7 10/13/11 10:03 AM
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m m h . c o m MODERN MATERIALS HANDLING / O C T O B E R 2 0 1 1 9
BY NOËL P. BODENBURG, EXECUTIVE MANAGING EDITOR
MHIA
MHIA announces leadership changesAT THE FALL MEETING, ASSOCIATION SAYS NOFSINGER WILL RETIRE AT THE END OF THIS YEAR AND NAMES PREST HIS SUCCESSOR.
THE BOARD OF GOVERNORS of the Material Handling Industry of America (MHIA) announced last month that John B. Nofsinger, chief executive offi cer of MHIA since 1999, will retire on Dec. 31, 2011. And, George W. Prest, chief operating offi cer of MHIA, will be his successor as of Jan. 1, 2012.
“I am honored to be given the opportunity to build on the solid foun-dation John is handing off,” Prest said. “I want to thank the Board of Governors and John for the confi dence they have in me. I accept the chal-lenge of leading MHIA with humble confi dence.”
Nofsinger has more than 45 years of experience in the materi-als handling and logistics industry. He is recognized as a national and international authority on materi-als handling and logistics. Before joining MHIA in 1986, Nofsinger was employed for 20 years by Republic Storage Systems. During that time as a volunteer leader within MHIA, Nofsinger served as vice president of the Board of Directors and chair-
man of the Shelving Manufacturers Association.
“John’s 45 years of service to the industry and his 25 years of service to MHIA have been marked by major changes and improvements to the value that MHIA offers its members. He has also greatly added to the value of MHIA events and programming offered to end users,” said Material Handling Industry executive chairman Colin Wilson. “The association is extremely grateful to John for his leadership and numer-ous contributions to the ma-terial handling and logistics
industry.”Nofsinger serves on the
Board of Governors and executive committee of Material Handling Industry (MHI), boards of directors for MHIA and Material Han-dling Education Foundation (MHEFI). He also serves as managing executive for the Rack Manufacturers Insti-tute (RMI) and the Storage Equipment Manufacturers Association (SMA).
His other industry service in-cludes the Board of the Charlotte Roundtable of the Council of Supply Chain Management Professionals. In addition, Nofsinger was integral to MHIA’s current and ongoing par-ticipation as a founding member of the American Logistics Aid Network (ALAN).
“John’s leadership in the devel-opment of MHIA as a national and international standard for industrial associations is renowned,” said Prest. “In addition, the growth and success of ProMat and the develop-ment of the newly launched Modex expo are in large part due to John’s strategic vision. The development of the R-Mark rack certifi cation,
globalization of member-ship and MHIA’s role with ALAN all came about under John’s leadership. MHIA and the industry owe John, and his wife Patti, a huge debt of gratitude for his service.”
Prest brings more than 30 years of experience to MHIA, both in manag-ing and owning material handling manufacturing companies. Over the years,
George W. Prest,
chief executive
officer of MHIA as
of Jan. 1, 2012.
John B. Nofsinger,
chief executive
officer of MHIA
since 1999, is
retiring.
Follow
MMH1110_News.indd 9 10/12/11 1:18 PM
Prest has been recognized for his volunteer leadership of industry manufacturers and distributor as-sociations, local government and charitable foundations. This leader-ship includes serving as president of RMI and MHEFI, as executive chairman of MHI, and as a mem-ber of the Manufacturers Board of Advisors of the Material Handling Equipment Distributors Association (MHEDA).
“George’s previous experience as the CEO of a major material handling manufacturing enterprise gives him a unique perspective on the needs of both MHIA members and end users and will serve him well in his new role,” Wilson said. “I am convinced he has the experience and the ability to lead MHIA toward even greater success.”
“George has served this industry for many years as a volunteer leader in a variety of organizations,” said
WHEN THE INDUSTRY’S NEW expo for manufacturing, distribution and the supply chain, Modex 2012, opens on Feb. 6 in Atlanta, it will in-clude more than 500 exhibits and an expansive educational conference.
The Material Handling Indus-try of America (MHIA), sponsor of the event, recently announced the keynote speakers. They will be: Rick Blasgen, chief executive offi cer of the Council of Supply Chain Man-agement Professionals (CSCMP); Alberto Alemán Zubieta, chief ex-ecutive offi cer of the Panama Canal
Authority; and Donald Ratliff, execu-tive director of The Supply Chain & Logistics Institute at the Georgia Institute of Technology.
Monday’s keynote will be “The State of Logistics and Supply Chain Management” with Blasgen. He will discuss the importance of sup-ply chain management as a critical business success factor, the trends CSCMP is seeing around the world, and how global supply chains drive change. Blasgen will also discuss tal-ent within the supply chain fi eld.
Tuesday’s keynote will be “The
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Nofsinger. “His strategic vision has been a key contributor to advanc-ing MHIA’s efforts to increasing not only member value but awareness
of the value of material handing and logistics solutions to the manufac-turing and supply chain end user community.”
TRADESHOWS
Modex 2012: Keynote speakers, conference details announced
MMH1110_News.indd 10 10/12/11 2:11 PM
Expansion of the Panama Canal and its Impact on Supply Chains and Global Trade” by Zubieta. Scheduled for completion in 2014, the expan-sion of the Panama Canal is certain to change global freight movement and open up new opportunities, but precisely how is yet to be deter-mined. Zubieta will detail how these infrastructure improvements will benefi t importers and exporters and explain how you can prepare for its impact on your operations.
Wednesday’s keynote will be “How Supply Chain and Logistics Performance Impacts Trade” by Ratliff. He will detail how your sup-ply chain and logistics performance impacts trade and is critical for companies that want to increase exports. This keynote will provide insight into what elements of supply chain and logistics performance need improvement and how to make these improvements to boost exports.
Modex will also include 70 edu-cational sessions outlining leading trends, best practices, and state-of-the-art equipment and technology solutions. Modex is partnering with 17 industry organizations that will co-locate.
“Co-locating these events with Modex 2012 will allow manufactur-ing, distribution and supply chain professionals unparalleled educa-tion and networking opportunities as well as exposure to the broad-est material handling, logistics
and supply chain equipment and technology display of any expo of its kind in North America,” said John Nofsinger, chief executive of-fi cer for MHIA. “For our members, attendees and exhibitors, the co-locations will add even more value to the event; the largest being the Georgia Logistics Summit which last year hosted 1,300 attendees from 21 states and expects to draw even more in conjunction with Modex 2012.”
“These co-located events will
MMH1110_News.indd 11 10/12/11 1:18 PM
12 O C T O B E R 2 0 1 1 / MODERN MATERIALS HANDLING m m h . c o m
12 O C T O B E R 2 0 1 1 / MODERN MATERIALS HANDLING m m h . c o m
MMH1110_News.indd 12 9/30/11 9:57 AM
complement the existing confer-ence at Modex, which provides valuable insight into the trends and innovations impacting supply chains,” added George Prest, chief operating officer for MHIA. “The Modex 2012 conference will fea-
ture leading-edge topics in manu-facturing, distribution and the supply chain, exploring subjects as such as the impact of the Panama Canal expansion to sustainability, security, visibility over four days of sessions led by industry experts.”
ECONOMY
Manufacturers are becoming less optimistic about economy, says Grant ThorntonWHILE MANUFACTURING has been considered a bright spot for the U.S. economy during the economic downturn, recent data from consul-tancy Grant Thornton LLP indicates that manufacturers are losing faith in the growth prospects for the economy.
A survey of nearly 70 U.S. manu-facturing leaders conducted by the fi rm, entitled the “Business Opti-mism Index,” found that a mere 13% of surveyed manufacturers think the economy will improve over the next six months, down from 40% in May and 60% in February.
What’s more, Grant Thornton found that 40% of surveyed manu-facturers maintain the U.S. economy will get worse compared to 26% and 3%, respectively, in May and Febru-ary. Another 53% are very or some-what optimistic about their own business, which is down from 80% in May and 91% in February, while 47% are pessimistic about their own busi-ness compared to 20% in May and 9% in February.
“Directionally, it is not a surprise how COOs and CEOs are feeling about the direction of the econ-omy,” said Wally Gruenes, manu-facturing practice leader at Grant Thornton and a member of the board of directors of the National Association of Manufacturers. “Although manufacturing has held up well since 2008, the sector lost about 3,000 jobs in August, and productivity is down about 1.5%.”
Gruenes said these numbers are in direct correlation to the fact that there is less business occurring and
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volumes are trending down. He also said that this data does not fully ex-plain what is happening with exports on a real-time basis.
While July exports were up 11% annually according to Department of Commerce data, Gruenes said it does appear that the economic weakness in Europe and the mild slowdown in Asia are impacting the United States’ ability to export product.
“It does appear to be driven by the morass in Washington and the Eurozone and less volume,” he said. “The combination of the two is some-what toxic. While 40% said they think the economy will get worse, 53% feel pretty good about their own busi-ness. So the environment is not great, but some feel better about their own business rather than the economy in general, which is consistent in this data going back to February.”
Along with the declines reported in the Grant Thornton data are concurrent declines in the Institute for Supply Management’s monthly Manufacturing Report on Business. Another thing to note is that the U.S. manufacturing base is signifi cantly smaller than it was in the 1980s and has been in a three-decade span of decline, and has seen 2 million to 3 million jobs lost—and not regained—since the recession began in 2008.
But even with the loss of jobs and shrinking domestic manufacturing base, Gruenes said that according to NAM data, the U.S. manufacturing economy still does account for 21% of the value of manufactured materi-als that are produced compared to Japan and China, which are at 14% and 13%, respectively.
“There is still a signifi cant level of manufacturing performed in this country, but some of the challenges we have seen, with the concept of near-shoring to Mexico and points south, as well as China and Vietnam, we think the long-term trend is go-ing to be bringing production back closer to home,” said Gruenes. “And the megatrend is that supply chains are going to be shortened from a physical perspective.”
This approach brings manufactur-ers closer to their customers and suppliers closer to manufacturers, raising the question of manufactur-ers asking if the costs of transporting the product from the other side of the world—as fuel and transportation costs increase—are offset by labor costs, he said.
In certain parts of the world, he said, this is evident, with manufactur-ers not being able to fi nd personnel with the right amount of skill to bring in-house to work in their factories. Part of this is a broader social issue, with fewer young people interested in that career path.
Looking at public policy initiatives, survey respondents cited the reduc-tion in effective corporate tax rate as the one they are least optimistic about at 54%, followed by 25% and 21%, respectively citing job creation and defi cit reduction as the initiatives they are least optimistic about.
“ The combination of
the two is somewhat
toxic. While 40% said
they think the economy
will get worse, 53% feel
pretty good about their
own business.”
—Wally Gruenes, manufacturing practice leader, Grant Thornton
Results of Modern’s 2011 Pallet Usage StudyThursday, October 27, 2011 at 2:00 p.m. ETwww.mmh.com/2011pallet
MMH1110_News.indd 13 10/12/11 1:18 PM
lift truck TIPS
GraphicCaption
Effective lift truck operator training can produce efficiencies and safety, whereas poor training can significantly compromise
both. According to Spencer Ecklund, director of safety services for Toyota Forklift in Atlanta, Ga., too many companies get comfortable with the latter.
