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PRODUCTIVITY SOLUTIONS FOR DISTRIBUTION, WAREHOUSING AND MANUFACTURING

November 2011

John DeereNothing runs like an AGV 14BEST PRACTICES

From the store to the DC 22EQUIPMENT 101

Supply chain software basics 26READER SURVEY

Warehouse/DC Operations Survey: Still doing more with less 36 + 2011 Warehouse/DC Operations Survey Webcast:

Thursday, Nov. 17 at 2 p.m. ET www.mmh.com/wdcbenchmark2011

SPECIAL REPORT

Green trends in materials handling 42Annie Olson, project manager for new cab assembly, John Deere

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mmh.com Modern Materials Handling / N o v e m b e r 2 0 1 1 3

PeCo Pallet joins rPaFAST FACT

93%Percentage of respondents who reported their company made efforts to go green with sustainability initiatives in 2011 (see survey, p. 36).

Source: Peerless Media Research Group

PECO PallEt, a national leader in pallet pooling services, has joined the Reusable

Packaging association (RPa). the companys membership is a milestone for the RPa; complet-

ing the list of major pallet pooling companies to join the association. they are also the 19th new member to

join the RPa in 2011.We are delighted to welcome PECO Pallet into our member-

ship, said Jerry Welcome, president of the RPa. the fact that all major pallet pooling companies have chosen to join the RPa demonstrates the value and competitive advantage we offer to our members, as well as the commitment of companies like PECO to significantly increase the use of reusable solutions in todays marketplace.

tOyOta MatERial HandlinG north america (tMHna) announced the expansion of its executive team in an effort to further strengthen the north american regional operations and distribution channels of its two lift truck brands (toyota and Raymond).

Effective immediately, Brett Wood has been promoted to executive vice president of tMHna, the management and organization structure over both brands north american materials handling equipment business and manufacturing organizations. Wood will continue to serve on the boards of toyota Material Handling U.S.a. (tMHU) and toyota industrial Equipment Mfg. (tiEM) at toyotas forklift manufacturing facility in Columbus, ind.

Jeff Rufener will take the helm as president of tMHU. Rufener joins toyota after most recently serving as vice presi-dent of marketing for Mitsubishi Caterpillar Forklift america. He is the president of the industrial truck association (ita) and brings more than 30 years of materials handling industry and executive experience to toyota.

toyota Material Handling na announces management changes

altHOUGH tHE nUMBERS are showing continued signs of leveling out, the main theme of the institute for Supply Managements (iSM) Manufacturing Report on Business indicated that growth is still occurring.

in October, iSM reported that the index it uses to measure the manufacturing sectorknown as the PMiwas 50.8, down 0.8% from Septembers 51.6 and in line with the 50.6 and 50.8 readings from august and July, respectively. the PMi was routinely topping 60 earlier in the year, but experts said it was not likely to remain at that level for a long period.

any reading 50 or higher is a sign of economic growth, and even with a flattening out of the PMi in the low 50s range in recent months, October represents the 27th straight month the manufac-turing sector expanded and the 29th consecutive month that the overall economy showed growth.

october manufacturing report down from september, but showing growth

PMMi, OWnER and PROdUCER of the Pack Expo trade shows, reported that with more than 26,000 attendees, 1,559 exhibitors and nearly 630,000 net square feet, Pack Expo las Vegas 2011 (las Vegas Convention Center, Sept. 26-28) broke many event records.

Simply put, this is the most

dynamic show weve produced in las Vegas, said PMMi president & CEO Charles d. yuska. Record-breaking only begins to describe it. Pack Expo las Vegas 2011 brought integrated processing and packaging innovations to more than 40 vertical markets, including food, beverage, confectionery, pharmaceutical, and

Pack expo las Vegas breaks records, exceeds expectations

baking and snack.Preliminary figures show 2011

attendance figures about 15% greater than 2009, and a jump of nearly one-third in international attendance. net square footage was up more than 20%.

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Productivity SolutionS for diStribution, WarehouSing and Manufacturing

VOL. 66, NO. 11

DEPARTMENTS & COLUMNS 3/ Upfront

7/ This month in Modern

12/ Lift Truck Tips: Cold storage

54/ Focus On: Conveyor/Sortation

58/ 60 seconds with...

NEWS 8/ Center For Unit Load Design hires

new director

9/ Manufacturing Skills Standards Council launches new Green Production Module

9/ MAPI report says U.S. manufacturers face a 20% structural cost disadvantage

11/ ProMat 2013 and Automate to co-locate

COVER STORYsysteM report

14 nothing runs like an agVJohn Deere is using AGVs to move tractor cabs down the assembly line, and the result has been savings in labor, a safer work environment and improved quality.

20 Building cabsAGVs move tractor cabs through the production line.

FEATURESBest practices

22 From the store to the dcSome leading retailers are looking at the DC to lower the cost of operating their stores.

equipMent report

supply chain software basics26 supply chain execution30 the enterprise level

exclusiVe reader surVey

36 2011 Warehouse/dc operations survey Our 2011 findings reveal that inventory turns are not improving, more DCs are closing rather than opening, and many companies are remaining cautious with equipment investment.

2011 Warehouse/dc operations survey Webcast: thursday., november 17th at 2 p.m. et www.mmh.com/wdcbenchmark2011

special report

42 green trends growing in materials handlingGoing green isnt going away: Its a permanent and increasingly important part of the global business landscape.

productiVity solution

46 robotic drum palletizer beats manual process

47 gentle handling in a compact footprint

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-qualified 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 offices. postMaster: send address changes to: Modern Materials 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.

cover Photo: cliff jette/getty iMageS

annie olson, project manager for new cab assembly, John deere

60 seconds with... John Nofsinger

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EDITORIAL OFFICES111 Speen Street, Suite 200Framingham, MA 01701-2000(800) 375-8015

Michael LevansGroup Editorial dirEctor [email protected]

Bob TrebilcockExEcutivE [email protected]

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Sara Pearson SpecterEditor at [email protected]

Roberto MichelEditor at [email protected]

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m m h . c o m MODERN MATERIALS HANDLING / N o v e m b e r 2 0 1 1 7

Member Member ofOfficial Publication of

Winner Jesse H. Neal

Certificates of Merit for Journalistic

Excellence

MICHAEL LEVANSGROUP EdItORIAL

dIRECtOR

This monTh in modern

W hen we shared the 2010 findings of the Supply Chain Groups annual Warehouse & Distribution Center Operations Survey, our readers told us they had finally turned a psychological corner and were feeling more upbeat about their pros-pects for equipment investment and systems expansion inside their four walls.

In fact, those findings revealed that inven-tory turns had increased, more projects were going back on the books, and incentive programs were being dusted off and re-em-ployed to offer a much-needed boost to an already weary workforce. We reported that finally the specter of continued cost reduc-tion was being exorcised and warehouse and DC managers were allocating investment to where it was most needed.

