Automating Warehouse Management

Having spent the last 20 years at Formica Corporation in distribution and transportation, Denny Dundes remembers when all warehouse processes were handled manually. Back then, picking and shipping information was all handwritten. Files and documents were stored in cabinets or on desks throughout warehouse offices. And, getting products from a warehouse to a customer was hardly an efficient process. Now, Formica is currently installing a warehouse management system (WMS) which will interface with the company's enterprise resource planning (ERP) system. "I have really seen it all," says Dundes, implementation area manager at Formica. "I go back to a time before we even had computers."

The Formica brand name is synonymous with the high-pressure laminate (HPL) the company produces. In addition to HPL, the company also manufactures a material called Surell. This synthetic marble product is thicker than HPL and is typically used for kitchen countertops and bathroom vanities. Headquartered in Cincinnati, the company has eight warehouses in North America. Five warehouses handle Surell and HPL, and three warehouses have exclusively HPL inventory. The company sells about five times as much HPL as it does Surell. This led Formica to install the WMS using a two-step method. Distribution of the Surell product line, and the five warehouses that carry it, was automated first. Upon completion, the company will implement the WMS for its HPL product line. Currently, Formica has completed the first step of implementation. The second step is scheduled to be completed by May of 1999.

Finding A Robust WMS
Having installed a low-level ERP system in 1991, Formica realized it was time for a change once again in 1995. It was clear that the company's current package would not be adequate as Formica expanded. The company wanted an ERP package that would integrate all the departments within Formica. The company put together a team of managers - one from each department. While Dundes represented distribution, other team members included managers from purchasing, planning, and customer service. After evaluating enterprise-wide solutions, the company selected BPCS (Business Planning and Control System) from System Software Associates. However, during the evaluation process, Dundes concluded that BPCS was not robust enough to run the company's warehouses. "Our distribution network is very complex. We needed a system that automated picking, packing, and shipping. BPCS was adequate for our Surell line, but it couldn't handle our HPL line," explains Dundes. "I was able to persuade management that we needed a different WMS."

A 60-page functional design report was sent out to nine WMS software suppliers and Formica whittled that number down to three potential vendors. Dundes sat through three demos and was allowed to work with two of the packages for a few days. Following that hands-on evaluation, Dundes selected Renaissance Software's International Warehouse Management System (IWMS). "The software had 85% of the functionality that we needed right off-the-shelf," says Dundes. "We only had to tweak the product by 15% to achieve what we are running on our mainframe today."

Setting A Course For EDI
The five warehouses that handle the Surell product line ship to distributors such as Home Depot and Lowes, and to fabricators which are typically local contractors. Orders are received via telephone or fax by the customer service department at Formica headquarters. The representatives enter the orders manually into BPCS. "We are currently in the process of implementing EDI (electronic data interchange) for BPCS, but we are not there yet," states Dundes. "The ultimate goal is to process all orders electronically."

Once in BPCS, all the orders are automatically separated and routed electronically to the IWMS of one of the five warehouses that distribute Surell. For example, a fabricator located in Austin, TX, would have its order routed to Formica's Dallas warehouse. From this point, the IWMS takes over and the warehouse starts processing orders.

Pick And Pack Items More Efficiently
Each morning, the warehouse dispatcher views all the orders that are to be shipped from the warehouse that day. That data is stored in BPCS and then transmitted on a daily basis to the IWMS. Once dispatchers have the order information, they begin a function called load planning. The IWMS allows the dispatchers to sit at this workstation and visually assemble each order and virtually load the orders on trucks. For example, one customer's order may be shipped in a crate that is 30-inches wide and eight-feet long. Another order for the same day may be shipped in a crate that is 30-inches wide and 12-feet long. To insure a better ride in a truck, the smaller crate should be shipped on top of the larger crate. The dispatcher will see both crates represented on his computer monitor, and can plan the best sequence for filling orders.

The sequence in which items are picked to fill an order is also primarily controlled by the load planner. The software determines the most efficient way for each order to be filled. "There is a great deal of logic built into the software. The orders are typically filled by starting with the largest items and ending with the smallest items. Having the larger items on the bottom of an order allows us to create a pyramid-type structure which rides better in a truck," explains Dundes. To facilitate this, Surell products in warehouses are arranged according to size. The larger products are located in aisle A and product size decreases with each additional aisle. The two-man picking crew fills the order by following the sequence set forth on the picking slip.

Instantly Update Inventory
The Surell product line comes in many different sizes and thicknesses. The sheets of Surell are all 30-inches wide and come in 8-, 10-, and 12-feet lengths. All the sizes can be purchased in thicknesses ranging from a quarter inch to one inch. Additionally, Surell distributors and fabricators can choose from about 30 different colors. The warehouses also carry Surell products that include sinks, shower enclosures, and seam kits. In all, the Surell product line accounts for about 2,700 different stock-keeping units (SKUs) in each of the five warehouses that carry it. The products are stored in two-tiered racks that start on the warehouse floor and rise to 30 feet in the air.

Because many products are stored off the warehouse floor, the two-man picking crews use lift trucks to fill most orders. The lifts raise two men, separated by a platform, to the second level of racks in the warehouse. Before filling an order, the men place a crate on the lift platform. The platform and the men are then raised to the second level of racks where they can then slide a sheet of Surell from the rack and place it in the crate. The men then lower the lift and move to the next item to be picked.

After an order has been filled, the picking crew takes the crates to the shipping dock where the freight crew will load the order. The pick slip is given to the dispatcher who informs the system that an order has been filled. The inventory for the warehouse is automatically updated in the IWMS and the BPCS. "When the inventory at a warehouse drops below a predetermined amount, the BPCS will generate a replenishment order that is sent to our manufacturing plant," explains Dundes.

Getting Trucks Out On Time
Two of the five Surell warehouses run three shifts, with the majority of orders being filled during first shift. Second shift's time is divided between filling orders and restocking inventory. Third shift employees are almost exclusively crews that restock the warehouse with incoming products from Formica's manufacturing plants. Most of the orders that leave a warehouse are shipped using a less-than-truckload (LTL) carrier or a private fleet carrier. LTL carriers are scheduled to pick up orders during first shift. Once the order is loaded, LTL drivers head to central dispatching centers where they are routed to the appropriate customers.

Private fleet carriers drive directly from a Formica warehouse to a customer's door. These carriers are scheduled to pick up orders at a warehouse throughout the night. "Most of the private carriers are delivering within a few hours of our warehouse," says Dundes. "Our system schedules these pick ups so that a delivery arrives right when a customer is opening for the day. The scheduling is critical. If drivers arrive too early, they have to wait to unload their trucks and they waste time."

Ready For The Next Phase
Installing the IWMS at its five warehouses that carry the Surell product was a big undertaking for Formica. However, this was only the first step for the company in automating its distribution. While Surell is a major product line for the company, it is dwarfed in sales by Formica's better-known HPL line. Implementing IWMS for Formica's Surell product was a dress rehearsal of sorts for Dundes and his crew. By May of 1999, the company will have all eight of its North American warehouses running IWMS for all of the products it manufactures and distributes.

"We wanted to implement IWMS for our smaller product line, which made the project more manageable," states Dundes. "By working with employees with this smaller implementation, we gained a lot of valuable information that we plan to incorporate when we automate the HPL product line. By May of 1999, we plan to be Year 2000-compliant and fully automated."