“People don’t take it seriously,” says Eck-lund. “They think, ‘But that’s the way we’ve always done it. If it hasn’t happened yet, it’s not going to. We’re not going to tear up any product, nobody’s going to get hurt, and the trucks are going to run forever.’ Sadly, they are mistaken.”
In the absence of proper training, most operators learn by watching an experienced but otherwise unqualified instructor of the type Ecklund calls “Old Fred.”
“You know Old Fred. The guy who knows everything about everything but knows nothing about anything,” Ecklund says. He adds that it’s instruc-tors like Old Fred who have helped perpetuate the most common safety violation: Driving, turning and moving with a load in the air.
OSHA is cracking down on Old Fred, says Ecklund, who pointed to requirements that instructors be “knowl-edgeable, experienced and trained.” He says failing to train or re-train is a usual suspect on OSHA’s Top 10 list of common violations.
But Ecklund says he appreciates that the art of op-erator training is filled with gray areas. It can be hard to translate good habits from videos, workbooks and laps around road cones to the warehouse floor, where cowork-ers’ practices, inadequate oversight, and the pressures of incentive picking can quickly corrode those habits. Unfor-tunately, bad habits aren’t found only in the aisles.
“Managers call me up looking to get training done in an hour or so,” laughs Ecklund. “It blows my mind. They’ll have operators tearing up product and say, ‘Well, 1% loss is acceptable.’ There is no such thing as an acceptable loss for me.”
Ecklund says about 10% of managers stay in the room during training. The rest claim they are too busy. But Ecklund emphasizes that managers are accountable not only to OSHA, but to an employee who might file suit for negligent oversight.
It’s also important to remember OSHA standard 1910.178 states that training must include not only formal instruction and practical training, but also an “evaluation of the operator’s performance in the workplace.”
“Training is the most important aid for preventing accidents and as an operator, it’s important to be as well trained as possible,” says Ecklund. With the emergence of automated vehicle technology competing for jobs, he says, human operators are on notice to perform at opti-mal levels of safety and efficiency.
“The technology is knocking on the door,” says Eck-lund. “You’re working for your job. You gotta fight for what you want.” M
14 O c t O b e r 2 0 1 1 / Modern Materials Handling m m h . c o m
The long view on operator trainingIn the face of automation, operators should strive for safety and ignore “Old Fred.”
lift truck TIPS
By Josh Bond, Contributing Editor
Josh Bond is a contributing editor to Modern and can be reached at [email protected].
MMH1110_LiftTruckTIPS.indd 14 10/12/11 1:17 PM
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MODERN system report
Big-box retailers, the Internet and e-books have upended the way books are purchased by con-sumers. Many of those same dynamics are altering the way books are distributed as well.
Not so long ago, Random House Inc.—the world’s largest English-language trade book publisher—distributed only its own newly pub-
lished and backlist hardcovers, trade and mass-market paper-backs, and audio books issued by its nearly 100 imprints in North America. What’s more, a significant portion of those books were likely to be shipped as full-pallet orders.
Today, Random House still distributes its own titles. But, it also has a growing third-party distribution business, shipping titles for 30 other publishers to thousands of brick and mortar retailers, distributors, wholesalers and libraries, as well as direct-to-consumer Web orders. In addition to
By Bob Trebilcock, Executive Editor
Blished and backlist hardcovers, trade and mass-market paper-backs, and audio books issued by its nearly 100 imprints in North America. What’s more, a significant portion of those books were likely to be shipped as full-pallet orders.
But, it also has a growing third-party distribution business, shipping titles for 30 other publishers to thousands of brick and mortar retailers, distributors, wholesalers and libraries, as well as direct-to-consumer Web orders. In addition to
By Bob Trebilcock,
Annette Danek, vice president of fulfillment for Random House
16 O C T O B E R 2 0 1 1 / MODERN MATERIALS HANDLING mmh.com
Random House cuts turnaround in half
Ed
win
Rem
sber
g/G
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Imag
es
MMH1110_SysRpt_RandomHouse.indd 16 10/12/11 2:16 PM
Thanks to a new tilt-tray sortation system, Random House is beating the competition to market and improving turnaround times by nearly 50%.
mmh.com MODERN MATERIALS HANDLING / O C T O B E R 2 0 1 1 17
warehousing and shipping, Random House also handles customer service and back-office support functions for its third-party customers.
The profile of those orders has also changed. According to Annette Danek, vice president of fulfillment, who runs the company’s distri-bution and fulfillment cen-ters, “As people are buying more electronic books, you don’t need as many physical books in the supply chain.” As a result, full pallets com-prise fewer than 10% of the units shipped from Random House’s 1.3-million-square-foot distribution center in Westminster, Md. About
60% of the units are full cartons and 30% are loose picks—individual titles picked to a mixed carton.
To address those changes and to support its growing third-party logistics (3PL) business, Random House added a sin-gle-tray tilt-tray sorter (Intelligrated, www.intelligrated.com) to the Westminster facility in the fall of 2009.
The 712-foot-long sorter features: • Two induction locations with six stations each and four
induction belts per station, for a total of 12 high-capacity sin-gulated automatic inductions.
• Overhead scanning after each array of induction sta-tions. The scanners read a UPC bar code on the exterior of each item on the sorter.
• And, 250 double-level chutes for a total of 500 potential sort/pack-out destinations. Packers are responsible for more than one-sort destination.
The sorter allows Random House to efficiently handle the mixed-case and direct-to-consumer orders that now com-prise a larger share of its business. Order turnaround time
has been improved by 50% since the sorter went live even as the company increased its overall title volume with its non-Random House clientele.
The change was a calculated strategic decision made together by company CEO Markus Dohle; Madeline McIntosh, the president of sales, operations and digital; and the senior dis-tribution leadership that has paid off despite an economic slow-down. “We decided to invest in our physical infrastructure at a time when most publishers have put on the brakes with theirs,” says Danek. “We’re now able to get our books delivered faster than our competition, and we have become a more effective and profitable partner for our booksellers with our advanced supply chain productivity and efficiency.”
The payoff: Random House has reduced lead times and increased throughput since the sorter went live, adding 10 new outside publishers as Random House Publisher Services clients. And, there is room to grow. “We could double or tri-ple our SKUs and keep the same turnaround times because of the sorter,” Danek says.
Hitting the distribution wallIn addition to choosing great authors and publishing hun-dreds of bestsellers and many Pulitzer and other prize win-ners 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 distribu-tion 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 over-seen by the Random House Publisher Services group.
At present, Random House operates two national distri-bution 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 prod-ucts 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 dis-
MMH1110_SysRpt_RandomHouse.indd 17 10/12/11 2:16 PM
tribution 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 tear-ing 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 com-plete 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 com-plete 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 market-place. This explosive-growth, reading and distribution for-mat 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 ini-tiatives 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 inven-tory 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 pri-orities 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 with-out routing it through nine or 10 pick modules.
With a tilt-tray sorter, Random House could aggregate the picking pro-cess. Instead of sending a shipping con-tainer from one module to the next, all of the items from a single-pick module
18 O c t O b e r 2 0 1 1 / Modern Materials Handling mmh.com
modern system report
narrow-aisle wire-guided turret trucks are used for putaway and picking in the full-pallet storage area.
once orders have been picked and packed, cartons are delivered to a quality assurance area for a weight check. From there, cartons are sealed, labeled and sorted to a shipping lane.
MMH1110_SysRpt_RandomHouse.indd 18 10/12/11 2:16 PM
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are sent to a sorter induction point. The sorter then routes all of the items for an order to one of 500 packing destina-tions. Once all of the books for a car-ton have accumulated, a light flashes to notify a packer that an order is ready to be packed.
In this system, one packer can han-dle several packing locations at a time. Once a carton is packed, it’s placed on a takeaway conveyor, and then auto-matically 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 pro-ductivity through the inevitable order-cycle peaks and valleys.
Once Random House settled on a technology, there were logistical prob-lems to address. One was a matter of layout. “We already had a mezzanine and we knew we needed certain operat-ing speeds,” says Danek. “But we didn’t have a lot of space and we had issues like I-beams in the way.”
The system integrator came up with a way to fit the sorter on the mezzanine within the architectural constraints of the building.
A second concern was whether the process of moving books from the sorter to a packout station would cause dam-age. “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 chil-dren’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 pro-cesses 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 impor-tantly, 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 custom-ers 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 profit-ability of our customers with Random House titles, as well as our own.”
20 S e p t e m b e r 2 0 1 1 / Modern Materials Handling mmh.com
modern system report
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.
Speed to market random House’s new picking methodology aggregates orders for faster turnaround times and speedier delivery to the market.
By Bob trebilcock, Executive Editor
Receiving: Random House receives (1) full trailer load shipments on full, half or mixed pallets from the binderies. Pallets are unloaded to a staging area in the receiving area (2) where they are checked in against a production order in the warehouse management system (WMS). As product is checked in, the
WMS creates a license plate bar code label for the pallet and assigns a put-away location in one of the reserve stor-age areas (3).
Putaway: Once a pallet has been received in the WMS, a lift truck opera-tor scans the license plate bar code label and is then directed to a drop off
MMH1110_SysRpt_RandomHouse.indd 20 10/12/11 2:16 PM
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modern system report
3
Storage
7
Loose pick
3
Storage
3
Storage
2Staging
10
Packing
10
Packing
5Shippingconveyor
8Conveyor
6Shippingsorter
1 Receiving
4 Shipping
9Tilt-tray sorter
Random HouseWestminster, Md.size: 1.3 million square feet
Products handled: Books
sKUs: 45,000+
throughput: 500,000 units per day
employees: 450 with seasonal adjustments
shifts/days: 3 shifts/5 days
location for one of the storage areas (3). There, the load will be retrieved by a narrow-aisle, wire-guided turret truck. The turret truck operator scans and is directed by the WMS to a storage loca-tion. The operator confirms the put-away by scanning the storage location label.
Picking: Orders are received in the WMS and batched into waves. Depending on what has to be picked and shipped during that shift, a wave may be created based on a variety of criteria including a customer, a carrier, carrier pick-up times and international orders. Picks are also grouped by full pallet picks, full carton picks and each picks.
• Pallet picks: Pallet labels are distributed to the turret truck operators in the storage area (3). Once they scan a pallet label, the WMS directs them to a pick location. After the pallet is deliv-ered to a staging station, it is picked up by another lift truck operator and deliv-ered to the stretch wrapper if neces-
sary and then to the shipping dock (4), where it is staged for loading.