How quickly things can change.When we dove into the findings of our 2011 survey last month, we realized that much of last years optimism had been tempered. The still unstable U.S. economy already had many back on their heels. But now the growing crisis in Europe and a call for even more belt-tightening in light of continued global volatility has pushed them flat on their backs in terms of new investment. Ac-cording to these results, the new mantra is the old 2008 mantra: Do more with less.

The high-level findings gathered from 598 respondents (consisting of mid-level, upper-level, and senior-level warehouse and DC decision makers) revealed that inventory turns are not improving, more DCs are closing rather than opening, and many companies are opting to be more cautious, leveraging cost reduction measures that require little or no investment. Editor at large Maida Napolitano and our research team put all of the 2011 findings into context starting on page 36.

Research partner Norm Saenz of supply

chain consultancy TranSystems tells Napoli-tano that the more with less mantra was heard loud and clear in this years results. In fact, most companies are trying to do more with fewer people, fewer buildings and less automation investment, says Saenz. And as a result, he adds that theyre operating with a reduced staff, consolidat-ing facilities and taking the more conven-tional route in terms of storage and picking.

A finding that immediately leaped out at the team is that after years of decrease, there are more respondents operating sin-gle-facility networks this year than the past yearfrom 30% in 2010 to 35% in 2011. However, Napolitano reports that consolida-tion is just one tactic being adopted.

To lower operating costs, more than 75% of respondents say theyre improving ware-housing processes, 60% are improving inven-tory control, and nearly half have changed racks as well as their layouts. And when com-pared to last years results, significantly more companies are reducing staff43% com-pared to last years 36%, adds Napolitano.

But while this years results may offer a quick flashback to 2008, especially in terms of staff reduction, research partner Don Derewecki of TranSystems says that much of these cost-cutting best practices have been long overduean indication of a more enlightened management commu-nity functioning in a new world. If you ask me, that is just sound management, says Derewecki. The more with less mantra will be and should be the chant for U.S. logistics operations moving into the future.

Still doing more with less

Join our research team for all the findings to this years survey on Thurs., Nov. 17 @ 2 p.m. ET and on-demand after that date. www.mmh.com/wdcbenchmark2011

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8 N O V E M B E R 2 0 1 1 / MODERN MATERIALS HANDLING m m h . c o m

Going forward, one of Horvaths goals is to ramp up the number of research projects related to unit load design. Here are a few of the ideas he wants the center to pursue:

A mathematical formula to calculate the containment force of stretch wrap on a load: Currently, if youre trying to stabilize a load with stretch wrap, you have to do a lot of trial and error on different pat-terns until you get the containment force and wrap design that works, Horvath said. Were developing a mathematical formula that will allow people to calculate the containment force in advance. That will reduce the number of times you have to test the load to get it right.

Stress distribution on a pallet: Purchasing people often take wood out of the pallet to save money, said Horvath. What they dont realize is that there is a new stress distribution

WE ARE MATERIAL NEUTRAL, de-clared Laszlo Horvath. I think thats important for people to know.

As the new director of the Center for Unit Load Design at Virginia Tech University, Horvath is taking the helm of a research lab with a heritage of putting wooden pallets to the test. Today, he said, the center, its stu-dents and faculty are still involved in research related to pallet design. But wooden pallets are now just one component of the unit load, which may also include alternative pallets such as plastic and metal along with corrugated containers, stretch fi lm and strapping.

With its emphasis on the unit load, the center is evaluating them all. We do not push wood over plastic or any other material, Horvath said. We are looking for the best pallet and the best materials for the ap-plication.

More importantly, as the name of the center implies, Horvath, his colleagues and their students are looking beyond the pallet to research and test how all of the components of the unit load work together to get product from the end of the manu-

facturing line to the ultimate custom-er. In other words, theyre looking at the complete package.

Over the last few years, packag-ing designers have brought us their products so we can put them to the test and give them ideas on how to improve what theyre doing, Hor-vath said. And shippers are coming to us with unit loads, especially when they have issues with stability during distribution. As a research center, we think its important to do more than just test a product or a load. If its falling apart, we want to understand whats going on inside the package or the load and give them ideas on how to im-prove the design.

The exercise is valu-able to the companies that rely on the lab. Getting to the root of the problem also pro-vides practical experi-ence for Virginia Tech students who will soon graduate and enter in-dustry, Horvath added.

BY BOB TREBILCOCK, EXECUTIVE EDITOR

MODERN TALKS TO LASZLO HORVATH ABOUT THE STATE OF VIRGINIA TECHS RESEARCH LAB AND THE FUTURE OF THE UNIT LOAD.

Center for Unit Load Design hires new director

PACKAGING

At Virginia Tech, Horvath is taking the helm of a lab that puts wooden pallets to the test.

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m m h . c o m MODERN MATERIALS HANDLING / N O V E M B E R 2 0 1 1 9

on the pallet that may affect some of the products in a package more than others. Thats one of the reasons some bottles or cans may leak even if the load is in tact. Horvath wants to develop a model that can simulate the stress distribution on a unit load to create better packaging and unit load designs.

Mold prevention: Pallets made the news last year when Johnson & John-son blamed moldy pallets produced in the Caribbean for the contamina-tion of product manufactured and packaged in Puerto Rico. The center is investigating ways to prevent the growth of food pathogens and mold on pallets using a wood byproduct that is already used in the production of food. The material were work-ing with is eco-friendly and approved by the FDA as a food product, said Horvath. If you can put it in food, you can put it on a pallet.

Life-cycle analysis: Wood or plastic may not rank up there with the plastic or paper question at the grocery store, but its a question that pallet users often ask. Right now, theres no way to answer that question based on real world experience. We want to do a life cycle analysis of the pallet once its out there in the distribution world and create a tool that will help companies decide which is better for their application, Horvath said.

The projects are ambitious. But, the biggest selling job Horvath may have is convincing companies that paying closer attention to the com-plete package can save them money. Most companies do not come to us when they are designing their pallets and packaging, Horvath said. They come to us when things are falling apart. Usually, thats because they dont have packaging people on staff who understand pallets, corrugated and stretch wrap. We want to con-vince them that the kind of systems-based approach to packaging that were teaching our students can save them money. After all, thats what they wantto save money.

THE MANUFACTURING SKILLS STANDARDS COUNCIL (MSSC) launched a new creden-tialing module dedi-cated to help train and assess the nations front-line manufacturing workforce against industry-defi ned national standards related to green production. Under GPM, workers and students will be able to secure an industry-rec-ognized, nationally portable MSSC Green Production Certifi cate.

GPM was designed to include all manufacturers, not just companies producing green goods such as wind turbines and solar panels. For this reason, MSSC defi nes green production as workplace activi-ties across all manufacturing sectors that require the use of equipment, technologies and processes that will improve the environmental perfor-mance of manufacturing companies.

In developing GPM, we quickly discovered that green production skills will be integral to all manufac-

turers interested in improving their sustainability perfor-mance, said MSSC CEO Leo Reddy. Front-line production workers who are GPM-certi-

fi ed will be a powerful force in helping manufacturers to gain a

competitive advantage in achieving their sustainability goals, he added.

