Industry consolidation, decreasing order quantities, rising freight and operational costs, the proliferation of SKUs, varying product sizes and packaging, and continued competitiveness are just a few of the many challenges facing beverage distributors at the moment. As warehouse inventories become more complex, distributors of all sizes are recognizing that efficient, cost-effective and technologically advanced storage systems are a critical component to keeping up with market demand.

Beverage companies that handled 200 to 300 SKUs a few years ago are dealing with double or even triple those numbers. Jim Stollberg, vice president of global product management for Grand Rapids, Mich.-based Dematic Corp., points out: “With the increased number of SKUs, you now have a broader set of products, which creates more complexity in the warehouse. With a larger product line, distributors are facing increased operational costs, decreased quality with missed picks and decreased efficiency. Large and small warehouses are looking for automated solutions that fit their specific needs.”

Another challenge is operational cost reduction, particularly as beverage distributors deal with a soft economy.

“As the need for efficiency and cost savings is becoming ever more critical for businesses, they are searching for cost savings from automation,” says Laura Worker, marketing manager for Westfalia Technologies Inc., York, Pa. “Even if they are only starting with a [Warehouse Management System], the pressure for sustainable cost savings is paramount to firms, especially in this recession.”

Storage system suppliers point to technology such as voice- or light-picking and automated storage and retrieval systems (AS/RS) as benchmarks for helping distributors to better manage their complex inventories and make their warehouses more flexible and agile.

Better management
An automated warehouse allows distributors to service their customers more effectively. As service levels improve and error rates decline, distributors are able to give customers what they want, when they want it with almost 100 percent order accuracy, suppliers say.

Bill Leber, head of business development for Swisslog, Newport News, Va., agrees that with automation, “the quality expectation goes up. It’s unacceptable to have inaccurate orders. Nobody accepts orders that are just ‘close enough’ anymore, and with the sophisticated technology, they don’t have to. Orders are perfect, sequences are perfect, everything’s fresh and efficient.”

Other benefits of automation include less damage to inventory and real-time reporting that allows companies to know exactly what’s available when orders are placed. Fewer workers are needed with an AS/RS, and the most difficult work is made as ergonomic as possible.

“There’s an increased incentive at larger distributors to make things ergonomically friendly to its workers, which generally results in higher expectations and increased productivity,” Leber says.

Cost, however, has often been a barrier for all but the mega-distributors to embrace AS/RS technology, but Stollberg says awareness in the warehouse technology industry has changed, with more companies focused on providing scalable, customized solutions for the full spectrum of distributors, including mid- and small-sized operations. Installed costs of entry-level and smaller systems have come down in recent years.

“You don’t have to be a mega-sized distributor to embrace productivity tools to enhance performance,” Stollberg says. One of Dematic’s most flexible products is Mutlishuttle, a modular shuttle system used to transport product, which can be configured to accommodate a variety of throughputs and system requirements with speed and accuracy.

“Multishuttle can be used as a storage system, but more importantly used as a sequencing system,” Stollberg explains. “Pick the cases and Multishuttle will take the cases inbound randomly and automatically sequence and deliver them to an operator to palletize, or palletize them automatically.”

Another challenge for distributors is the efficient creation and storage of store-ready pallets, particularly mixed-layer pallets. The entire process is streamlined using a combination of automation and manual order picking.

“It is the advances in software and controls which make it possible now to integrate storage and picking operations to build customer orders correctly and quickly,” Westfalia Technologies’ Worker says. “Specifically picking and robotic palletizing software has advanced to the point where integrating each, case or layer picking, is possible. So pallets of orders can be organized in the manner customers want, such as store ready, and accumulated for truck loading.”

Swisslog’s Leber agrees. “We see more and more pre-configured pallets, single SKU pallets are becoming a thing of the past,” he says. “In the warehouse, combining software and info-technology with mechanical systems is the key to the future growth. You can combine pallet handling with individual case handling. You can have pre-configured order-ready pallets within a day or two of order date, put them back into storage and sequence them for orders over the next couple of days. With information technology you don’t have to guess anymore.”

Automated technology can enable more efficient delivery and significant increases in productivity. Dematic’s Stollberg uses the example of creating store-ready mixed pallets built to a customer’s exact specifications back at the warehouse rather than loading single SKU pallets of product and cherry-picking orders on-site.