• Carton picks: A full carton con-tains 12 copies of one book title. For full carton picks, labels are printed in advance and divided into clusters of 60 cartons, the equivalent of a full pallet. Whenever possible, all 60 cartons will be picked from one aisle in the ware-house. Working from a pallet truck, the order selector is directed to a storage location after scanning a carton label. The selector then applies the label to the carton, places it on the pallet and
then repeats that process until the pallet is complete. The pallet is then delivered to an induction point where another associate loads the cartons onto the shipping conveyor (5). Once on the conveyor, the cartons are diverted to one of 16 shipping lanes by a sliding shoe sorter (6). At the end of the ship-ping lane (4), the cartons are palletized for delivery.
• Piece picking: Individual items are selected from pick locations in the loose pick area (7). Associates in this area are directed by a voice-picking solution. To start the process, an order selector scans a label on a tote container and is directed to a pick location. The pick is confirmed by voice or by scan-ning a bar code. Once all the items for that tote have been picked, the order is closed by scanning the label on the tote and placing it on a conveyor (8). There it is transported to an induction point for the tilt-tray sortation system (9) on the mezzanine.
Packing: Just as orders are batched
MMH1110_SysRpt_RandomHouse.indd 22 10/12/11 2:16 PM
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Loose pick
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Storage
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Packing
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5Shippingconveyor
8Conveyor
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1 Receiving
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m m h . c o m modern maTerials handling / O c t O b e r 2 0 1 1 23
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check. After the scale, cartons are sealed and labeled and then conveyed by the shipping sorter (6) to the correct shipping lane (4). There, they will be married with any other cartons associ-ated with that order. About 80% of all units will be palletized and shipped
as either a full truckload or less-than-truckload shipment. The other 20% will ship as parcel shipments. Most of those will go directly from the conveyor into a parcel shipper’s truck. Some may be palletized and sent to a parcel shipping hub. M
into waves for picking, tote containers accumulate at one of two induction points for the tilt-tray sorter (9) until the pack out stations (10) are ready for a wave. An associate empties the books in the totes onto an automatic feed conveyor. They are scanned as they are automatically placed on one of the tilt trays and then sorted to the correct pack out chute. Books accu-mulate until there are enough items for a carton. At that point, a blinking light alerts the packer to begin to pack the order. When the packer scans a location label at the chute, the WMS identifies the right size carton for that order, depending on the size of the books. Once the carton is complete, the packer scans the bar code label on the carton and places it on a take away conveyor. At that point, the packer is directed to the next chute ready for packing.
Shipping: From the packing sta-tion, the takeaway conveyor delivers cartons to a quality assurance weight
modern system report
MMH1110_SysRpt_RandomHouse.indd 23 10/12/11 2:16 PM
24 O C T O B E R 2 0 1 1 / MODERN MATERIALS HANDLING mmh.com
By Lorie King Rogers, Associate Editor
Pallets are the foundation of the materials
handling industry. Here’s why they are important
to our readers.
At any given moment in time, there are nearly 2 bil-lion pallets on the move across the United States. New, used, metal, plastic, corrugated, wood or wood composite, pallets are, quite literally, the
foundation of the materials handling industry. For those outside of the materials handling industry, pal-
lets might seem like a just basic commodity. But for those of us on the inside, pallets are an essential component that can have a major impact on an operation’s process and ultimately its bottom line.
“In most cases, a pallet is the platform that serves as a lynch pin for entire unit load,” says Bruce Scholnick, presi-dent of the National Wood Pallet & Container Association (NWPCA), the Washington, D.C.-based trade association that represents the wooden pallet industry. “And that plat-form allows you to move more in less time with less labor.”
Pallets have the power to affect major cost savings for manufacturers and any operation moving product. They also protect the product during transit and allow it to arrive at its destination in good, usable, salable condition. Without a pallet, a product’s packaging would have to be more durable, which could also translate into higher costs.
So, since almost every product moving through our nation’s supply chain moves on a pallet, the question is: What type of pallet and why?
Actually, there are a lot more questions in our annual pal-let survey, which was resurrected last year after eight years and a lot of industry evolution. Modern’s goal in conducting
the pallet survey is to better understand current and future usage of pallets as well as any trends that may be occurring in the pallet market.
In August, Modern’s 2011 Pallet Survey was sent out to subscribers of our magazine as well as a sample of recipients or our e-newsletters. The e-mail invitation also included a URL linked to a dedicated Web site that contained the ques-tionnaire. We received 594 qualified responses from readers employed at a facility that actually uses pallets. The survey has a margin of error of ±5.6%.
Here’s what the readers told us.
People purchasing palletsThe readers who responded to Modern’s pallet survey once again represent a broad spectrum of industry verticals, with food and beverage (16%), consumer goods (12%), whole-sale trade (10%), and transportation and warehousing (8%) accounting for nearly half (46%) of the qualified responses. We also received responses from a number of other sectors, including paper and allied products, medical and healthcare products, electronics, automotive, building materials, metals and aerospace, to name a few.
The average reader is purchasing an estimated 9,020 pal-lets at their location, or roughly 18 truckloads a year, slightly below 20 truckloads a year reported in 2010. However, 14% of users are purchasing more than 30,000 or more pallets a year, or about five truckloads per month or more. Another 16% are purchasing between 10,000 and 29,000 pallets per
PALLET READER SURVEY
+ WEBCAST: RESULTS OF MODERN’S 2011 PALLET USAGE STUDY, THURSDAY OCTOBER 27, 2011 AT 2:00 P.M. ETWWW.MMH.COM/2011PALLET
MODERN special report
Usage on the rise
MMH1110_SpRpt_Pallets.indd 24 10/12/11 1:56 PM
year at their location. While there is a lot of talk about the stagnant economy,
pallets are generally an indication of the amount of product being palletized for inventory or shipping purposes. Yet, 45%
of respondents indicated that their pallet usage has increased over the last two years by an average of 20%, and another 40% indicated their pallet usage had remained the same. Only 15% of respondents indicated their usage had gone down, by an average of 29%.
We found similar results looking forward. Asked how they believe the number of pallets they purchase will change over the next two years, 48% expect to increase their pallet pur-chases, by an average of 17% and 43% expect their purchases to remain the same. Only 9% expect their pallet purchases to decrease, by an average of 31%.
According to this year’s survey, 60% of the pallet purchas-ing decisions continue to be made by purchasing managers, warehouse managers, shipping and warehouse managers, and dedicated buyers. And, as was also the case last year, the
mmh.com Modern Materials Handling / O c t O b e r 2 0 1 1 25
Usage on the rise
During the past two years, how hasthe number of pallets purchased atthis location changed?
By what percent?
Source: Peerless Media Research Group
Stayed the same37%
40%
Increased39%
45%
Decreased24%
15%
Average % increase
25% 20%
Average % decrease
27% 29%
2010 2011
What types of pallets do you use?
Source: Peerless Media Research Group
Wood
Plastic
Wood composite
Cardboard/Corrugated
Metal
Other
95%
39%
14%
8%
7%
2%
MMH1110_SpRpt_Pallets.indd 25 10/12/11 1:56 PM
26 O C T O B E R 2 0 1 1 / MODERN MATERIALS HANDLING mmh.com
majority of pallets (52%) are being purchased at the local level, meaning people at that location are buying pallets for that location only. Fifteen percent of respondents say that pallets are purchased at the local level for that site plus others, and 18% say that their pallets are purchased at the division-level for one or a number of locations.
A pallet’s purposeSo, once purchased, what’s the purpose of these pallets? For the most part (83%), pallets are being used in both ware-housing and shipping applica-tions. Only 8% of our readers report using pallets solely for warehousing and 9% solely for shipping.
Of the pallets being used in a shipping capacity, 40% say that their pallets are used to export product; 59% send their pallets on a one-way journey out to trading part-ners; and 20% circulate pal-lets in a closed-loop between trading partners.
Seventy-one percent of readers say that their pallets move in a closed-loop transporting product and materials within their facility, and 52% say pal-lets move between a number of facility locations with their organization.
One example of the latter is the Chicago Transit Authority. It owns thousands of wooden pallets that are used to move materials from its cen-tral warehouse out to 20 maintenance locations. Pallets are on the job around the clock moving materials needed to repair buses and trains and support its stations. “We have about 60,000 SKUs in stock,” explains Mark Ehmig, gen-eral manager of warehouse operations. “Everything from plumbing and electri-cal supplies is moved internally on our own pallets.”
Pallets can live a long, useful life in this closed-loop, even those that get pretty grimy. “There’s a small number, about 5%, that we use to handle items that don’t need to be moved on clean, pristine pallets,” says Ehmig. “Some of these pallets have seen better days, but they’re still useful.”
That’s not true in all cases. For example, the White Castle facility in Covington, Ky., which makes fro-zen food for the White Castle burger chain, has to address a number of strict requirements when handling food, including those issued by the Grocery Manufacturers Association (GMA).
As a result, the White Castle facility incorporates a number of pallet solu-tions. For example, warehouse supervi-sor Gordon Skaggs explains that since
products cannot be placed directly on a floor, they use their own wooden pallets to store and hold products. Plastic pallets serve a role in carrying onions through the prepa-ration process because, as Skaggs says, onions get sticky and plastic pallets are washable.
When it comes time to ship the frozen food out to restaurants, distributors show up at White Castle’s shipping dock equipped with their own pallets. “We use different carri-ers and they all come for the product with their own pallets,” says Skaggs. “They come with about 30 pallets, and it’s an even pallet exchange.”
Stable businessHow respondents are using pallets this year tracks closely with last year’s findings. In fact, according to Modern’s
research team, the differences are not statistically significant. Meaning, the overall numbers in this year’s pallet sur-vey tell us that the pallet industry has been stable. There is little change from last to this year.
However, our survey did uncover a slight variation in the average number of times a pallet is used. Last year, the average number of times a pallet was used was 7.5. This year, the average dropped to 5.6.
There could be a number of factors responsible for the decline, explains NWPCA’s Scholnick. For example, business could have fallen off for some respondents, or some respondents might be storing product on “slave” pallets in a warehouse. But Scholnick also says this slight adjustment is not a red flag. There are a host of reasons the
MODERN special report
How has the number of used wood palletsyou use/have acquired changed duringthe last 2 years?
Source: Peerless Media Research Group
Use/acquire usedpallets on same level
49%41%
Use/acquiremore used pallets
31%32%
Use/acquire fewerused pallets
20%20%
Rely more ona pallet pool
Not asked
7%
How do you expect the number of usedwood pallets to change in the next 2 years?
Use/acquire usedpallets on same level
43%44%
Use/acquiremore used pallets
41%32%
Use/acquire fewerused pallets
16%17%
Rely more ona pallet pool
Not asked
7%
20102011
MMH1110_SpRpt_Pallets.indd 26 10/12/11 1:56 PM
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number has gone down, but the pallet industry is cyclical and that number is going to fluctu-ate, he says.
Pallet rentalAnother interesting point that came to light in this year’s pallet survey is the increase in those considering certain pallet rental systems.