GPM was developed by MSSC under a U.S. Department of Labor American Recovery and Reinvest-ment Act grant to the Communi-cations Workers of America/IUE. MSSC is an industry-led, curriculum, assessment and certifi cation sys-tem focused on the core skills and knowledge needed by the nations front-line production and materials handling workers. The nationwide MSSC system, based upon industry-defi ned and federally endorsed national standards, offers entry-level and incumbent workers the oppor-tunity to demonstrate that they have acquired the skills increasingly needed in the technology-intensive jobs of the 21st century.

WITH THE U.S. manufacturing base accounting for roughly 11% of Gross Domestic Product (GDP), domestic manufacturers are not only dealing with a declining base on the home front, they are also facing major disad-vantages when it comes to doing busi-ness compared to global competitors.

That was among the fi ndings of a recent report from The Manufactur-ers Alliance/MAPI and The Manufac-turing Institute, entitled The 2011 Structural Costs of Manufacturing in the United States.This report is the fourth in a series, which compares the

structural costs of manufacturing in the U.S. to those of its nine largest trad-ing partners: Canada, Mexico, Japan, China, Germany, United Kingdom, Korea, Taiwan and France.

And among its chief fi ndings is that U.S.-based manufacturers face a

SUSTAINABILITY

Manufacturing Skills Standards Council launches new Green Production Module

ECONOMY

MAPI report says U.S. manufacturers face a 20% structural cost disadvantage

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10 N O V E M B E R 2 0 1 1 / MODERN MATERIALS HANDLING m m h . c o m

ployee benefi ts, and it also indirectly captures the costs of materials and capital intensity, Leonard said. The denominator is value-added, not sales, so when your costs of interme-diate goods goes up, your value-add is going to go down almost equally. For companies that are more capital-intensive than others, that is going to increase the value added relative to the wages you pay, because your workforce will be more productive with the initial capital equipment.

The Manufacturers Alliance/MAPI released its Global OutlookOcto-ber 2011 report indicated renewed risks for the global economy. These are a continuation of the period of crisis that began with the collapse of the housing market.

That event revealed an underlying fi nancial structure that can only be de-scribed as an accident waiting to hap-pen, with unjustifi ed and unsustainable leverage, off-balance sheet transac-tions, and counterparty risks that nearly toppled the U.S. fi nancial system, MAPI economist Cliff Waldman said. In what now appears to be a new phase of crisis, public fi nances are the subject of fear. The sovereign debt drama that began in the southern periphery of the Eurozone has grown in ways that have unnerved global fi nancial markets.

20% structural cost disadvantage in the global market compared to top competition, which is up from 17.6% in 2008. The cost disadvantage in 2006 and 2003, was 31.6% and 22.4%, respectively.

In an interview with Modern, MAPI

economic consultant Jeremy Leonard said that the data for this report is based on a raw costs index, which is a ratio of wages and compensation to total value added in manufacturing.

This captures the direct effect of wages exclusive of other em-

For companies that are more capital-intensive than

others, that is going to increase the value added

relative to the wages you pay, because your workforce will be more

productive with the initial capital equipment.

MAPI economic consultant Jeremy Leonard

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m m h . c o m MODERN MATERIALS HANDLING / N O V E M B E R 2 0 1 1 11

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TRADESHOWS

ProMat and Automate to co-locate in 2013 THE MATERIAL HANDLING INDUS-TRY OF AMERICA (MHIA) and the Automation Technologies Council (ATC) announce that the Automate Show and Conference will once again co-locate with ProMat in 2013. Both exhibitions will be held January 21-24, 2013 at Chicagos McCormick Place.

ProMat is the premier materials handling and logistics show held in North America. Automate 2013 is the premier event for robots, vision, motion control and related automa-tion solutions in North America. The co-location of events is the latest effort by MHIA and ATC to help end users fi nd solutions to their manufac-turing and supply chain challenges.

The decision to co-locate ProMat 2013 and Automate 2013 was an easy one after the successful co-location of these events in 2011, says George Prest, chief operating offi cer for MHIA. The co-location of Automate with ProMat 2013 will allow manufacturing, distribution and supply chain professionals unparal-leled education and networking opportunities as well as exposure to the largest equipment and technol-ogy display of any show of its kind in North America.

We had such terrifi c feedback from attendees and exhibitors in 2011 that it made perfect sense to build upon and expand our collocation in 2013, said Jeff Burnstein, president of ATC. Were looking forward to an outstanding Automate event that educates current and potential users on how automation solutions can help them improve productivity, boost product quality, speed time to market, reduce costs and become stronger global competitors.

The co-located ProMat 2013 and Automate 2013 will be the largest international event and conference of its kind ever held in the U.S.

Over 825 exhibitors are expected to showcase their solutions to some 30,000 professionals from more than 100 countries in industries such as warehousing/distribution, automo-tive, alternative energy, consumer goods, defense, food and beverage,

electronics, lab automation, medical, pharmaceutical, plastics, printing, security, semiconductors and more.

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12 N o v e m b e r 2 0 1 1 / Modern Materials Handling m m h . c o m

The challenges of the cold chain are most pro-nounced in the cold storage warehouse, an expen-sive and intensive exercise in labor and asset man-agement. Perry Ardito, general manager for Jungheinrich warehouse products group with MCFA, says cold storage managers have become too comfortable with the level of discomfort. He argues that readily available lift truck tech-nologies can increase productivity, decrease costs and keep cold storage lift truck operators comfortable.

Ardito places the most emphasis on keeping the lift truck operator warm. In many freezers, the operator is compelled to leave every 20 minutes to warm up. Its bad for both job satisfaction and productivity.

If any other business lost 50% of productivity, theyd be hard-pressed to remain profitable, says Ardito.

This grind leads to high turnover and a shallow talent pool for lift truck operators, whose desire to get the job done hastily can result in damage to equipment, racks, product and expensive insulation panels.

Imagine you have to stand up in your office all day, then someone turns down the temperature to freezing, says Ardito. Its probably not a place youre going to retire from. Labor is expensive, and finding operators who are experiencedor even willing to do the workcan be difficult.

Some argue automation is the solution, and that the cold chain might be the first materials handling segment to be completely handed over to robots.

Thats an interesting idea, says Ardito. The use of automation has grown, but it will always be evaluated by cost and ROI. Cold storage is expensive enough. How much labor can you remove and still justify that cost?

A more practical solution, he says, starts with installing a lift truck fleet with heated and seated cabs. The tre-mendous increase in productivity is sure to maximize ROI, according to Ardito.

In addition, each time a truck leaves the refrigerated space, its electronic components and steel are subject to condensation and gradual corrosion. A lift truck should be robustly designed, says Ardito, with insulated electronics

to prevent premature failure. Another approach is to limit the number of times the truck has to leave the freezer.

In cold environments, the average lift truck battery life cycle and rate of charge decline by as much as 20% to 50%. A battery rated for an 8-hour cycle in ambient ware-houses might only last 4 to 6 hours.

