Home improvement shows have put a spotlight on the benefits of customized closet organizing systems. Yet, when it comes to warehouse operations, it’s going to take more than a visit from “The Property Brothers” to accommodate the expansive needs of a beverage manufacturers and distributors.
Impacting not just beverages but all consumer packaged goods industries, SKU proliferation has put strains on warehouses as companies look to house a more diverse portfolio of goods.
“When the number of SKUs increases, the number of storage locations has to grow with it,” says Rick Graff, product manager of integrated systems for Intelligrated, Mason, Ohio. “In most cases, building size cannot increase, so you hunt for space — either by going higher or finding creative ways to fit more SKUs in the current space. That could be storing one product behind another in the rack. However, this creates complexity in fulfillment when products need to shuffle from one location to another.”
As storage needs become more complex, flexible systems will remain vital as warehouses are handling several different unit sizes, he adds.
Additionally, throughput duties for storage systems are affected because of additional SKUs despite the possibility that total orders might not change. “The SKU count has driven up the number of SKUs per order, which essentially drives up the throughput needed from a storage system,” Graff says. “Throughput has effectively increased — even if the total number of orders or products has remained constant.”
Skip Eastman, chief executive officer of Indianapolis-based Twinlode, also highlights the complexities that can accompany the increasing amount of SKUs. Because of these complexities, storage suppliers are developing solutions that meet these growing needs.
“The quality of innovations has improved over the years,” he says. “In the early ‘80s, automated storage and retrieval systems (AS/RS) were implemented in facilities but did not have the level of communication with what’s actually going on or with a [warehouse management system] (WMS) as good as it is today. The automation side of it has really been helpful to some of our customers in the beverage industry. However, to that is the cost impact and their ability to justify the return on investment on these more complex systems.”
In the face of consolidation
Another business aspect impacting warehouse operations has been mergers and acquisitions throughout the manufacturing and distribution sectors of the beverage industry.
As businesses consolidate operations, companies are taking a deep look at best practices to streamline efficiencies.
“It’s made them more aware of what their storage needs are, and in some ways forced them into rethinking their process of how their product is coming into the warehouse and how it’s going out of the warehouse,” Eastman explains “… Several of the manufacturers have done a very good job of implementing WMS systems and integrating that into their entire warehouse.”
Beyond manufacturers — and in the face of consolidation — distributors also have seen the benefits of WMS and AS/RS innovations for their storage needs. A few years ago, Breakthru Beverage Illinois, then known as Wirtz Beverage Illinois, had consolidated its three separate facilities into one with the construction of a new 604,907-square-foot building, which included warehouse, office and cooler space.
In a case study by Westfalia Technologies Inc., the York, Pa.-based company detailed how the installation of its AS/RS and WMS solutions for the wine, spirits and beer distributor helped it meet customer demands while fostering long-term growth.
“Specializing in high-density storage systems, Westfalia’s AS/RS provides Breakthru Beverage with the ability to store up to 10 pallets deep while maintaining a balance of inventory and movements across the system,” the study states. “The 42-foot-tall building is equipped with five high storage racks with three tandem storage and retrieval machines (S/RM). Using the Satellite system, storing and retrieving loads in Breakthru Beverage’s high-density configuration significantly increases storage capacity and reduces the footprint of the system. The Satellite system also provides triple support so [that] the load weight is distributed evenly and more reliably in the rack.”
Intelligrated’s Graff adds that when warehouses incorporate automation, it allows for better prognostication throughout the supply chain process.
In a company white paper about considerations for a successful AS/RS investment, Graff details that growth of eCommerce also has perpetuated the trend of more frequent, smaller-quantity orders.
As part of this evolution, Graff writes that shuttle systems will become the next generation solutions because of their flexibility, speed and scalability. “Although auto-store and mini-load systems are also capable of serving the order sizes and quantities of contemporary distribution demands, shuttle systems offer significant throughput advantages of five to 10 times greater than other AS/RS technology,” the white paper states.