Last year, 48% of our respon-dents using pooled pallets were managing their own pools. This year, that number is down to 35%, and respondents say they are considering a helping hand. (Interestingly enough, readers tell us that the top reasons for outsourcing pallet handling and repair are the same reasons for keeping it in house—cost effec-tiveness and convenience.)
Modern’s survey included a number of companies that lease, repair or manage pallet pools, including CHEP, IFCO, PECO, iGPS and Ongweoweh. Among them, CHEP saw interest and/or participation in their business jump from 22% last year to 43% this year. While the increase wasn’t as dramatic for the others, up is up.
One reason for the increased inter-est could be due in part to new guide-lines issued by big box retailer Costco. Last year, the company man-dated that all by the end of 2010, all deliveries must arrive on a four-way entry block style pallet. This style of pallet has a true four-way entry that makes it easier to unload and han-dle the unit load, which ulti-mately enhances efficiencies. However, it’s more challenging to manufacture than the basic stringer style pallet and also more expensive.
So, rather than buy more expensive pallets, end users are considering the jump into a pallet rental pool with pallets like those offered by CHEP,
PECO and iGPS. This option could provide cost savings for some opera-tions and ease the constant pressure to lower expenses by collaborating with vendors who can become part-ners and focus on part of the operation that is not directly connected with its core competency. Simply put, as one respondent said, “We are not in the pallet repair business.”
But some companies are in the pallet
repair business, which is good news to nearly two-thirds of survey respon-dents. Of the readers using wooden pallets, 60% use a third party or pallet recycler to main-tain their pallets, while 28% sort and repair their pallets internally.
Wood wins, plastic placesRegardless of who is maintaining the pallets, it’s clear that wood con-tinues to be the over-whelmingly dominant material of choice in the market, with 95% of respondents report-ing that they use wooden pallets at their facility.
And within that fig-ure, according to Scholnick, about 80% of the wooden pallets in circula-tion today are reused. Over the past two years, 32% of respondents say they have acquired more used wooden pal-lets, and that same number has plans to acquire more used wooden pallets for their operation. Only 17% report an expectation of using fewer used wooden pallets in the next two years.
While wood is the winner, plastic is gaining some traction. Thirty-nine percent of our readers say that they use some plastic pallets at their location, com-pared to last year’s 33% who said they use some plastic pallets. And, of those not currently using plastic, 21% say they would consider using plastic pallets in the future.
When considering wood pallets, readers told us the most impor-tant considerations con-tinue include the follow-
MODERN special report
What type(s) of pallets are you not using but may consider for future use?
Source: Peerless Media Research Group
Cardboard/Corrugated
Plastic
Metal
Wood (new)
Wood (used)
Woodcomposite
No change
11%9%
7%4%
23%21%
9%3%
7%4%
12%12%
59%62%
20102011
Source: Peerless Media Research Group
#1 Cost/Price
#2 Durability/Better quality
#3 Customer requirements/Demands
#4 Increase in exporting and regulations
#5 Increased sales/Business/SKU growth
#6 Green/Eco-friendly
#7 Availability by type of pallet
What do you believe will be the primaryreasons for future changes regardingyour pallet usage?
MMH1110_SpRpt_Pallets.indd 28 10/12/11 1:56 PM
mmh.com Modern Materials Handling / O c t O b e r 2 0 1 1 29
ing: purchase price (95%), strength (95%), availability (93%), and durability (92%).
However, when con-sidering plastic, priori-ties have shifted. Last year, strength and dura-bility were the top pri-orities (92% each). This time around those factors are still the top consider-ations, but they are less important (83% and 82%, respectively) to end users.
Weighing into a loca-tion’s pallet choice can be a number of factors, including sanitary issues, durability and quality. “We would only change to reduce cost but probably would not change from plastic,” explains one respondent. “We have found the plastic pallets give us the highest number of turns, literally measured in years of service with as
many as five or six trips per week.”Among the other materials high-
lighted in the survey, 14% of respon-dents indicate they use some wood composite pallets, 8% say they use some cardboard/corrugated, and 7% say they use some metal pallets.
Respondents, however, did not indicate in what quan-tities alternative pallets are purchased.
But, of course, every pallet has a unique pur-pose. For example, corru-gated or transport pallets are designed for one-time use, often going from a manufacturing operation to a distribution center where product is repalletized and stored. .And, although more expensive, alumi-num pallets are lightweight and strong which makes
them ideal for transport in the airline industry.
Every operation is different and pal-let usage depends on what and where product is moving. But according to Scholnick, “All pallets have place in the market.” M
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What is your company’s potential forparticipating in a pallet retrieval/recoverysystem or in a third-party pallet rental system?
Source: Peerless Media Research Group
Might consider 37%33%
Would stronglyconsider/Would consider
22%23%
Would not consider 34%38%
Don’t know what aretrieval/recovery system or
3rd party rental system is
7%7%
20102011
MMH1110_SpRpt_Pallets.indd 29 10/12/11 2:00 PM
By Bob Trebilcock, Executive Editor
After a challenging 2009, the ADC market bounced back in 2010 and looks strong moving forward.
modern information management
Top automaticdatacapturesuppliers
30 O c t O b e r 2 0 1 1 / MoDern MATeriAls HAnDling mmh.com
In 2010, the automatic data capture (ADC) busi-ness bounced back from the recession.
The total market for industrial ADC solutions, those solutions used in factories, warehouses and logistics applications, came in at roughly $10.6
billion in 2010, according to Massachusetts-based VDC Research Group. That’s up about 17% from the $8.8 billion spent on industrial ADC in 2009.
At least for now, 2011 is expected to be another good year, according to Drew Nathanson, VDC’s vice presi-dent of AutoID. VDC projects the industry to approach $12 billion in 2011 and grow at a compound annual growth rate (CAGR) of 16.6% through 2015, when it is expected to reach $22.867 billion.
The ADC market includes handheld and stationary bar code scanning and imaging devices, bar code print-ers, consumables like bar code labels and RFID tags, RFID solutions for the supply chain and ruggedized mobile computing solutions for the factory and ware-house. VDC’s figures above do not include consum-ables associated with automatic data collection, such as bar code labels.
Driving that growth is a combination of geography and technology adoption. “We’re seeing growth in emerg-ing markets like Brazil and Mexico, Eastern Europe and Asia,” Nathanson says, pointing out that the market in China grew 20% off a decent-sized install base. There has also been significant growth in the adoption of imag-ing technology for 2D bar codes and RFID.
VDC’s projections are supported by surveys the firm has done on ADC budgets from end users. “While end user budgets for bar code systems declined by 53% in 2009 as a result of the recession, we’re now seeing increased ADC budget allocation in every primary vertical market,” says Tom Wimmer, VDC’s practice director for AIDC and RFID. The data suggested an 8.5% increase in budget allocations for 2010—and real results were even better—and an approximately 30% increase in 2011.
The 2010 market leaders included familiar faces: Once again, Motorola led with an estimated $1.228 billion in revenue, a 12.5% increase over 2009. Zebra Technologies placed second with $526 million. The top five spots were rounded out by Datalogic with $403.5 million, Honeywell with $380 million, and Intermec
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modern information management
Top 20 ADC suppliers by revenue ($ millions)
rank Companytotal 2010 revenues
north american Headquarters Web site
Bar code printers
Handheld scanners
stationary scanners rFid
Mobile computers
1 Motorola $1,227.9 Schaumburg, Ill. www.motorolasolutions.com x x x x
2 Zebra $526.5 Vernon Hills, Ill. www.zebra.com x x
3 Datalogic $403.5 Hebron, Ky. www.datalogic.com x x x x
4 Honeywell $380 Morris Township, N.J. www.honeywell.com x x x
5 Intermec $377.5 Everett, Wash. www.intermec.com x x x x
6 SATO $234.7 Charlotte, N.C. www.satoamerica.com x x
7 TEC $181.4 Atlanta, Ga. www.tecamerica.com x x
8 Avery Dennison $151.2 Pasadena, Calif. www.averydennison.com x x
9 Psion $143.7 Hebron, Ky. www.psion.com/us x x x
10Hewlett- Packard $136.4 Palo Alto, Calif. www.hp.com x x
11 Denso $125.7 Long Beach, Calif. www.denso-adc.com x
12 LXE* $123.1 Norcross, Ga www.lxe.com x x x x
13 SAVI $118.9 Sunnyvale, Calif. www.savi.com x x
14 Printronix $98.8 Irvine, Calif. www.printronix.com x
15 Vocollect* $97.7 Pittsburgh, Pa. www.vocollect.com x
16 Datamax-O’Neil $83 Orlando, Fla. www.datamaxcorp.com x
17 SICK $80.4 Minneapolis, Minn. www.sick.com x x
18 Opticon $75.4 Renton, Wash. www.opticon.com x x
19 Casio Computer $71 Dover, N.J. www.casio4business.com x x
20 Talla-Tech $70.9 Tallahassee, Fla. www.elbitsystems.com x x
*Acquired in 2011Source: VDC Research
(which dropped from the No. 3 spot to No. 5) with $377.5 million. Intermec didn’t have a bad year: Revenues were up from $365 million in 2009. Rather, Datalogic and Honeywell performed better.
With business on the ropes, most major players focused on maintaining the status quo; there were no major mergers or acquisitions in 2010, and no real departures from technologies or markets. There have been two sig-nificant acquisitions in 2011 that will impact next year’s numbers and stand-ings: Intermec acquired Vocollect, the leader in voice recognition technol-ogy in March 2011, and Honeywell added EMS Technologies, the parent company of LXE, to its portfolio in June. Depending on how Intermec and Honeywell absorb the new companies, those acquisitions could alter the leader board next year.
Collecting the data This is Modern’s 10th-annual look at the leading manufacturers of ADC hardware and solutions. Because the industry includes public and private companies, this is the third year in a row that we asked VDC Research Group to compile the data: Since they are covering this technology every day, they are closer to the market.
To make our list, companies must sell in North America, though the chart includes worldwide revenues. Modern does not include resellers, systems inte-grators or other companies that do not manufacture ADC hardware. Since our readers are primarily focused on sup-ply chain solutions, we do not include companies whose primary focus is the retail checkout counter or non-indus-trial settings, like hospitals, libraries or resorts. Nor do we include companies that only manufacture consumables like bar code labels and RFID tags.
While the overall market for ADC solutions totaled $10.6 billion, each of the industry segments experienced their own dynamics last year that may have been different from the overall market.
Mobile computingThe market for ruggedized mobile com-puters reached $2.655 billion in 2010, a 14.5% increase over 2009, says David Krebs, vice president of VDC’s mobile and wireless computing practice. Those figures include handheld/PDA devices, wearable mobile computers, and lift truck-mounted devices used on the plant or DC shop floor or in port and yard applications.
Krebs estimates the overall market for mobile computing devices will grow by a compound annual growth rate of 9.4%, reaching 4.16 billion by 2015.
The primary driver in 2010 was pent up demand. Warehousing, transpor-
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modern information management
tation and logistics projects were an important part of that story. “There was some growth from new facilities and investments and the retail sector saw a big rebound,” says Krebs. “But the most important factor was projects that had been postponed and got the green light.”