Now you need more labor and downtime to swap out batteries, and more actual batteries to keep in rotation, says Ardito.

Higher voltage batteries improve run-time. If rated for 12 hours in ambient conditions, the battery will still oper-ate for a full shift even with a 25% cycle reduction.

With a heated cab, a comfortable seat, and a lift truck that will run until quitting time, a cold storage lift truck operator might soon pass in and out of the freezer just once per day. M

Specially designed cold storage lift trucks take a bite out of historic productivity drains.

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14 N o v e m b e r 2 0 1 1 / Modern Materials Handling mmh.com

modern system report

By Bob trebilcock, Executive Editor

on its iowa manufacturing campus, John deere

is using agVs to move tractor cabs down the

assembly line. the result has been savings in labor,

a safer work environment and improved quality.

nothing runs like an agV

or years, manufacturers turned to automation to improve quality and take labor out of their processes. A robotic welding machine, overhead and floor-level conveyors, and automatic guided vehicles (AGVs) made workers more efficient and allowed companies to increase production without increasing their workforce.

In 2010, John Deere set out to bring a new level of automation to the assembly line for its CommandView II tractor cabs at Deeres historic Waterloo Works in Waterloo, Iowa, a huge manufacturing campus that includes six manufacturing facilities spread across 5.9 million square feet of floor space and 2,734 acres.

Deere was certainly looking for labor savings from automation, says Annie Olson, project manager for new cab assembly in Waterloo. But Deere was also in search of a solution that would bring a new level of safety and flexibility to its operations.

The cabs that go on our 7R, 8R and 9R series of tractors are more complex as we add new levels of comfort and functionality for the operator, says Olson, citing heated seats and Bluetooth technology as just two of the options demanded today. We needed an assembly line that could grow with the technology we are adding to our cabs now and might add in the future.

A final consideration was to add automation that would improve the quality and reliability of Deeres processes. As an adherent of lean manufacturing, Deere looks to drive higher, more consistent levels of quality with each new investment.

The solution was a fleet of 35 automatic guided vehicles (Toyota Material Handling USA, toyotaforklift.com) that went live in September 2010. The AGVs

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automatic guided vehicles engage specially-designed frames to transport cabs through the assembly process.

annie olson, project manager


http://mmh.com


serve as a flexible mobile assembly line, routing the cabs through as many as 12 assembly stations before a finished cab is delivered to the final tractor assembly line.

The result has been labor savings.With the new system, Deere has freed up the direct labor equivalent of one assembler, who used to move the cab from one station to the next, for more important value-added operations. More importantly, the AGVs have deliv-ered a new level of flexibility and qual-ity control to the cab assembly line. Mistake proofing is very important to

our processes, says Olson. The AGVs have allowed us to expand on our qual-ity control systems and will allow us to add more technology in the future.

Ensuring qualityJohn Deere has been producing trac-tors in Waterloo, Iowa, since it pur-chased the Waterloo Gasoline Engine Company, manufacturer of the Waterloo Boy Tractor, in 1918. The facilities include a foundry, an engine works plant, a product engineering cen-ter, and tractor assembly for some of Deeres most popular agricultural trac-

tors. Deere employs 5,000 workers in Waterloo and ships its tractors to more than 130 countries. With $26 billion in total sales in 2010, John Deere is the largest manufacturer of agricultural equipment in the world.

In early 2010, the cab manufactur-ing team in Waterloo began discussions for a new line for the CommandView II cab, which would be common to the 7R, 8R and 9R series.

Some automation had already been introduced into the cab assembly area when a manual system was replaced with an elevated conveyor. In the past, cabs were placed on a dolly that an assembly worker manually pushed from station to station. Tractors are getting heavier all the time, as are the cabs that go on them, says Olson. If youre manually pushing a cab day in and day out, it takes a toll.

A manual line not only presented an ergonomic challenge, it created a challenge to Deeres quality control program. We are a lean operation with a no fault forward policy, says Olson. If we discover a quality issue, we stop work on that cab until we address the issue. When Deere was using a man-ual system of moving the cab along the line, it was difficult to ensure that all of the options were installed in the right cab and that all of the processes and quality checks were completed during the assembly process.

In part, that was addressed with the installation of a roller conveyor that sat about 2 feet off the floor. By automat-ing the assembly line, Deere could also add technology to automatically cap-


agVs replaced a conventional elevated conveyorized assembly line. now, deere personnel can easily and safely access all four sides of a cab (top). the lower profile of the agV allows workers to step up into the cab for interior work or to access the roof of the cab from a low platform (bottom).


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ture data about processes on the line. However, the conveyor had limitations if something did go wrong.

With the conveyor, we could lock down the line to prevent a cab from moving forward, Olson says. However, it was difficult to stop a cab on the con-veyor mid line to make a repair. If we found a fault, we had to shut down the whole assembly process.

Whats more, if the assembly line needed to change, say to add another assembly station for a new option, the whole conveyor line had to be moved. That was not easily accomplished.

Finally, with more available options than ever before, Deere needed a larger assembly line and extending the con-veyor was not an option.

A better mouse trapDeere investigated several different solutions before choosing AGVs. These included an overhead handling system, an old-fashioned chain drive assembly line and even going back to a manual push line. At least with the old system, an operator could push a cab out of the way to fix a problem rather than shut down operations.

Then the Waterloo group learned about an AGV spec that had been designed for Deeres line of harvest-ers in East Moline, Ill. There is a lot of commonality across our cabs and we like commonality across our fac-tories, says Olson. East Moline also had a no fault forward policy and their spec had the necessary line speed and weight specifications for our facility. We jumped on board.

The AGV design Deere chose is a

tugger vehicle known as a mouse. The mouse is designed to go under the load, engage the dolly with a pin and then tug it along. Since there is no longer a con-veyor on the floor, an operator can walk completely around the cab itself.

The mouse features a low profile base that rises just 8 inches off the floor and shares the same footprint as the dolly that carries the cab. The total load from the shop floor to the bottom of the cab is just 12 inches. At that height, the roof of the cab is accessible to an opera-tor without a ladder. The step up from the ground into the cab was a normal height. These features both brought a level of ergonomics to the line. There are certain stations that require addi-tional height, Olson says, but we address those with lift tables.

The vehicle navigates by following a magnetic tape on the floor: If the line needs to change in the future, Deere can simply move the tape.

Deere was also attracted to the mouse vehicle because it was a mass-produced product and not custom-made. If Deere needs another vehicle, it can simply place an order.

Finally, a systems integrator was available with the experience to inte-grate the AGVs into Deeres existing production line. We needed a design for the dolly that carries the cab, we needed to modify the ergonomic lifts and the vehicles needed to commu-nicate with the existing systems over the Ethernet, Olson says. We did not have that expertise in-house. The fact that our supplier had an expe-rienced integrator made this a full package.