“As a distributor, I’m not taking up as much time in my customer’s parking lot,” he says. “I’m in and out of the store much quicker, and I’m able to spend more time servicing my customer effectively and efficiently and cover more ground on my route. If I can open up one side door, or an end load truck, I can get 20 percent more stops covered in the route. That’s a tremendous increase in productivity.”

High-density space saving
While the number of SKUs is expanding, available square-footage within the warehouse is not, which means that warehouse managers must maximize their layouts to free up floor space and create efficient case flow from the picking areas.

Many storage system providers are designing high-density solutions that help to maximize space in existing structures, lower energy and labor costs, and reduce damage and theft costs.

Westfalia’s rack entry vehicle, called the Satellite, is capable of storing pallets up to 12 deep in a lane.

“The Satellite technology enables us to put AS/RS into existing buildings, even low bay warehouses only 20 feet high, providing maximum storage in the cubic area,” Worker says. Its product also has the capability to vary the lane depths of the middle block between two aisles to fit changing inventory SKU needs.

High-density AS/RS have other benefits as well. “Typically a 40 percent smaller building is required than a conventional warehouse,” Worker says, meaning a new warehouse or extension can be added to a tight area where a distributor is running out of space. A smaller building footprint can translate to lower construction costs and a lower environmental impact, such as smaller parking areas and drainage requirements, less lighting and less space to heat and cool. Worker adds that some of Westfalia’s clients have reported a 40 percent drop in refrigeration/cooler expenses.

Twinlode, South Bend, Ind., offers Dual Pallet Drive In or Drive Thru systems that handle two pallets at a time and claim to reduce handling costs by half, increase productivity with a single or single/double forklift by

50 percent, and storage capacity by 35 percent within a distributor’s existing space.

Twinlode President Skip Eastman says that handling two loads at a time not only increases the storage density within the warehouse, but reduces the amount of inventory handling, uses fewer lift trucks, reduces movement throughout the warehouse and increases productivity for those operators running the systems. The Drive In system loads and picks from the same side for last in/first out inventory retrieval, while the Drive Thru system loads and picks from both sides for first in/first out retrieval.

For high-volume, multiple SKU applications Twinlode offers Pallet Flow Double and Single Pallet storage systems as well as Push Back Double and Single Pallet storage, both designed to accommodate first in/first out inventory retrieval.

Customizable, affordable software
Customizable software solutions are garnering wide-spread attention across all segments of the industry. Technology once considered out-of-reach for all but the biggest of the mega-distributors is now highly targeted and tailored to an individual operation’s needs.

“Not everybody can afford a full-blown large software program,” Stollberg says. “The picking operation is where most of the costs are, with 50 to 75 percent of the cost attributed to the labor involved. The software now directly attacks the inefficiencies of the highest cost systems in the warehouse. If you can focus on that, you can solve a pretty big part of the problem.”

Westfalia will debut its latest version of its Savanna.NET Warehouse Management System (WMS) in March at the ProMat 2011 show in Chicago. Savanna’s version 2.3 includes real-time 3D visualization of a warehouse, a dashboard for tracking key statistics of warehouse operations, and streamlined user rights management interfaces. In addition, the updated software improves the order picking module for better integration of third party picking solutions, such as high-speed layer picking and mixed layer picking.

Developed with gaming software, the 3D visualization of Savanna version 2.3 allows users to view the warehouse from any angle and to identify and filter individual warehouse zones and SKUs, including the option to color-code inventory by SKU. The release’s web-based dashboard allows clients to enter statistics that they wish to track with real-time data. The updated version also includes improvements to the ability for users to develop and save their own data filters, the company says.

In previous releases, Westfalia increased the functionality of Savanna by adding modules designed to meet warehouse needs. An AS/RS Reconfigurable Middle Block reconfigures the lane lengths of the middle storage area as needed, while the picking module integrates a variety of picking strategies including pick tunnels, pick-to-light, pick-to-voice, robotic layer picking and mixed layer picking.

Westfalia also is trying to raise awareness of automatic storage and order picking replenishment for smaller warehouses and distribution centers. Its design automatically ties replenishment of picking to maximizing storage with an AS/RS, and optimizes product flows with Savanna in a small facility without being very expensive, Worker says.

“The system is ideal for companies moving toward automation in steps, starting from conventional warehousing to fully automated systems,” she says. “Based on Microsoft.NET, Savanna easily is upgradeable. It integrates quickly and easily with ERP systems and all other existing hardware/software interfaces.” BI