Trends Krebs is watching include: • The extension of the warehouse
into the transportation management space and the retail store as companies focus on a closer tie between inventory levels in the store and the warehouse.
• The emergence of new form fac-tors, especially outside the four walls of the plant and warehouse. “The clas-sic brick is still the preferred device for the plant and warehouse,” Krebs says. When you look at the transportation space, there is a desire to be more por-table, ergonomic and lighter weight.”
• While enterprises are extend-ing mobile solutions to more workers, Krebs is not seeing a big migration to smart phones or tablets or operating systems from Android, at least in indus-trial settings. “At the end of the day, these are slow-moving markets,” Krebs says.
As for acquisitions, Honeywell’s pur-chase of EMS gives it more access to the warehousing and distribution mar-ket, an area where it lagged the compe-tition, according to Krebs. “Honeywell is strongest in retail, transportation and health care,” he points out. “LXE is a long-standing provider of wireless com-puting with a strong customer base and partner channel.”
Scanning and printingBar code-related hardware, including printers and scanners, is possibly the most mature of the ADC technology segments. After a disappointing 2009, those markets posted impressive gains last year. Handheld scanners jumped 18.1% to $770.3 million, while the market for industrial fixed scanners increased by 18.3% to $809.1 million, according to Wimmer.
Meanwhile, the market for industrial
printers, which includes bar code printers and the RFID printer/encoder market, improved by 13.8% to $1.863 billion.
Wimmer sees growth continuing, with five-year compound annual growth rates of between 6.7% (printers) to 9.1% (handheld scanners).
Similar to last year, the bright-est spot is in the 2D and camera-based imaging space, which Wimmer sees nearly doubling by 2015. “The demand for 2D imaging is expected to outpace all other bar code technolo-gies through 2015,” Wimmer says. It’s being driven by a number of factors including:
• increased requirements to encode more information,
• rising demand to embed scanning functionality into other devices, such as smart phones, tablet PCs, lottery and gaming systems, kiosks and even elec-tronic voting machines,
• the desire to extend data capture platforms and their value propositions, and
• a need to support linear and 2D codes as a means to have a more robust solution and a future-proofed system.
As for mergers in the space, Wimmer says the acquisition of Vocollect should reinforce Intermec’s go-to-market strategy. “Intermec’s value proposition has always been that they are the one-stop-shop for your ADC needs, covering everything from printers to networking gear. The one technology they did not have was voice,” says Wimmer.
RFIDRFID remains the fastest growing of the ADC segments, expanding by 19.6% to $4.523 billion in 2010. The market is expected to post compound annual growth rates of 25%, topping out at $13.838 bil-lion by 2015, according to Nathanson.
The most important RFID story may not be the growth in numbers, but where and how RFID is now being used in an industrial setting. Instead of tag-ging cartons and pallets to track goods through the warehouse, the action has shifted in several key ways.
“In the retail market, about 80% of the activity is in the retail store,” says Nathanson. Major retailers, he adds, are tagging items in the store to get a more precise handle on inventory on the shelves than they get tracking point of sale information. That may explain why Wal-Mart ordered nearly 19,000 handheld RFID units. In the future, Nathanson expects to see tagging moved to the point of manufacture, similar to bar code labeling.
In addition, RFID is being used to authenticate products. In Korea, for instance, there is a mandate to have 50% of pharmaceuticals tagged with RFID by the end of 2012. But RFID is also being used to authenticate Chilean sea bass, liquor and cigarettes in some countries. “Talk to customers, and authentication and anti-counterfeiting are two of the most desired applications for RFID,” says Nathanson.
Finally, RFID technology is being embedded into other scanning engines as well as tools, parts and components for tracking purposes. That includes products as diverse as a scalpel or other medical device in a surgical kit to work in process on the manufacturing floor to the 3,000+ tags Boeing expects to put on a commercial aircraft. “RFID is becoming part of a broader overall solu-tion package and not just tracking car-tons and pallets,” says Nathanson. “The supplier community is doing a great job of providing solutions to help them get there.” M
“ Talk to customers, and authentication and anti-counterfeiting are two of the most desired applications for RFID.”
—Drew Nathanson, VDC
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At every point in the supply chain—from receiving raw mate-rials in a manufac-turing facility to
delivering the finished product to the retail shelves—the more information you have about your product and the process, the better. That’s why data capture technology is a key component to an operation’s success.
A number of technologies are included in the data capture market. Mobile com-puting, RFID, voice technology, and bar codes and bar code scanning are the solu-tions most often employed to capture, share and manage data.
Having real-time, accurate data enables today’s warehouses, distribu-tion centers and manufacturing plants to keep pace with the constant, contin-ued pressures to increase efficiencies.
While data capture systems once worked independently, today’s technol-ogy works together. This equipment report will take a look at:
• mobile computing,• bar codes and bar code scanning,• radio frequency identification, or
RFID, and• voice technology.
MoBile CoMPUtingWorkstation computers are ideal for sharing instructions with operators who remain in one place during a shift, but that’s an unlikely scenario inside the four walls of most faclities. In these environments, workers and products are in constant motion.
“Product is not staying still, even though a warehouse seems static,” says Bruce Stubbs, Intermec’s director of industry marketing for warehouses. “Product is constantly moving and going through the supply chain.”
Mobile computers that communi-cate wirelessly with a host computer over a facility’s Wi-Fi network enable operators, order pickers and other per-sonnel to receive work instructions and capture information in real time wher-ever they are. In addition to receiving communications, workers can key data into a mobile computing device.
Mobile computing is the foundation of any automated data capture solution, regardless of whether the systems scans bar codes, reads RFID tags or uses voice technology to communicate.
There are two main types of mobile computing devices:
• Vehicle-mounted computers are designed to work with lift trucks and walkies. A vehicle-mounted computer will usually have a bar code scanner tethered to it. Both devices communi-cate wirelessly to the network. Not only does this provide real-time data and capability, it creates efficiency. “Workers don’t have to get off and on the truck to count or handle cases,” explains Stubbs. This saves time and gives an operation the best of both worlds. In addition, Stubbs says, “Vehicle-mounted comput-ers can be run off the power source of the forklift, so you don’t have to worry about a battery.”
Today’s vehicle-mounted computers provide workers with better technol-ogy like enhanced graphics and large screens. “Some now have touch pads, the resolution is much better, and the ergonomics of the key pads are better,
By lorie King rogers, Associate Editor
data capture basics data capture technology can help
an operation see its products in real
time and take proactive steps to keep
materials moving smoothly through the
supply chain. Here’s a look at several
basic data capture technologies.
modern Equipment 101: Data captureA primer for warehouse/DC managers
MMH1110_EquipReport_Data.indd 34 10/12/11 1:13 PM
too,” says Stubbs.• Ruggedized handheld devices are
available in a variety of form factors, depending on the job. Order pickers carry an integrated handheld device that includes a scanning engine for bar codes or a reader for RFID tags. Supervisors who are not scanning as often as an order selector may carry mobile comput-ers that are similar to a PDA.
Today’s mobile computers are nearly as powerful as a desktop, and the graphics have improved over time. These machines are able to run the applications you need on an Intel-based platform running an open system like Windows.
“These mobile computers are really the driving force behind productivity and accuracy in a facility,” says Stubbs.
“These are the devices needed to be successful and competitive.”
BAR CODE SCANNINGBar code scanning is the most common way to collect data at every link in the supply chain. There are two major com-ponents and considerations in any bar code solution:
• choosing the right type of bar code or bar code label for the right type of application, and
• choosing the best scanning device for the application.
BAR CODESBar codes are everywhere and on everything. In fact, according to Marty Johnson, product marketing manager for Zebra Technologies, if something doesn’t have a bar code, it may not exist in an automated system. That may be a bit of an exaggeration, as RFID and other technologies gather steam. But,
bar codes are certainly pervasive. And, he adds, the ramifications of not having some method of identification are huge and costly.
Bar codes can have different appear-ances and can have different levels of data storage capabilities. In today’s industrial settings, there are at least three types of labels.
1. 1D, or linear, bar codes are the most familiar arrangement of black and white lines and spaces used to create the Universal Product Code (UPC). This is the bar code that people think of first, says Johnson. It’s the linear style style —a classic UPC with stripes of varying degrees of width.
2. 2D bar codes come in a variety of forms, but consistent across the board is that all information is encoded verti-cally and horizontally. “A 2D bar code has a different look to it,” explains Johnson. “It’s basically two dimensional and looks like a series of blocks and tri-
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modern Equipment 101: Data captureA primer for warehouse/DC managers
left: Vehicle-mounted computers that communicate wirelessly to the network provide real-time data and create efficiencies since workers don’t have to get on and off lift trucks to count and handles cases. Above: Voice technology is often applied to labor-intensive activities, like piece picking, putaway, replenishment and cycle counting.
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angle and squares in varying patterns.” The 2D type can be used when
there’s a need to store more information than the 1D UPC style can handle. A 2D bar code can hold a different level of detail, and according to Johnson “is more in tune with mobile applications.” Rather using a traditional scanner to collect data, a smart phone can take a physical image of it and capture the information that way.
3. Direct part marking is used to apply a unique identifier directly to a part that can be used in the future for tracking and tracing. The importance of direct part marking for tracking and tracing comes into play in an open-loop supply chain in many ways, including safety as it relates to a food or pharma-ceutical product recall or in the case of a part being part of a larger finished product, like an airplane or a car. In the
retail apparel setting, direct part mark-ing is being applied to clothing labels. Suppliers are tagging individual items, which enables better inventory control and helps avoid stock out situations for retailers at the consumer level.
Techniques used to apply the identi-fying data include ink spraying or etch-ing directly into a part.
Bar codes can also be printed on paper and a variety of materials, depend-ing on the product and its environment. For example, polyester can resist dam-age caused by contact or exposure to chemicals and can be stored outdoors for about two years; polyimide can tol-erate temperatures up to 500 degrees; polypropylene can also tolerate high temperatures and be stored outdoors for between one and two years.
The cost of a label depends on its size, material and volume needed.
After choosing the right type of bar code, the next step is to choose the right type of scanner for capturing the data stored on the bar code.
scannersLaser scanners, which read 1D bar codes, are the most common type. These devices read bar codes in con-junction with an oscillating mirror that automatically moves the beam back and forth across the bar code.