Moving cabs The new system went live on Sept. 17, 2010. Prior to the implementation, Deere gathered a team of technicians, manage-ment and assemblers to take ownership of the project. Still, management and the skilled trades group at Waterloo saw a test run of the new system to allay any reser-vations. The supplier brought in an AGV that picked up a cab, ran a loop and then dropped it off at a staging area, just like the mouse would do once it went into production. Seeing was believing. Im sure that our skilled groups and manage-ment were skeptical, says Olson. Once they saw the system do what it was designed to do, people were excited.

In the year since going live, there has been a reduction in labor associated with moving the cab from one station to the next. Any time we can automatically deliver something to a station without manual labor or a lift truck, that delivers a reduction in labor, says Olson.

More importantly, Deere is now able to adhere to its mistake proofing policy without shutting down the line: If an error is discovered, the AGV carrying the cab with a fault will stop, while the cabs behind and in front of it continue to move forward.

And, the vehicles have brought a new level of flexibility to Deere. Not that long ago, we did a project over a weekend that allowed a cab to go to five different testers instead of two, Olson says. It was me, a couple of electri-cians, the integrator, someone from factory automation and some magnetic tape. We could not have done that with a conveyor.

Having worked with AGVs for the last year, she adds, We are looking at where else we can use them and there are several other projects in the works, Olson says. This has been a stepping stone for us. M

after the assembly process is complete, cabs are staged for delivery to the tractor manufacturing line.


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The CommandView II cab pro-duction line is a good example of how a leading manufacturer has applied automation to an existing manufacturing line. Cart-style auto-matic guided vehicles (AGVs) are the primary materials handling technology that moves the carts from one assem-bly station to the next before delivering them to an electrical verification sta-

tion for quality control and finally to a queue where the completed cabs will be delivered to the next step in the trac-tor assembly process.

The system is simple and efficient. Here are the steps.

The process begins when a welded and painted cab frame enters the cab production area and is staged in an area known as the Mouse Trap (1). From

here, the cab will enter the assembly line where large modular subassem-blies will be installed. While every cab will go to certain stations along the line,


John Deere Waterloo, Iowasize: 5.9 million square feet; more than 2,734 acres

Facilities: Deere operates six manufacturing facilities on the Waterloo campus

Products handled by agV: CommandView II cabs for 7R, 8R and 9R series tractors

employees: 5,000

shifts/days: 2 shifts/5 days

Building cabsautomatic guided vehicles move tractor cabs through the production line at John deeres Waterloo plant.By Bob trebilcock, Executive Editor

1

Mouse Trap

AssemblyStations

2

3

3

3

AGV ReturnPath

6Queue

5

3

4

3

3 Cab Assembly Line

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a cab may also be diverted off the main line to work stations where optional fea-tures and equipment will be installed to customize the cab for a customer.

At the Mouse Trap (1), the cab is on a specially designed skid. When the AGV moves under the skid, a pin con-nects the skid to the cart. That marries the cab frame to the AGV. During that process, an operator scans a serial num-ber on the cart that will be transmitted to the manufacturing system and stored on the mouse to identify that cab dur-ing production.

From the Mouse Trap, the cab enters the assembly line (2). During its trip down the line, the cab can visit 12 assembly stations (3), such as the back panel, roof, seat, front control support, glass and fender stations. When an AGV pulls into one of the assembly stations, it communicates the serial number to a programmable logic controller (PLC) in the department. With that informa-tion, the system communicates the work to be done at that station to the opera-tor. As the operator completes the steps associated with the process at that sta-tion, data is automatically collected and updated in the production system.

Overhead tooling has been outfit-ted with homing sensors. Before the AGV can move forward to the next sta-tion, the tooling has to be returned to a home location.

Once the work is complete and tools are safely out of the way, the AGV moves to its next stop. Once the final subassembly or option has been installed, the cab is delivered to an

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electrical verification station (4) for a quality control check. From there, it will be delivered to a staging queue (5) where it will be picked up and delivered to one of two assembly lines.

The final assembly system notifies the cab line when it is ready for a spe-

cific cab. At that point, the operator releases the cab and its skid from the AGV. The cab moves on to the assem-bly line and the AGV travels along an AGV return path (6) back to the Mouse Trap (1) where it will pick up the next cab skid. M

System suppliersautoMatic guided veHicles: toyota

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By Bob Trebilcock, Executive Editor

Efficiency in the warehouse has traditionally driven the

distribution process. Now, some leading retailers are looking at

the DC to lower the cost of operating their stores.

From the store to the DC

22 N o v e m b e r 2 0 1 1 / MoDErN MaTErials HaNDliNg mmh.com

modern best practices

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mmh.com MODERN MATERIALS HANDLING / N O V E M B E R 2 0 1 1 23

MODERN system report

n late September, Macys announced an initiative to adopt item-level RFID tracking technology in all of its Macys and Bloomingdales department stores by the fall of 2013. The idea is to provide Macys suppliers with real-time information from the store to drive replenish-ment and distribution processes.

Beyond the adoption of item-level RFID in the retail supply chain, the Macys initiative represents another emerging trend: Instead of managing a distribution process from the DC to the store, some leading North American and European retailers are driving their dis-tribution processes from the store back to the DC.

Modern has recently published the stories of two retailers who have adopted store-to-DC distribution processes.

Kroger is building aisle-aligned, store-ready pallets in three distribution centers in Colorado, Arizona and southern California (mmh.com/article/Kroger). These mixed SKU pallets are built in the sequence that the product will be placed on the shelf as the worker moves down the aisle.

Office Depot built a new DC in Pennsylvania that features a goods-to-person order fulfillment system that enables a demand-driven store replenishment strategy (mmh.com/article/OfficeDepot). Office Depot is send-ing its stores one mixed SKU pallet a day that can go straight to the shelf to replenish items recently sold and still in demand.

In these new models, retailers are looking at their distribution processes from the opposite end of the telescope. Instead of designing materials handling sys-tems that produce the lowest cost for handling a pallet or carton in the DCeven if those processes increase the cost of handling the product in the storethese retailers are looking at the total landed cost to the shelf, says Bryan Jensen, vice president of supply

chain consultancy St. Onge. In some cases, the new approach may actually raise

handling costs in the DCs and lower the cost of labor in the store. But, the math works because there are so many more stores than DCs. Stores represent 75% of the total operating expenses for many retailers, says Brian Sherman, a senior engineer at Witron. An incre-mental increase in costs in one warehouse can result in savings across 200 to 300 stores in a region.

The idea also works if a retailer can link store man-agement systems with warehouse management systems (WMS). We have the ability to track labor costs at the DC and capture labor savings at the store to get a picture of the greater good, says Tom Kozenski, vice president of product marketing for RedPrairie. To make that case, you need someone at the C-level who understands the greater good. Thats not going to reso-nate with the warehouse manager who is going to see his costs go up.

Everything old is new againThe concept itself is not new, says Jensen. Twenty years ago, he worked for a national toy retailer that designed DC processes to pick everything for an aisle or two in its stores, not unlike what Kroger is doing today. The limi-tation then was that there was just too much of a labor premium in the DC to do it economically, Jensen says.

