Typically, a functional system provides reports about suchtopics as operational efficiency, effectiveness, and productivityby extracting information from databases and processing itaccording to the needs of the user. In an automated distributioncenter includes a central warehouse for imported goods. Pallethandling is a vital part of their production and distributionprocesses. Pallet handling extends throughout the business process,from goods receiving to shipping of finished products or sorteddeliveries. Therefore fast, smooth and efficient pallet handling isessential.Question:
Explain how data turned into knowledge to provide acompetitive advantage (in the transcript below).
A major advance in logistics
Narrator:
In an era when no retailer can afford to stand still, changingthe supply chain operations of the largest, non-food retailer inthe UK is a significant project. Owned by GUS, Argos fills thenumber one retail slot outside grocery and is also the numberretailer for toys and small electrical appliances. This representsabout 150 million items a year sold through over 550 stores spreadaround the UK and Ireland and online. Indeed, 98 percent of the UKpopulation now live within 10 miles of an Argos store.
Steve Melton:
In early 2001, Argos carried out a fundamental review of itssupply chain and what it concluded was that unless substantialchanges were made in the supply chain, it would become a constraintto the future growth of the business. And that means change notonly in terms of new capabilities but also cost efficiencies. Someof the challenges the business was facing at the time arose fromgrowth, growth in sales, for example. Since 2001, the business hasgrown by over 40 percent and nearly 3 and a half billion pounds ofsales but also growth in terms of the number of channels we’retrying to operate. Now nearly 20 percent of our sales go direct tohome. And also growth in choice, in Spring/Summer 01, we had about8,700 lines in our catalog and now that’s nearly a massive 13,000in the catalog that we’ve got today and in fact, you know, pilot,you know, which we’re calling our Argos Extra, which is a new storeformat we’ve got nearly 16,000 product lines. One of the thingswe’ve had to deal with is increasing competiveness in our markets.What that means is, increasingly competitive prices in many of ourcore areas. One good example is consumer electrical, where we asconsumers have gotten used to the fact that prices of TVs, DVDs,and videos continue to fall for us. Now Argos has been respondingto that by going directly to source and direct importing many ofthese product categories so we can pass on some of the cost savingsto our customers. In May 2001, the GUS board approved an investmentof 140 million pounds to transform the Argos supply chain. Thisprogram covered three main areas; the first was improvements insourcing and the performance of our supplier base, the second wasnew capabilities in planning the end-to-end supply chain and a muchleaner approach to moving stock through to the customer, and thethird area was restructuring of the physical distribution networkto provide better cost efficiencies and supply assurance.
Narrator:
Yet Argos had never embarked on a supply chain project of thisscale and complexity so the company looked for outside expertise inanalyzing its physical distribution network in detail anddelivering an effective solution. Argos turned to top supply chainconsultancy, The Logistics Business, to provide the combination ofstrategic logistics insight and practical implementation.
Steve Melton:
The Logistics Business started working with us in late 2000 andVanderlande came on board in early 2001. With such a large changeagenda, it was vital that we picked strong partners withsubstantial experience in this kind of program to enable us todeliver successfully without impacting on the day to day business.The Logistics Business brought us real track record in automatedwarehouse design and we liked their practicality. At the beginning,they helped us with design and managing the tender operation andsince then they’ve had an active, ongoing role in contactmanagement.
Narrator:
The early work included validation of centralized distributionand introduced the concept of totes in the Argos supply chain forthe first time. Next, came the outline specification for a newcentral distribution center or CDC for small items. Confirming thesuitability of basing this along with the center for direct importsor CDI. Initially, work centered on the analysis of requirementsincluding the use of the I-Flow model developed by the logisticsbusiness. I-Flow analyzes throughput and storage requirements for adistribution center and predicts how they will change as thebusiness grows and develops in the future. It was used to breakdownthe general requirements of the operation into specific flows andprocesses which form the basis for final Vanderlande designs. Atthe same time, Argos’s property department set about finding asuitable site that had to cover 30 acres. The site chosen wasBarton Underneedwood in Staffacher situated near Burton on Trent,this choice benefits from a central midlands location and excellenttransport links. Labor availability was also important as the planswere for 24 hour operations. After effective designs were receivedfrom four major system integrators, Vanderlande Industries werechosen as the provider for the sophisticated handling and storagesystem at the heart of the new central distribution center.
Steve Melton:
Venderlande won the tender for the mechanical handling system inAugust 2001. They showed a good understanding of our businessrequirements and their solutions gave us the best overall return oninvestment. Both parties were able to fit in quickly with theculture and the approach of the Argos team and a partnershipapproach has been vital seeing us through the challenges ofcommissioning and startup.
Narrator:
Work then started on turning this plan into an effectiveoperation that would deliver the promised benefits and form thefocal point of Argos’s distribution operations for many years tocome. Through Senior Consultant, Clive Weston, the LogisticsBusiness has been the engineer on the project from beginning to endacting as Argos’s warehouse engineering and design specialist. Withconsiderable experience of major automation projects from design tohands on implementation, the Logistics Business has worked closelywith Vanderlande to ensure that Argos has made the most of itsmulti-million pound investment. The new Argos central distributioncenter at Barton under-Needwood was completed in 2003 andimmediately started to provide improved logistics to thecompany.
Steve Melton:
One of the things about being a catalog retailer is effectivelythe catalog is an all season promise of product availability to thecustomer. It means we’ve got to be in stock with all of thoseproducts from the beginning to the end of the season that’s whyunlike other grocery and non-food retailers. That’s why assuranceof supply as well as our pick accuracy is so important to ourbusiness.