Imaging technology can also read 2D bar codes and direct part markings. These systems capture the image of the bar code all at once, much like a digital camera. The imaging technology auto-matically frames the information on the bar code and pulls it in. The data capture is extremely fast, with imaging technology response time measured in sub-seconds. “This technology can
Data capture equipment manufacturers
company Web siteMobile computers
Bar code scanners/readers
rFid readers
rFid tags
Voice technology
Accu-Sort Systems accusort.com x x
Alien Technology alientechnology.com x x
Avery Dennison averydennison.com x
AWID awid.com x x
CipherLab cipherlab.com x x x
Datalogic datalogic.com x x x x x
Datria Systems datria.com x
Denso ADC denso-adc.com x x
Honeywell honeywell.com x x
Impinj impinj.com x x
Intermec intermec.com x x x x x
Lucas Systems lucasware.com x
LXE (now part of Honeywell)* lxe.com x x x x
Motorola Solutions motorolasolutions.com x x x x
OATSystems oatsystems.com x
Psion psion.com x x x
SATO satoamerica.com x
Savi Technology savi.com x x x
SICK sick.com x
Sirit Technologies sirit.com x x
Texas Instruments ti.com/rfid x x
ThingMagic thingmagic.com x
Vocollect (now part of Intermec)* vocollect.com x x
Voxware voxware.com x
Wavetrend wavetrend.net x x
Zebra Technologies zebra.com x x*Acquired in 2011
This table represents a sampling of leading data capture equipment manufacturers.
modern Equipment 101: Data captureA primer for warehouse/DC managers
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push information out to the workforce and gather it back in real time,” says Intermec’s Stubbs.
One benefit of imaging technol-ogy, Stubbs explains, is that because a camera can capture the image of any product or process and upload it in real time, it can “see” problems like the con-dition of a load, for example.
Regardless of the scanning technology, bar code scanning equipment options include handheld and fixed devices.
Fixed scanning devices, which are 100% automated and scan without human intervention, are commonly used as part of a conveyor system. These scanners read the bar codes on cartons as they are inducted into the conveyor or sortation system or before they are stored in an automated storage and retrieval system (AS/RS).
Fixed scanners can also be mounted at choke points in a facility, including dock doors. “Fixed scanners mounted at portals track everything that goes through a critical point,” explains Chris Warner, senior product marketing man-ager for Motorola Solutions.
In some operations, on-demand handheld readers are used to go out and do manual tracking, Warner says. Today’s handheld readers are lighter than their predecessors and include a litany of ergonomic improvements including hands-free features.
In some styles, handheld technology literally puts the information at an oper-ator’s fingertips. Wearable devices like ring scanners, for example, enable true hands-free activity and leave a worker’s hands free to perform a task. Today’s wearable devices have increased pro-cessing power and more memory so in addition to reading bar codes, some can actually display full color images on the screen. This feature visually can ensure accuracy during the picking process or even while building a pallet.
There are two types of handheld readers—one industrial type and a smaller, lighter type that’s more appro-priate in a commercial setting for sales force applications. “You wouldn’t want
to put a heavy device on the sales floor for an associate who had to use it for a long time,” Warner says.
In all cases, once the bar code is scanned or the image is captured, software is then used to decode the data.
rFidRadio frequency (RF) tech-nology has been around for decades. During World War II, it was used to identify friendly aircraft; in current times this technology is used for such things as animal tracking, toll collection and keyless entry. It also has many industrial uses, including several in materials handling.
Radio frequency identifi-cation, or RFID, is a form of automatic identification used to carry data about an object and transfer it to a computer, reducing the time and labor needed for manual data entry.
A basic RFID system includes an RFID tag, a reader and a host computer. When a reader energizes a tag, the data stored on in the tag’s memory is trans-mitted to the reader using radio waves. The reader then communicates the nec-essary data to the host computer so the computer’s software can act on the data.
RFID tagsMost RFID tags have at least two parts:
• a silicon chip for storing informa-tion, and
• an antenna for receiving and trans-mitting a signal.
Tags can come in a variety of sizes and shapes, depending on the appli-cation. Those used in shipping labels combine a tiny square chip (smaller than the head of a pin) with a 3- to 4-inch-wide antenna. Two of the most common antenna shapes for shipping labels are squiggle and double cross designs.
RFID tags can have high or low memory capacity. High-memory tags
can cost tens of dollars, while low-memory tags can cost tens of cents.
RFID tags can be active, passive or semi-passive.
• Active tags include a battery and use its power to transmit the sig-nal. The battery gives an active tag an especially long read range, about 100 meters, according to Alan Sherman, director of marketing for OATSystems. It also increases the price of the tag, so active tags are used to track very high-value assets or in closed-loop applica-tions where the same tag might be used hundreds of times.
• Passive tags have no batteries and instead use energy from an RFID reader to power their transmissions. Passive tags are less expensive, but have a limited read range, about 30 feet using fixed readers, says Sherman.
• Semi-passive tags, also called bat-tery-assisted tags, use batteries to boost the response of a passive tag. These tags have about a 100-foot read range.
RFID readersAs with bar codes, RFID readers are available in a number of form fac-tors. Fixed readers can be mounted
Handheld bar code scanners and rugged mobile computing devices enable the real-time exchange of data.
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at portals, like dock doors, or inte-grated as part of a conveyor system. Handheld devices can be carried or worn by an operator, and vehicle-mounted readers can be mounted on a lift truck. Some RFID reading devices can be mounted on a vehi-cle then lifted off and carried by an operator.
RFID offers some advantages over bar codes.
• No human intervention is needed to read an RFID tag, which broadcasts the information on the tag to an RFID reader. RFID read-ers can be mounted throughout a facility, including the ceiling. This “eye-in-the-sky” position provides visibility of movement at a basic level and can track and note the location of an item at any moment in time, explains Sherman.
• RFID can work in hostile or haz-ardous environments, like a paint line in a manufacturing facility. Paint over the RFID tag and it will still broadcast its signal; paint over a bar code and it’s unreadable.
• RFID tags can carry a lot more information than bar codes.
Over the years, RFID technology has improved. As far as tags are con-cerned, Motorola’s Warner says, “The market has seen a lower cost per tag with an increased read range.”
On the antenna front, there’s also good news. “Modern antennas are more ‘tunable’ to help integrators create the appropriate capture window and help eliminate spurious reads,” says Bert Moore, director of communications for AIM Global, a trade association repre-senting makers of automatic identifica-tion equipment.
Since there are many different types of RFID systems all with different capabilities, ranges and data capacities, Moore recommends seeking profes-sional guidance from a knowledgeable integrator who is familiar with industry standards and is able to set up a system that works in your environment and with your products and business processes.
VoiCe teCHnologYVoice technology is a hands-free, eyes-free technology that operates in conjunction with an operator. Voice applications are most often found in labor-intensive activities in warehouses, like piece picking, putaway, replenish-ment and cycle counting.
Voice technology turns computer commands into spoken instructions. Commands from the system and an operator’s feedback create two-way dialogue that navigates through the task at hand, explains John Schriefer, marketing communication manager for Lucas Systems.
A typical voice system includes a mobile computer and a headset. The mobile computer communi-cates wirelessly with a management system of records, like a warehouse management system (WMS), man-ufacturing execution system (MES), or an enterprise resource planning (ERP) system. The operator wears a headset with a microphone to talk back to the mobile computer.
According to Schriefer, there are a number of styles of head-sets that are rugged, lightweight and comfortable for an opera-tor to wear, but one of the most important features is the indus-trial noise-canceling feature on the microphone. “There is nothing worse for a voice system than bad recognition. This feature filters out
background noise so the system can clearly understand when the operator is speaking and what’s being said,” he says.
Today’s voice systems are smart. In addition to distinguishing between feedback and background noise, some systems are diverse enough to under-stand three dozen languages and spe-cific enough to actually recognize each worker’s unique voice patterns, accents and speech idiosyncrasies.
Another way for voice technology to work is a software solution that works over a dial tone. While this strategy is successful in the mobile field service environment, it can also work inside the four walls, explains Brad Wyland, vice president of strategic marketing for Datria Systems. “Workers can pick up a desk phone, cell phone, smart phone or any industrial handheld device and connect to the system with a phone call,” he says.
Regardless of the delivery method, voice communication between the worker and the system can result in a number of improvement gains, includ-ing increased picking accuracy and effi-ciency, reduced picking and replenish-ment labor, reduced employee training time, and enhanced safety. M
modern Equipment 101: Data captureA primer for warehouse/DC managers
Fixed scanning devices, which are 100% automated, can be part of a conveyor system or mounted at choke points in a facility.
“Workers can pick up a desk phone, cell phone, smart phone or any industrial handheld device and connect to the system with a phone call.”
—Brad Wyland, Datria Systems
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40 O c t O b e r 2 0 1 1 / Modern Materials Handling mmh.com
modern productivity solution
Pick-to-light solution results in improved picking performance and more reliable sensing for automotive components supplier.
in today’s competitive industrial manufacturing markets, success is about getting it right as soon
as possible. This is especially true in automotive: Suppliers of automotive components require 100% accuracy, high quality, documentation, proper pack-aging and low cost.
Orscheln Products, located in Moberly, Mo., has built a reputation as a leading global supplier of motion control systems, which representatives say comes from a continual commitment to manu-facturing quality, leading-edge products and excep-tional service. The company’s product line includes parking brake systems, control cables, fluid-level indicators, throttle controls and shifters.
Many of the assemblies are complex and change constantly, and the company understands that the basis for a competitive product is the ability to assemble it in the correct sequence and keep the labor and any rework to a minimum.
So, when the company went looking to improve
productivity and replace an older, unreliable and cumbersome system with a new one, it insisted on a solution that would simplify the process without putting additional constraints or hardships on its assemblers. Choosing a proven assembly method that provides answers to all of the industry’s strict requirements, Orscheln installed a unique pick-to-light (Banner Engineering, www.bannerengineer-ing.com) solution.
The pick-to-light system gives the operation total flexibility to control and adjust the pick sequence as requirements change. With a built-in sensor for a no-touch, simple and fast way to acknowledge the pick, the embedded photoelectric sensor allows the light to operate without touch.
The system’s indicator lights are positioned over the bins. The sensor is triggered when the operator reaches into the bin for a part. When it’s removed, the sensor registers the pick. It’s the in/out action of the operator that triggers the sensor and acknowl-
Driving efficiencies anD qualityBy lorie King rogers, associate editor
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mmh.com Modern Materials Handling / O c t O b e r 2 0 1 1 41
modern productivity solution
edges the completion of the task.Orscheln has achieved improved productivity from
enhanced picking performance and more reliable sensing. The pick-to-light solution has reduced errors and improved overall machine operations and flow. Orscheln also benefited from the ability to scale the
system for different parts and bin sizes and number of parts at each station to allow each station to be unique to the application.
As a result of the significant improvement in produc-tivity, Orscheln plans to implement additional pick-to-light systems in the future.
British apparel retailer, Next, markets home products, clothing, footwear and accessories
in its 500 stores throughout the United Kingdom and Ireland, and in 50 franchise branches in Europe, Asia and the Middle East.
To keep up with demand and its changing business requirements, Next installed a new goods-to-person order fulfillment solution that has enabled the company to achieve a dramatic increase in distribution productivity and capacity. The high-rate order fulfillment system (Dematic, www.dematic.com) delivered a threefold increase in order picking rates, along with far greater peak capacity.