Today, technology has caught up with the concept. All the things we wanted to do then can be done with less labor because of new automated materials handling technologies, says Jensen. And, the systems allow us to fold store operations into the distribution flow.

Those technologies include automated storage and retrieval systems (AS/RS), goods-to-person picking sys-tems, robotics and especially sophisticated warehouse management, warehouse control and order fulfillment

From the store to the DC

I


http://mmh.com/article/Krogerhttp://mmh.com/article/OfficeDepothttp://mmh.com


software systems. They also take a dif-ferent approach to traditional order ful-fillment.

The systems were building to do that dont rely on pick faces for every SKU, says Brian Keiger, technol-ogy sales leader for Kuka Systems. Everything is brought out in sequence to build a store-ready mixed SKU pal-let or to build a display pallet. Whats more, the system can adapt to the hun-dreds of SKUs being added to the sys-tem in the coming years without adding more pick faces.

Kuka Systems, for instance, is work-ing with one grocer to fill orders for

frozen, refrigerated and dry goods from one facility with deliveries on one truck. They will only need a fraction of the employees they would normally need, but those associates have to be more highly educated and technically savvy than the typical warehouse worker, Keiger says.

What do some of those solutions and strategies look like, and what does it take to operate from the store back to the DC? Here are several different approaches.

Direct store delivery Direct store delivery, or DSD, is a replenishment strategy that bypasses the traditional distribution network of shipping from a manufacturing plant to

a retailers DC and then to the stores. In a DSD system, a product manager working for a manufacturer generates a replenishment order from a retail store using a mobile computer. That order flows directly into a WMS. Orders are picked and loaded onto a route delivery truck in the sequence of the route stops that will be made by the driver. The last product in is the first product out.

In a DSD model, deliveries bypass a traditional distribution network and go directly to the store, says Chad Collins, vice president of marketing and strategy for HighJump Software.

DSD is most commonly used by retailers of very fast-moving items like food, beverages, snacks and household staples. The kinds of products you find in a grocery store, a convenience store or certain aisles in a phar-macy or big box retailer.

The benefit to the retailer is the speed of replenishment. Direct store replenishment is very quick and its very accurate, says Lora Cecere, an analyst and partner with the Altimeter Group.

How quick? With direct store deliv-ery, says Cecere, the demand data moves as much as five times faster than in a traditional distribution environment.

There are three DSD models, according to Cecere:

One-step: The product manager replenishes a cooler with product that is already on his truck. This is common with highly perishable products such as milk. The time between identifying a need and replenishing a store, known as a latency period, is a day or less.

Two-step: A product manager sends an order to a WMS and a route truck driver delivers the merchandise and stocks the shelves. The latency period is a little more than two days.

Three-step: A product manager

sends an order to a WMS and the prod-uct is delivered to the back room of a retail store. After the delivery, a manu-facturers rep will come in and mer-chandise the store. The latency period in that model is 3.5 days.

Store- and aisle-friendly pallets All retailers talk about smaller and more frequent deliveries. Instead of shipping large deliveries to a store several times a month, retailers want to receive deliveries once or twice a week. In a store-to- the-DC model, retailers are receiving deliv-eries as frequently as once a day. Think of these as store-friendly pallets because they go directly from the truck to the sell-ing floor rather than a stock room.

When youre shipping every day, youre giving a store what it needs rather than putting excess volume in the back, says Witrons Sherman. Shipping just what a store needs also eliminates the double handling that comes from unloading a portion of a pallet on a shelf and then wheeling it back into the stock room.

While store-friendly is an improve-ment over traditional retail distribution, there are still inefficiencies if the pallets arent built with the layout of the store in mind. There are stores where an associ-ate has to go back and forth to 10 or 12 aisles to put the product away because there was no rhyme or reason to how the pallets were built, Sherman says.

Thats led to the next step, which is to use automation to build aisle-friendly pallets. The goal is that all of the prod-ucts on the pallet can be put away in two adjacent aisles, says Sherman.

Aisle-friendly pallets are most com-monly found in geographies where stores are close enough to the DC that daily deliveries are still economical despite rising fuel prices.

Companies doing this most effec-tively, like Kroger, are using automated storage, robotics and software to build aisle-friendly pallets using a minimum of labor. Reserve pallets are stored in an AS/RS to reduce the footprint of the facility. Active SKUs are broken down

in addition to store-friendly pallets, some retailers have developed solutions to pick the right items for specific counter displays and shelves in a retail store.

modern best practices


http://mmh.com

to case or unit levels and stored in totes in a mini-load AS/RS.

In the most automated examples, the cases or items required to fill an order are dispensed in the right sequence and then built robotically. Since the system automatically determines the next item in the sequence, theres no need for pick faces. The cranes do the dynamic sequencing, says Sherman.

Getting granular The next step beyond aisle-friendly pal-lets is to get more granular than the pallet by building counter- or display-friendly totes. If you go into a retail store and see a stack of T-shirts or sweaters perfectly aligned with a mix of sizes, you can do that in the store, says Larry Strayhorn, president of TGW Systems. Or, you can pick orders in a way that an associate in the store can simply open the tote and put the mate-rials directly on the counter in a spe-cific department.

As with aisle-friendly pallets, the ulti-mate goal is to maximize an associates selling time. You dont want that sales person setting up displays on the counter or organizing the product by size on the shelf, says Strayhorn. You want them available to help the customer.

In this kind of system, which TGW has implemented for an apparel retailer

in Europe, point-of-sale information from the stores is turned into a replen-ishment signal that is sent to a WMS. The system allows our customer to do replenishment based on demand, says Strayhorn. They know what items from the new collection they want on the floor and in what sizes because they know from history whats selling. Once the WMS passes the order require-ments to a warehouse control system, the WCS sequences the delivery of totes with the right material to a work station in a goods-to-person fulfillment system. A smaller vertical buffer system is installed in front of the workstation: If a tote is delivered out of sequence, it goes into the vertical buffer until it is ready to be picked.

According to Strayhorn, these types of solutions illustrate not just a new way of thinking about distribution strategies, but also an evolution in how automated storage technology is being used. To get the sequence right is sophisticated and challenging, he says. In this kind of setting, the AS/RS is a tool for logistics. Instead of just stor-age, its being used for buffering and sequencing.

Improvements in robotics and other automated technologies have been a key to creating store- and aisle-friendly pallets in the retail grocery industry.

Companies mentioned in this articleAltimeter Group, www.altimeter-group.com

HighJump Software, www.highjump.com

Kuka Systems, www.kukanao.com

RedPrairie, www.redprairie.com

St. Onge, www.stonge.com

TGW Systems, www.tgw-group.com

Witron, www.witron.com

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Anyone will tell you, use the right tool for the right job. When it comes to supply chain execution softwarethe applications that direct manufac-turing operations, oversee distribution processes like receiving and order fulfillment, and ship productsthere are more tools, and more robust tools, available than ever before.

In the past, these were stand-alone applications, explains Tom Kozenski, RedPrairies vice president of product marketing. Not anymore. Software appli-cations are working together and using common data to synchronize and optimize the operations necessary to get an order to a customer.

