New regional retail distribution center sets standard for cost savings and operational efficiency

Business Situation

The acquisition strategy of a major US retailer drove the need for a new distribution center (DC) to accommodate its rapid growth. With operations in 36 states, the DC planning team relied on its extensive experience with material-handling systems to plan its new location.

Capitalizing on the opportunity to design this system from the ground up, the team was determined to use the latest automated storage and retrieval technology in the most effective way possible. They began a rigorous worldwide search for an innovative solution that would maximize the efficiency of people responsible for picking the goods while minimizing the necessity for additional support personnel in replenishment, receiving, inventory control, and administration.

The new center would be a real-time environment that would require uninterrupted operations to effectively service more than 400 regional store locations. For this reason they turned to Stratus, their proven supplier for continuous availability servers and services, to power the new software.

Business Objectives

A set of aggressive business objectives were put forth for the new DC:

• Reduce distribution fulfillment costs by "an order of magnitude"
• Enhance service levels to stores within the region
• Ensure the final DC efficiency model would amaze users and evaluators alike

Stratus-based Solution

Using continuously available processing, instead of conventional servers, was a natural fit for this state-of-the-art DC. As the company’s director of process and technology noted, “In a totally automated environment, recovery from downtime would affect operations throughout our facility. Every system and thousands of sensors would have to be brought back up and re-sequenced from the point they were interrupted. It's like an entire factory going offline. What we are most concerned with, however, is the potential impact on store operations.”

The team selected ftServer W Series systems, Stratus' line of ultra-reliable, Intel^® processor-based servers that have equaled or surpassed the industry’s defining 99.999% availability level in real-world customer installations. Availability features including duplicated lockstep components and failsafe software automatically keep the fault-tolerant ftServer system operating without interruption or performance loss. Furthermore, the server’s self-monitoring and online ActiveService^TM capabilities have the ability to detect, isolate, report, and resolve problems before they cause system downtime.

From start to finish, the new storage and retrieval technology (AS/RS) solution was designed for intelligent automation. Store orders are received overnight by a Stratus server; software sorts through the data before the pick starts in the morning. Then begins the process of managing communication between mechanical devices that move product to and from associates’ pick stations: programmable logic controllers (PLCs), machine conveyors, diverters, and so on.

Automatically presenting the right products to people at their pick stations is fundamental to achieving the desired improvements. Products are moved to the pickers instead of pickers moving to the products. A screen instructs each picker what to pick, they scan the items, place them in a tote, and the tote is automatically moved away. Tote contents are packed and then stacked in an order that reflects the exact aisle assignment within individual stores. The precise matching allows tote-laden dollies to be unloaded from the delivery truck in sequence and rolled directly to the correct aisle for immediate placement on the shelves.

Business Impact

Stratus and the systems integrator, who was also the software supplier, worked together closely on the project to ensure that the customer's goals were fully achieved.

As a result, the new solution reduces labor costs by operating with one-third the staff necessary in a traditional DC. The facility itself comprises less than 300,000 square feet, yet it is capable of handling an order volume comparable to a conventional DC twice as large, cutting the expenses of real estate and building operations.

The system also provides complete real-time information about movement of product throughout the building. In fact, every time product is introduced or removed from a tote or pallet, the retailer knows when it happened, who did it and why. The real-time information capabilities provided by the system have also eliminated the need to close the DC for physical inventory.

Individual stores are delighted with the improved service. The right goods are delivered at the right time and getting those goods onto the shelves has become faster and easier than ever before. On average, 1.5 million pieces are handled daily and more than 50,000 different items will be stocked during the course of a year. With its new Stratus-based automated material handling solution in place, this retailer can look forward to consistently efficient order fulfillment at these retail stores for years to come.

Impressed with availability, simplicity, and efficiency that were the outgrowth of this design, the company's decision makers have designated the new facility as their model for future DCs and has already been duplicated at another location.