The fulfillment system, which is dedicated to the company’s fast moving product lines, has 20 stations that fill orders for up to 24 stores each. At each high-rate put station, an operator is directed by put-to-light displays to fulfill a series of orders, fed by a seamless, sequenced supply of products. The products are automatically delivered to the station’s central picking point from the automated storage and retrieval system.
Each station holds up to 24 order totes destined for one of the retail outlets. The light displays at each loca-tion indicate how many items must be put into each of the totes, allowing a single operator to work on up to 24 store orders at the same time. When an order tote is full, the display instructs the operator to push it onto a take-away conveyor for transfer to shipping.
The high-rate put stations minimize the time an employee must travel in the warehouse to access each pick face. Instead, they are fed with a continual supply of products, and the ergonomic design of the stations ensures that high productivity is combined with mini-mal physical demands. The innovative design enables operators to achieve pick rates up to 1,000 items per hour depending on the order profile. An additional ben-efit of supplying stock to pickers is that errors are sub-stantially reduced, improving accuracy and customer service levels. M
picking the light solutionLight-directed put stations are designed to help an apparel retailer optimize split case fulfillment and account for a 300% improvement in pick rates.
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8 The Supply Chain Top 25: Leadership in ActionThe 2011 rankings of the Top 25 supply chains from Gartner Inc. are in. They include repeat winners and some new entrants. Perhaps even more important than the actual rankings, says Gartner Research Director Debra Hofman, are the lessons that can be learned from analyzing the leaders. This year, six specific qualities stand out.
16 The Greening of Walmart’s Supply Chain…Revisited In 2007, SCMR ran an article on Walmart’s sustainability program, focusing on eight specific initiatives being pursued. Four years later, the author of that original article, Erica Plambeck of Stanford, and colleague Lyn Denend revisit those initiatives to assess just how Walmart is doing on the sustainability front.
24 Achieving Flexibility in a Volatile World A new global survey from PRTM confirms the importance of operational flexibility in supply chain success and identifies five levers that leaders employ to make it happen. The con-sultants report that the financial and perfor-mance advantages of improved flexibility can be profound. They outline five basic steps that companies can take to start realizing those benefits.
32 What’s Your Mobility Index?Mobile devices are everywhere these days. But what’s the real potential of mobility in the key supply chain processes. And what’s the best way to identify and tap into that potential?
Sumantra Sengupta of EVM Partners says the first step in answering these questions is to carefully determine your “Mobility Index.” This article tells how it’s done.
40 The Case for Infrastructure Investment: Lessons from Medco and StaplesSmart investment in supply chain infrastruc-ture—and in particular automated materials handling and distribution systems—can pay big dividends. Medco and Staples have proven that convincingly, as these case studies dem-onstrate. Their stories point to seven key take-aways that supply chains professionals in any business sector can learn from.
SPECIAL SUPPLEMENTS50 EU Logistics: Meeting the New Challenges
Editorial Advisory Boardn Jack T. ampuJaNiagara University n Joseph c. andraskiVICS Association n James r. BryonIBM Consulting
n John a. calTagironeThe Revere Group
n Brian cargilleHewlett Packard n roBerT B. handfieldNorth Carolina State University n nicholas J. lahowchicTompkins Associates n hau l. lee
Stanford University n roBerT c. lieBNortheastern University n clifford f. lynchC.F. Lynch & Associates n eric pelTz
RAND Supply Chain Policy Center
n James B. rice, Jr.Massachusetts Institute of Technology n larry smiTh
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S e p t e m b e r / O c t o b e r 2 0 1 1 Volume 15, Number 5
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COMMENTARY4 InsightsBowersox and Goldratt Leave Two Great LegaciesBy Larry Lapide6 Talent StrategiesAsia: The New Talent Management Model?By Mahender Singh48 Spotlight on Supply ManagementThe Evolution of Supply ManagementBy Carrie Ericson and Simon Rycraft 62 BenchmarksGlobal Sourcing Calls for Due DiligenceBy Becky Partida
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staging buffer accommodates multiple load sizes The Multishuttle Flex staging buffer features an enhanced configuration that accommodates multiple load sizes and totes, trays and cartons. The unit expands and contracts to accommodate the size of the load, automatically adjust-ing on the fly as it travels to a storage location so that the extractor device is set to accept the load upon arrival. With a load width range of 8 to 24 inches and 6 to 34 inches, the system can provide single- or double-deep loading in the rack structure. The device works with the supplier’s Multishuttle storage/stag-ing engine, which provides precise load sequencing at high rates in a compact footprint. The system is ideal for supply-ing items to piece pick fulfillment mod-ules (goods-to-person picking) or mixed case pallet building operations. dematic, 877-725-7500, www.dematic.us.
stacker crane transfers load stress to guide rails for greater efficiencyThe MT0 stacker crane AS/RS has been reconfig-ured to place the stress of the load on guide rails, rather than a track. By running across two guide rails, the crane does not need a top rail system, saving space and prevent-ing the unit from derailing.
For fast installation, most of the compo-nents arrive pre-assembled. Units range in height from 15 to 50 feet and can be customized to fit any single-deep rack environment. Features include the ability to pick products from as low as 4 inches above ground level and 180-degrees swivel for effortless pallet movement from one side of an aisle to the other, or for pallet extraction from a rack system into a loading or picking area. interlake Mecalux, 708-344-9999, www.interlakemecalux.com.
Customize vertical carousel with interchangeable carriers Featuring interchangeable carriers offered in multiple configurations, the Megamat RS vertical carousel allows operations to mix, match and change storage arrangements at any time. Options include partitions, dividers, inter-mediate shelves and rollout drawers with a variety of front lip height and depth clips. To change configurations, currently stored goods are first removed, then the carrier insert is added and goods are returned to the unit. Each carrier comes standard with a 0.3-inch front lip to prevent stored goods from migrating out. Depth or height clips secure taller or deeper sized totes or boxes, preventing them from migrating out of the carrier. To prevent overloading, each carrier has a partial top. Kardex remstar, 800-639-5805, www.kardexremstar.com.
Mini-load cranes lift 660 pounds up to 78 feetTwo new mini-load cranes, the SMC 2 and SMC 2 XL, offer an automated shelf solution for containers, boxes and trays. The systems use a closed lifting trolley to hold two standard, or one large, piece
of load-carrying equipment. Capable of accessing heights up to 39 or 78 feet respectively, the units feature modular construction for customization with lifting trolleys that integrate combined tele-scopes, grippers, and pulling fixtures for containers or trays, plus box and pack-age grippers. Other highlights include extremely stable masts, low clearance for space optimization, lifting capacities up to 660 pounds, integrated on-board control cabinet and low vibration mast. To save energy, the system employs a DC network of drive controllers or energy-optimized overlapping of motion to use and recover braking energy. ssi schaefer, 704-944-4500, www.ssi-schaefer.us.
FOCUS ON automated storage
Vertical lift module rises up to 40 feetIdeal for small parts storage, a line of vertical lift modules are constructed with a welded lower base module and bolted upper frame, enabling shorter installation time, configuration flexibility, and easier relocation to accommodate changing facility layouts and storage needs. Features include a patented,
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full-width extractor bar that provides a positive method of storing and retriev-ing trays (holding a maximum capacity of 500 pounds each). With a footprint mea-suring 69 x 99 inches, the machine can range in height from 12.5 to 40 feet in 6-inch increments. Lauyans & Company, 502-774-2200, www.lauyans.com.
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Goods-to-person shuttle system uses pick-to-light/put-to-light technology
The OSR shuttle system provides automated storage for small parts and incorporates pick-to-light/put-to-light technology based on the goods-to-person principle. Developed to provide high product density for a large range of products, the system can handle high quantities of small, discrete orders. Depending on system configuration, picking performance rates of up to 1,000 order lines per man-hour can be reached. The system groups required orders together for batch picking and transports them to a workstation. Bright displays indicate to the operator both the position and the quantity of the prod-uct to be picked, as well as the position of the container to which the product(s) should be transferred. Knapp Logistics Automation, 678-388-2880, www.knapp.com/us
High-speed AS/RS handles up to 3,000 cases per hourThe Uni-Shuttle HP automated stor-age and retrieval system offers flexible storage functionality with high-capacity transport and sorting capabilities. Able to handle as many as 3,000 cases per hour, independent high-speed shuttles run on each level at speeds up to 1,312 feet per minute. The efficient system can be flex-ibly configured to handle a variety of load sizes, shapes or types. Highlights include automatic sequencing of loads prior to or during retrieval, and just-in-time continu-ous retrieval. Murata Machinery, 704-394-6900, www.muratec-usa.com.
VLM saves up to 90% of floor spaceThe Modula vertical lift module enhanc-es picking and stor-age while saving up to 90% of floor space. Ideal for small items such as tools and electronic and pharmaceutical components, products are stored within metal trays which are automatically stored and retrieved as needed. The unit features a vertical lifting platform to deliver trays, adjustable tray heights on 1-inch increments, and a low energy use vertical lifting motor. Overall unit heights are offered in 3.94-inch to maximize facility ceiling height. Each tray’s stan-dard net load capacity is 440 pounds.
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For organization, the trays may be speci-fied with plain perimeter walls or with slotting for use with partitions and divid-ers. system logistics, 888-233-6796, www.systemlogistics.com.
robotic gantry system picks cases, cratesA line of robotic gantry-based case and crate picking systems require a smaller footprint than standard pick modules and pick in exact customer sequences. The units also provide complete product traceability and offer multiple layout options to accommodate SKU prolifera-tion and labor constraints. Operating in temperatures down to –4°F, the systems pick individual or multiple cases out of active storage using advanced automated controls. This enables cases or crates to be delivered in exactly the desired pallet-build sequence for automated mixed palletizing at the dock. It also provides
information on all product locations and isolates SKUs in the event of a problem or recall. rMt robotics, 919-945-0548, www.rmtrobotics.com.
lightweight, energy-efficient shuttle for highly dynamic storage
Ideal for highly dynamic storage and buf-fer applications, and as a supplement to mini-load AS/RS, the Stingray shuttle makes up to 1,000 picks per hour, per aisle. Travel and lift axes are functionally
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separated, producing higher throughput than stacker cranes for more accurate scalability of capacity and performance. It works with any of the supplier’s load handling devices, interfacing with totes, cartons and similar loads in single or multi-deep racks. Lightweight construc-tion enhances fast acceleration and travel speeds while promoting energy efficiency and reducing power use. Features include tool-free entry into to the shuttle with quick-release fasteners, and maintenance platforms spaced every 8 feet within the rack for easy access without disruption of the rest of the system. tgW, 231-798-4547, www.tgw-group.com.
load-handling device allows as/rs to store container sizes for greater flexibilityTo accommodate the proliferation of SKUs and smaller storage container sizes, the 2/4-deep storage load han-dling device handles containers measur-ing 23.6 x 15.6 and 11.8 x 15.8 inches, in any combination. The system incor-porates a conveyor system in the front zone, to eliminate sorting tasks and unproductive container movements, enabling the storage and retrieval machine to work at full capacity. Goods can be stored without presorting to
FOCUS ON automated storage
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storage unit size, while the machine has flexible access to each load unit, enabling series formations to be built during retrieval. Because of the handling device’s capacity, fewer movements are required, which reduces wear, extends maintenance intervals and enhances energy efficiency. viastore systems, 616-977-3950, www.us.viastore.com.