This equipment report focuses on supply chain execution (SCE) solutions. Like foot soldiers, supply chain execution solutions carry out the plan created by the planning systems. Heres a look at how these software applications are being used to manage the information of product mov-ing through todays complex operations.

Warehouse management systems Accurate inventory management directly impacts an operations bottom line. Too much product sitting means too much money sitting. Too little product means stocks and thats money lost, says RedPrairies Kozenski.

A warehouse management system (WMS) is

the starting point for inventory management. It ensures that the right amount of inventory is where its supposed to be when its supposed to be there, whether thats in the manufacturing facility, the warehouse or the distribution center, Kozenski explains.

A basic WMS package supports the everyday functions that are central to warehousing: receiv-ing, directed putaway, order fulfillment planning, picking and packing, and shipping the order.

An advanced WMS may also support: Replenishment: The WMS constantly updates

inventory and calls for the movement of material from storage to the active pick area so order pick-ers dont run out of inventory or sends notifica-tion to re-order.

Returns: With increased catalog and online shopping at the consumer level, the WMS sys-tem has the capacity to handle a large quantity of returns to maximize the value of the mer-chandise coming back.

Cycle counting: Typically this is a process to systematically count inventory according to a plan, and a support for the usual inventory accounting process.

Productivity: The WMS communicates with workers on handheld RF devices and voice technology. The communication data also pro-vides a way to track and report productivity.

Enhancements to WMSIn todays warehouses and DCs, a WMS is a foundational application. As these solutions have

26 N O V E M B E R 2 0 1 1 / MODERN MATERIALS HANDLING mmh.com

By Lorie King Rogers, Associate Editor

Supply chain execution

MODERN Equipment 101: SoftwareA primer for warehouse/DC managers

Supply chain software basics:

Workers interfacing with a WMS can track product and ensure that the right amount of inventory is where its supposed to be and when.

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todays supply chain

execution software

applications are evolving,

adding functionality and

enabling operations to

function more effectively.

supply chain execution

evolved, so has a suite of applications that enhance and extend the WMS functionality. While there are a number of different applications available, the three most commonly used are slotting, yard management and labor management.

SlottingSlotting software tools map the warehouse and the velocity of orders and order mixes to calculate the fastest moving items. This information is used to determine where individual products should be stored to create the most efficient picking opera-tion. For example, fast movers should be located closest to the shipping area; slow movers can

be located further away in reserve storage; simi-lar items should be separated to reduce picking errors; and heavy items should be positioned at chest height to avoid worker injury and improve ergonomics.

Slotting data can also be used to reconfigure and optimize the layout of products in a facility as business requirements change.

Yard management systems The yard management system (YMS) extends the view of the WMS. Visibility is the big issue, says Richard Kirker, SAPs SCM solution management and solution owner for warehousing. Knowing whats in the con-


http://mmh.com

tainers in the yard is important, espe-cially when the container is an extension of the freezer.

The YMS also serves as the bridge between the WMS and transportation. It controls yard activities and schedules arrivals at the dock doors, reducing bot-tlenecks and waiting time.

On the outbound side, a YMS cre-ates a delivery schedule and can coor-dinate picking activities around the trailers that are available to be loaded. Information collected by the YMS can also be used to analyze a carriers deliv-ery performance.

Labor management systems The WMS directs activities, but the labor management system (LMS) determines how many workers are needed and where theyre needed to do the job efficiently. It can also plan, manage, measure and report on the performance of ware-house personnel by com-paring the work against a set of engineered labor standards.

Additionally, the LMS can monitor work during a shift, provide real-time feedback to supervisors and associates, and use business intelligence tools to proactively address per-sonnel situations before they become customer ser-vice problems.

Warehouse control systems A warehouse control sys-tem (WCS) is a layer of software that sits between a host systemeither an ERP or WMSand auto-mated materials handling equipment. It controls and synchronizes the automated storage, picking and trans-

portation solutions.The WCS determines the best way

to route materials through the auto-mated systems and provides real-time control to re-optimize orders as busi-ness conditions change. It also updates the host system, providing transparency into warehouse activities.

If something goes wrong, the WCS can reroute the product or send an error message to the WMS in sub-second response time, explains Chad Collins, vice president of marketing and strat-egy for HighJump.

Manufacturing execution systemsThe manufacturing execution system (MES) manages processes on a shop floor. It tracks products and orders,

manages the work, and collects trans-actions for reporting to ERP systems. The MES also electronically dispatches orders to personnel and allows the schedule to change quickly in response to unexpected demand or to recover from equipment or material problems.

Todays integrated MES tools also manage the challenge of maintaining master records about the components of a product. Tracking and tracing capa-bilities are increasingly important in the global supply chain, especially in the food and pharmaceutical sectors, so maintaining one copy of data regard-ing the product is crucial, says SAPs Kirker.

As regulations become more strin-gent, having one version of the truth is

very important. You dont want a separate set of data for all areas, you want complete transparency, Kirker adds.

Transportation management systemsThe transportaion manage-ment system (TMS) receives orders, confirms shipping dates, checks rates, assigns carriers and establishes pick-up and delivery schedules before releasing orders to the WMS for processing. Once the orders have been picked, packed and shipped, it manages tracking, freight payments and carrier perfor-mance metrics.

Basic TMS functions include mode, carrier and route selection. The TMS can also handle load building, which opti-mizes orders by combin-ing LTL shipments into full loads, and aggregates parcel shipments to geo-graphic regions. This is increasingly important as transportation is a vital


Supply chain software suppliersCompany Web site erP sCP WMs Mes tMs

Aldata aldata-solution.com

x x x x

Apriso apriso.com x x

Descartes Systems Group

descartes.com x

e2open e2open.com x x x

Epicor epicor.com x x x x

HighJump highjumpsoft-ware.com

x x x

IBS ibs-us.com x

IFS ifsworld.com/us x x x

Infor infor.com x x x x

JDA Software jda.com x x

Kewill kewill.com x x

Lawson lawson.com x x x x x

Logility logility.com x x x

Manhattan Associates

manh.com x x x

Oracle oracle.com x x x x

QAD qad.com x x x x x

RedPrairie redprairie.com x x

Reddwerks reddwerks.com x

Retailix retailix.com x x x x

SAP sap.com x x x x x

Sterling Commerce

sterlingcom-merce.com

x x

This table represents a sampling of leading supply chain software suppliers.

modern Equipment 101: SoftwareA primer for warehouse/DC managers


http://apriso.comhttp://descartes.comhttp://e2open.comhttp://epicor.comhttp://ibs-us.comhttp://ifsworld.com/ushttp://infor.comhttp://jda.comhttp://kewill.comhttp://lawson.comhttp://logility.comhttp://www.manh.comhttp://oracle.comhttp://qad.comhttp://redprairie.comhttp://reddwerks.comhttp://retailix.comhttp://sap.comhttp://mmh.comhttp://aldata-solution.comhttp://aldata-solution.comhttp://highjumpsoftware.comhttp://highjumpsoftware.comhttp://sterlingcommerce.comhttp://sterlingcommerce.com

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but costly part of the supply chain that can erode profit margins if not handled effectively.