Narrator:
Containers of directly imported goods are held in Argos’s owncontainer yard until ready to be fed into the CDI operation.Containers are moved when needed to an available loading dock beinginput alongside direct deliveries. In the end, loose loadedproducts are not bar coded, instead as the product is unloaded, theArgos catalog number on each carton is manually keyed in to thewarehouse control system, part of the integrated solution fromVandelande Industries. On average, there are only two SKU’s pertruck and the operator only has to key in the new code when theitem number changes. Once inducted onto the automated handlingsystem, cartons are volume scanned to check product type againstdata held with a high level management system. As well asconfirming the load delivered, this allows the system to decide ifthe item is amongst the 70 percent that can be palletizedautomatically. Products that are not suitable for automaticpalletization, are directed via a hinged conveyer to the manual areat ground floor level. Products for automatic palletization aresorted by SKU into one of twenty-seven lanes with a VandelandeIndustries posi-sorter system. Goods are automatically palletized,then they can pass through a stretch wrapping machine and a barcode is fixed to each pallet. From there, pallets are transportedto the 90,000 capacity high bay for storage. In the high bay,fifteen fully automated stacker cranes, including two forover-sized items reach to twenty seven meters in height. Theseprovide up to 200 movements per hour. Product is called out inreverse order, passing through a dedicated high-level conveyer loopthat directs pallets for dispatch. Such as full pallet loads neededfor the regional distribution centers to the dispatch area atground floor level. Single SKU pallets to serve the small partspicking operation are directed to a tote filling area whereoperators de-palletize the stock and place it into tote boxes.Filled totes are routed through the warehouse to a mini-load storewith a capacity of 70,000 totes. The mini-load cranes chosen allowfor the number of cranes to be reduced from fourteen to twelve bymanaging four totes in each put away or retrieval movement. Thisarea holds stock ready for rapid supply to the advanced pickingsolution where orders are assembled under the control of a pick bylight system. The picking solution is undoubtedly a highlight ofthe Barton operation. It’s faster, has more built inerror-proofing, uses space, capital and labor more efficiently thanany other currently available alternative. The high through-putrequired by Argos would have required a substantial floor area fortraditional zone picking. The Christmas peak could have also causecongestion in the zones. The traditional alternative for highthrough-put operations, batch picking and automated sortation wouldhave required a massive investment and offered to few economiesduring off-peak operation. The solution chosen is ODS an evolutionof the traditional goods to man picking technique. Developed byVandelande Industries, specifically for operations that require avery high throughput of a relatively low number of SKU’s. When aproduct is to be picked, the warehouse control system directs aproduct tote from the mini load store onto one of the two conveyerloops that connect all of the order collection stations. These arethe picking lines or streets of the ODS, positioned at 90 degreesaround each loop. Each street accommodates four picking stationswith each station satisfying twelve orders simultaneously and canbe switched on or off to match operational needs. When a newproduct tote arrives at an order collection station, a screen showsthe product details and indicates how many are to be placed in eachorder totes. The operator will pick up an appropriate number ofitems from the product tote and place them in the order totesmounted on the angled shelf above. To increase speed and accuracy,a display is illuminated below each order tote requiring thatproduct, indicating how many are required. This is a put to lightoperation rather than a pick to light as the lights control wherethe products are placed. Finally, the consolidation area thecomplete order totes are buffered at high level in lanes thataccumulate each store order. Completed lanes are released to theground floor to be automatically stacked on dollies. Then, strappedand labeled robotically. The completed dollies are taken to amarshalling area for consolidation intro truckloads. Finally, goodsare loaded into the Argos fleet for dispatch throughout thecountry, but, the Barton site has another trick up its sleeve. Thesite also handles the awkward job or managing product returnsquickly and efficiently.
Steve Melton:
Reverse flow is a commonly neglected area of the retail supplychain. There’s lots of non-added value handling involved and itconsumes valuable supply chain capacity. We took the opportunity tocollocate the damaged returns operations at Barton and to automatesome of the processes. That’s given us benefits in terms ofimproved inbound transportation and it’s also enabled us to smoothsome of the heavily seasonal work patterns in the center. Ourcustomers are increasingly responsive to promotions and they aredoing their Christmas shopping later and later. In this business,the Christmas peak is three to four times the level of ourcorresponding off-peak activity and that’s a huge mountain to climbfor our operational teams. The site went live in August of 2003,and then almost straight into a massive peak season with technologyto settle in and a team fresh out of training and that was anenormously stretching challenge for everybody involved, but we camethrough it well. What we are now focused on, is consolidating allthat learning and working through plans to get the most out of ourinvestment going forward. Barton provides a focal point for thegrowing flow of the direct imports into the business and it’shelped us to invest to remove much of the manually intensivehandling that characterizes this area. It’s also provided us a wayof handling the slow moving total of products that’s generated bythe growth of choice within the business. By taking the productswhich are small enough to be handled in totes, we’ve been known toautomate much of that activity and that helps compensate in termsof driving efficiency. We’re already delivering substantiallyimproved productivity as well as pick accuracy in this activity.There’s plenty of hard work ahead, but we’re confident that Bartonrealizes its goal of becoming the flagship site to its distributionnetwork and hope to drive the Argos business further. With Bartonas the hub or our Argos distribution network, feeding out to all ofthe other sites to the RDC’s within the network, the reliabilityand insurance of supply coming from this side is absolutelyfundamental to our product availability in store.
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