Independent operator cabin facilitates storage and retrieval maintenanceTo enhance the safety, comfort and flex-ibility of automated warehousing staff during preventive and periodic mainte-nance, a storage and retrieval machine offers an optional employee lift cabin. The separate cabin operates indepen-dently from the vertical pallet lift and its load carrying device. Capable of trans-porting one person in the cabin up the
mast of the crane, the add-on eliminates the need to climb a service ladder. The cabin provides additional safety and comfort for personnel, particularly those wearing thermal clothing while servicing freezer storage units at temperatures as low as –18°F. It may be specified with the controls put in dead man’s mode, or with operation on a mobile control panel. Westfalia Technologies, 800-673-2522,
www.westfaliausa.com.Automatic power-down system in vertical carousel saves energyFor enhanced energy savings, a line of vertical storage carousels is equipped with the EcoMode intelligent energy management system. The system applies an incremental power reduction process that automatically switches stopped Rotomat vertical carousels to four differ-ent levels of standby mode at freely con-figurable time intervals. All systems that consume energy, even when the carousel is still, are systematically closed down by the control system. The final step turns the carousel off at the main power switch, ideal for end-of-shifts because it prevents the machine from consuming electricity overnight or over a weekend. Hänel Storage Systems, 412-787-3444, www.hanel.us.
FOCUS ON Automated storage
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48 O C T O B E R 2 0 1 1 / MODERN MATERIALS HANDLING mmh.com
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Rack-supported AS/RS A rack-supported AS/RS features rack incorporated into the building, serving as its basic structure while seamlessly integrating with the materials handling system. In addition to creating maximum storage density—at heights up to 100 feet—the system never interferes with the structure and can operate in a lights-out and/or non-climate controlled environ-ment. Configurations include double-deep arrangements as well as integration with transportation systems, conveyors or fork trucks. The cranes are directed by the supplier’s WarehouseRX warehouse control system to pick and put away in the most efficient order. Daifuku Webb, 248-553-1000, www.diafukuwebb.com.
FOCUS ON Automated storage
Horizontal carousel self-monitors, reports performance
Equipped with on-board intelligent machine health monitoring, the Hornet horizontal carousel reports any variances in performance to the service technician and the supplier’s central monitoring center, 24/7. Pro-active servicing delivers increased system up time, longer lifespan and faster return on investment. The sys-tem is included with the carousel, which improves productivity and reduces labor by bringing items to the operator and eliminating wasted walking and searching activities. Ideal for storage and retrieval of small parts, items and case handling,
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mmh.com Modern Materials Handling / O c t O b e r 2 0 1 1 49
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Wireless remote control for stretch wrappersThe Click-n-Go wire-less remote control for the suppli-er’s Simple Automation stretch wrap-pers enables fork truck drivers to place a pallet load on the machine, back a few feet away and press a button to initiate wrapping. By eliminating the need to stop within reach of a lanyard, the sys-tem gives operators increased pro-ductivity and flexibility in approach and placement. The system uses line-of-sight transmission and a
Protect overhead door rails from impactsResistant to forklift, hand truck or heavy cart impacts, Trackguard door track protectors prevent damage to overhead door rails. Ideal for high-traffic loading areas, the protec-tors feature a vivid black safety stripe on a durable bright yellow polyure-thane paint finish to both reduce wear and increase visibility. The protectors are made of structural steel and are offered from stock in 24- or 36-inch heights. Wildeck, 800-325-6939, www.wildeck.com.
Hybrid robot palletizerIntegrating a Fanuc M-710 robot, RoboTier palletizers enable pick and place operations to incorporate the unit into a standard layer condi-tioning apron. The system supports bags, cases or trays from the bottom for high speed robot motion and
Compact scanners read dirty, damaged bar codes
CLV650 and CLV640 compact bar code scanners use proprietary code reconstruction algorithms and high-performance microproces-sors to read damaged and dirty bar codes. The CLV650 features auto-focus and distance measure-ment technologies, with optics ideal for applications where space is limited and large depth of field is required. For cost-effectively reading high density codes, the CLV640 provides increased depth of field when an external input to change the focus position is
to ensure handling security. Loose spread placement on the apron increases production speed and
required. The scanners’ data han-dling capabilities execute a variety of configurable logic, output data filtering and sorting func-tions. SICK, 800-325-7425, www.sickusa.com.
two-step activation process, requir-ing two buttons to be depressed in sequence for machine activation to ensure operator and bystander safety. One remote can control mul-tiple machines. Lantech, 800-866-0322, www.lantech.com.
accommodates greater product vari-ability. Once a layer is completed, four-sided clamping centers the layer on the pallet, preparing the load for optional concurrent stretch wrapping. For easy creation of new patterns, load building software is pre-installed. TopTier, 503-353-7388, www.toptier.com.
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STATEMENT OF OWNERSHIP, MANAGEMENT AND CIRCULATION1. Publication title: Modern Materials Handling. 2. Publication No. USPS 911-680. 3. Filing date: September 14, 2011. 4. Issue frequency: Monthly. 5. No. of issues published annually: 12. 6. Annual subscription price:US $119; CAN $149;MEX $149; FOR $259 7. Complete mailing address of known offi ce of publication: Peerless Media, LLC , 111 Speen Street Ste 200, Framingham, MA 01701. 8. Complete mailing address of headquarters or general business offi ce of publisher: Peerless Media LLC, a division of EH Publishing, 111 Speen Street Ste 200, Framingham, MA 01701. 9. Full names and complete address of the Publisher, Editor and Managing Editor: Publisher, Brian Ceraolo, Editor, Michael Levans, Managing Editor, Noel Bodenburg, Peerless Media, LLC , 111 Speen Street Ste 200, Framingham, MA 01701. 10. Owner: Peerless Media, LLC , Division of EH Publishing, 111 Speen Street Ste 200, Framingham, MA 01701. 11. Known bondholders, mortgagees and other security holders owning or holding 1 percent or more of total amount of bonds, mortgages or other securities: None. 12. Tax Status: Has not changed during preceding
12 months. 13. Publication title: Modern Materials Handling. 14. Issue date for circulation data: September 2011 15. Extent and nature of circulation: Average No. Copies Actual No. Copies Each Issue During of Single Issue Preceding 12 Months Nearest Filing Date
A. Total no. copies (net press run) 60,839 60,730B. Legitimate paid and/or requested distribution (by mail or outside the mail) 1. Outside County paid/requested mail subscriptions stated on PS Form 3541 56,254 56,182 2. In-County paid/requested mail subscriptions stated on PS Form 3541 None None 3. Sales through dealers and carriers, street vendors, counter sales and other paid or requested distribution outside USPS 27 24 4. Requested copies distributed by other mail classes through the USPS None NoneC. Total paid and/or requested circulation 56,281 56,206D. Nonrequested distribution (by mail and outside the mail) 1. Outside County nonrequested copies stated on PS Form 3541 4,117 4,237 2. In-County nonrequested copies stated on PS Form 3541 None None 3. Nonrequested copies distributed through the USPS by other classes of mail None None 4. Nonrequested copies distributed outside the mail 167 NoneE. Total nonrequested distribution (sum of 15D 1, 2, and 3) 4,284 4,237F. Total distribution (sum of 15C and E) 60,565 60,443G. Copies not distributed 274 287H. Total (sum of 15F and G) 60,839 60,730I. Percent paid and/or requested circulation (15C divided by F times 100) 92.93% 92.99%16. Publication of Statement of Ownership: Publication required and will be printed in the October 2011 issue of this publication.17. I certify that all information furnished on this form is true and complete. I understand that anyone who furnishes false or misleading information on this form or who omits material or information requested on the form may be subject to criminal sanctions (including fi nes and imprisonment) and/or civil sanctions (including civil penalties).
Charles Tanner (signed), Director of Audience Marketing , 9/14/11
Peerless Media Statement of Digital Circulation
1. Publication Title: Modern Materials Handling
Average No. Digital Copies No. Copies of Single Each Issue During Issue Published Preceding 12 Months Nearest to Filing Date
Printed Circulation as reported on PS Form 3526, Line 15A 60,839 60,693Digital Circulation 21,283 21,286Total Circulation 82,122 81,979
Charles Tanner (signed), Director of Audience Marketing , 9/14/11
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modern 60 Seconds with...
David Krebs
VDC Researchtitle: Vice president of mobile & wireless division
location: Natick, Mass.
experience: 12 years at VDC
priMary Focus: Enterprise and government mobility
Modern: We’ve heard a lot about mobility over the last year, especially in the consumer world, thanks to tablets, smart phones and solutions like mobile banking. What does mobility mean in the supply chain world?
Krebs: Fundamentally, I don’t think mobility in the supply chain has changed. It’s still the right information at the right point to support the right decision. For years, we’ve talked about mobile computing as a critical access and entry mechanism to the data that supports business processes. That remains unchanged. Mobility is about freedom. It’s about fluidity. And it’s about untethering people from workstations. It’s not yet about your latest and greatest smart phone on the shop floor because those devices can’t support the rigors of an industrial environment. We still see purpose-built devices to support workflows on the shop floor.
Modern: is mobility growing and, if so, what’s driving the growth?
Krebs: Yes, it’s growing. There is an acute focus on mobility, and I think in part that’s a result of consumer stories, like Apple-inspired smart phone and tablet technologies. The growth is also a reflection of the fact that mobile technology has played a role in enabling the real-time business. We want to make a decision wherever we might be, whether that’s at work, in an airport or at the beach. I think the big realization is that mobile computing can free us to spend more time on the areas where we should be spending more time, like being in front of customers or managing assets instead of doing the more
mundane things like looking for assets. The other change is that mobility was once viewed as a point solution, such as picking in the warehouse. Now, organizations are looking at mobility more strategically. They are looking at all of their workflows and asking whether mobility can address operational pain points and efficiencies.
Modern: is business adopting smart phones and tablets on the floor or in logistics?
Krebs: In the warehouse and on the shop floor, ruggedized tablets may have a role to play, but it will be as a mounted solution and not a handheld solution. Where these devices are seeing an uptake is in very highly customer-centric situations. The interface and sleekness of the devices makes them appealing candidates for those applications. They’re not great for daylight visibility; they’re not great in a hot environment; and they’re not great in an industrial environment. Organizations are asking questions about them, but I think there are elements of a rugged mobile computer that you can’t replicate in a tablet or smart phone. M
Chris Lewis
MMH1110_60Seconds.indd 50 10/12/11 1:12 PM
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New Viper VLMSmall Parts, Items and Inventory Vertical Lift Module
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