Supply chain event management and visibilityOnce stand-alone applications, event management and visibility solutions are increasingly integrated into other applications, including WMS, WCS, MES and TMS. These systems are like watchdogs monitoring processes inside the four walls of a facility or across the supply chain for unexpected events that are out of tolerance for the planlike the shortage of parts on an assembly line or the breakdown of equipment in a DC. In case of an event, the system sends an alert to a decision-maker by fax, e-mail, pager or on a PDA so imme-diate action can be taken.

By building in work flow rules, the system can offer suggestions that allow a decision-maker to implement the best alternative in terms of cost, time and customer service requirements.

Computing in the cloudSoftware-as-a-service (SaaS), or on-demand software, is an increasingly popular delivery mode that makes virtu-ally all software applications available to operations of any size. Software appli-cations, which are hosted by the sup-plier, are accessed by the end user over the Internet. Also called computing in the cloud, this format enables clients to use software solutions without having to own, repair, upgrade and maintain their own IT systems and equipment.

There are a variety of drivers for cloud adoption. For some its cost savings, oth-ers want to be more agile. For others, computing in the cloud keeps the focus on the value-added activities of their core business, says HighJumps Collins.

In addition to off loading the IT burden, end users can keep systems current because vendors can push out changes and updates as avail-able, behind the scenes, even with-out notification.

30 N O V E M B E R 2 0 1 1 / MODERN MATERIALS HANDLING mmh.com

MODERN Equipment 101: SoftwareA primer for warehouse/DC managers

The enterprise levelSupply chain software basics:

Enterprise-level supply chain software solutions give an operation the tools to create

and test effective business strategies and plan ahead by incorporating commands for

necessary preemptive strikes.

By Lorie King Rogers, Associate Editor

T odays supply chain software solutions are enhancing every link in the supply chain, enabling real-time communication and effective management between an operations internal depart-ments and its global trading partners. As the technology evolves, so does the seamless sharing of information.

Software applications are moving away from stand-alone applica-tions to systems that are working together and using common data to effectively plan across the broad enterprise. Todays software pro-vides an end-to-end process, says Richard Kirker, SAPs SCM solu-tion management and solution owner for warehousing.

From the end users perspective, as technology evolves and becomes more affordable, organizations that didnt think they could afford it are taking advantage of the optimization offered by the com-mon data and architecture that todays solutions offer.

From the suppliers perspective, the goal is to keep up with end users demands and market-driven changes. As businesses look to refresh their offerings, software has to keep up, says Jennifer Sherman, senior director of logistics product strategy for Oracle. As a result, software applications at all levels have an increased depth of capacity.

Software can be organized into two basic categories: applications that plan and manage processes and operations

across an enterprise, also known as supply chain management appli-cations, and

solutions that execute those plans inside the four walls of a facil-ity, or supply chain execution solutions.

This equipment report looks at supply chain management (SCM) software and how these applications are being used in todays supply chain operations.


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modern Equipment 101: SoftwareA primer for warehouse/DC managers


enterPrise-leVel aPPliCations

Enterprise resource planning A packaged enterprise resource plan-ning (ERP) system is a business soft-ware application that resides at the corporate level and serves as the infor-mation backbone, or the system of record, of the supply chain. It allows a company to:

automate and integrate its business processes,

share common data across the entire enterprise, and

produce and access real-time information.

Typically, the core business func-tions managed by the ERP involve the manufacturing, distribution and finan-cial needs of a company, including cost accounting, inventory at a high level, purchasing, customer orders, invoic-ing, vendor invoices and payments, customer receipt processing, general ledger and shop floor features.

The data created by those processes is maintained in a common file and in a common language that is understood by all the other systems in an enter-prise, whether those systems are part of an integrated supply chain suite or linked together through interfaces.

In the past, no one single vendor had all the parts to manage the entire supply chain. The software market has matured and has become a platform in itself. While there is still a gap between the robust functionality provided by best-of-breed applications, ERP suppli-ers have closed the gap in many appli-cations. As a result, many customers can go to a single vendor for a set of products that work together to run all areas of their business. That is espe-cially true for customers running rela-tively straight-forward operations.

Order management system Filling an order begins with capturing order information from the customer. The order management system (OMS)

may receive orders by fax, phone, EDI (electronic data interchange) or on the Web.

Because there are a number of order and delivery scenarios, the OMS has to be heterogeneous with the functional-ity to deal with multi-channel capture and multi-channel fulfillment chan-nels. Multi-enterprise OMS sits above the ERP and presents one face to the customer: Place an order and the OMS will parse out the different line items of an order to the right division, the right manufacturing plant, the right third-party distributor or the right warehouse.

sUPPlY CHain Planning

Supply chain planning Supply chain planning (SCP) software, which also resides at the corporate level, is an umbrella technology that enables

an operation to perform advanced plan-ning and scheduling. It may also be used to handle information about orders col-lected by the systems of record and gen-erate plans to accomplish the work.

SCP applications can be configured any which way. During the program-ming process, an operations business rules are entered into the system. While there can be literally thousands of vari-ables incorporated, these business rules are what optimize the process.

The SCP system usually resides at the corporate level, where it has a broad view of the orders to be manufactured, picked and shipped. It also sees con-straints or limitations on the availabil-ity of capacity, materials, equipment and personnel. With this information, it determines the ideal way to sched-ule an order and plan for the future. In planning, SCP software may even determine that an order cannot be filled profitably and therefore should not be scheduled at all.

While there are many planning com-ponents, most SCP systems approach a problem from one of three angles: Strategic planning looks at capital

asset allocation as well as market and resourcing decisions like a ware-house location that best serves a par-ticular market.

Tactical planning looks at an opera-tions resources and customer demands to determine what will pro-duce the most profit for the company.

Operational planning looks at the supply chain plan developed by the strategic and tactical planning pro-grams and creates an operational path to execute those plans. For example, the operational plan might outline a weekly production sched-ule then go a step further and break down the schedule by the day, hour, minute or the second.

Multi-echelon planningMulti-echelon planning is an applica-tion used to optimize the amount and

one of the core functions performed by the erP includes overseeing the manufacturing needs of a company.


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positioning of inventory across the sup-ply chain. These planning solutions have matured and can add significant value to an operation, says Karin Bursa, vice president of marketing for Logility.

The multi-echelon solution evalu-ates the entire network and helps make decisions about the best quantity of product to keep at the most desirable location, explains Bursa. Instead of spreading inventory like peanut butter, the multi-echelon solution enables you to spread inventory with precision across the network and better align with cus-tomer service goals.

For example, this solution can simul-taneously consider inventory at a num-ber of DCs, supplier warehouses or inventory in route from a manufacturer or distributor. It can also consider prod-uct still in the manufacturing phase, evaluate your work-in-pr

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