EC
Sound House Inc. (Construction of a Warehousing/Distribution Center)
Mr. Atsushi Watanabe (Director)
Challenges
- Warehousing operations were dispersed and inefficient.
- Order picking operations relied heavily on experience and other human factors in order to perform well.
- Work flow issues necessitated some work to be performed outdoors.
Results
- Integrated logistics functions to improve overall efficiency.
- Realized a 30% improvement in operational efficiency by systemizing picking activities.
- Improved efficiency while maintaining a quiet, comfortable environment.
BackgroundGrowth was constrained by the limitations of conventional systems.
Background
Growth was constrained by the limitations of conventional systems.
Orders have steadily increased from a daily maximum of 100 orders per day 10 years ago, 700 orders 5 or 6 years ago, and 2,000 orders per day two years ago. The company added three new warehouse locations to meet the demand but because operations were dispersed and still using conventional methods, they could not meet the higher demand. With over 40,000 SKUs and sometimes as many as 2,500 shipments per day, people still had to manually create invoices and packing lists, and assemble the order accordingly. A similar system existed for picking where shelves were numbered, and an associate had to pick the desired item from a large number of sometimes similar products on nearby shelves, increasing the frequency of mistakes in picking. Accuracy was often directly related to the experience and skill of the person doing the picking. Naturally, this operation required extensive training and therefore new hires could not be used in picking operations. In fact, at peak times the entire company–administrative and sales staff included–worked until 10pm preparing orders for shipment. The goal was to establish an optimized distribution center that integrated all warehouse functions in order to reach the goal of fulfilling 2,000 shipments per day by 7pm only using associates dedicated to that task.
Reasons We Chose Toyo Kanetsu Solutions:Toyo Kanetsu understood the nature of the current situation well and was able to quantify the operation after introduction of improvements.
Reasons We Chose Toyo Kanetsu Solutions:
Toyo Kanetsu understood the nature of the current situation well and was able to quantify the operation after introduction of improvements.
Of the three companies that submitted proposals, we decided on Toyo Kanetsu Solutions because they truly understood our challenges, and were able to make specific comparisons of our operation based on simulations. Based on the simulation, we should have been able to fulfill 2,000 orders in 6 hours, and after the improvements, indeed, we were able to achieve that goal. Moreover, Toyo Kanetsu Solutions also determined that we should be able to achieve a throughput of 3,000 orders in 8 hours if only packing and shipping operations are performed. This type of knowledge helped us better plan for our busy season. Two months after startup of the new operation, demand went up to 3,000 per day after Golden Week, and our newly designed operation was able to smoothly and efficiently support the new level of activity.
Equipment introduced in this solution included the Toyo Kanetsu Solutions’ Ecoloveyor. By using driven conveyors only as necessary–before and after material induction–power consumption was kept to a minimum. We also introduced our own LED lights into the warehouse, and that, combined with the savings from less power usage, contributed to an overall reduction in running costs by 1/3.
Benefits:Highly improved operations contributed to a significant rise in employee morale and motivation.
Benefits:
Highly improved operations contributed to a significant rise in employee morale and motivation.
By using the hand-held units throughout the picking, packing and shipping processes, we were able to go paperless and we eliminated the manual packing slip process altogether, getting rid of four jobs. In the other logistics functions, we have been able to allocate staff more intelligently, and although we hired 20 new people, the staffing for picking, packing and goods-in operations remains stable and balanced. In the end, the work has become faster, easier and more accurate. Furthermore, shipping operations that formerly took until 10pm on average are now completed by 6pm. Efficiency has improved by about 30%. As far as the company is concerned, the warehouse staff can now complete all work within one work day and the people from other departments can concentrate their efforts on their primary function. We have seen a dramatic improvement in the work environment with the construction of the new warehouse.
Furthermore, we introduced a new inventory management system that has helped us reduce our stock shortage instances–another primary goal of the installation. The warehouse and distribution system not only improved our internal operations, it has helped us better serve our customers.
What’s Next? As an operator in the logistics industry, the new installation has given us a vision for the future.
What’s Next?
As an operator in the logistics industry, the new installation has given us a vision for the future.
We are currently in phase one of a two phase large-scale logistic center design. The first phase is the introduction and launch. The first three floors of this six-story building constitute the warehouse operations. All material handling equipment is installed on the first floor which is where the main warehouse is. In phase two of the improvements, we will expand by adding material handling equipment up to the 4th floor of the building, which will bring our throughput to 4,000 orders per day with much better inventory management. We have adopted a same-day shipping model, but since we cannot store enough inventory, certain items end up on back-order. Ultimately, the process ends up being labor intensive. Therefore, in phase two of the project, we will consider how to increase inventory holding of fast-moving material while also streamlining and automating goods-in processes. This warehouse with material handling equipment is a first for us since we established this business over 10 years ago. Toyo Kanetsu Solutions played a key role in helping us get our new operation up and running. It would not have been possible otherwise. Toyo Kanetsu Solutions could respond immediately if we had trouble with equipment. Whether you talked to a programmer or equipment installer, they were able to provide the right response quickly. Having completed the first phase, I can see the results that Toyo Kanetsu has helped us achieve.
* Source: Based on an interview conducted June 2009. Data, organizational departments and personal names appear as they were at time of interview.
Products and Services Introduced
