Departure from Automation for Corporate Express

by Case Studies on 2010-09-04

As one of the largest suppliers of office products in the world,  Corporate Express has undoubtedly excelled themselves with the design, layout and development of their new Regional Distribution Centre (RDC) at Erskine Park, New South Wales, Australia. The largest warehouse of its type within the Corporate Express portfolio, Erskine Park is now the flagship distribution centre and has already attracted significant interest within the local FMCG industry.  

With 43,000 m2 of warehouse and office accommodation, 50,000 SKU’s, 200 employees, 1 million kilograms of product, and 150 kilometres of steel for the storage and racking, this RDC is a sight to behold.

Corporate Express’ Erskine Park RDC has been physically designed to flow from receivables through to storage and despatch and is laid out with seven fully-operational business units working seamlessly under one roof. 47 doors in the despatch area and 25 receiving doors are a true indication of the scale of this facility. The site has also been designed to comply with a 4 star green rating under the Green Council of Australia guidelines and has been identified as a pilot site in benchmarking the new ratings criteria. 

Designing and constructing such a unique facility with new systems, processes and people, consolidating five disparate facilities that operated in and around the Alexandria/Port Botany area into a single facility - without disrupting customer service levels, was an extraordinarily complex project.  A project team was assembled under the governance of the Corporate Express Project Management Office and included the assistance of external agencies.

Peter J Ellis and Associates assisted with the internal layout designs and development of detailed plans that were constantly reviewed and updated until a final design was agreed by the team. Peter J Ellis and Associates then assisted with schedule and quality management of the supply and installation of more than 120 local and overseas procurement items that generate the materials handling and storage solution for this impressive facility.

Mr Paul Carpenter, one of the project managers on the team and Logistics Consultant for Peter J Ellis & Associates explained that whilst the entire project was complex, the major operational difference to most projects was the Corporate Express decision to move away from automation for this new RDC.

“Ultimately the Erskine Park RDC is a 43,000 m2 facility with very limited mechanised automation, which is very uncommon and therefore quite unique when designing a new distribution centre of this scale in Australia,” Mr Carpenter said.

According to Mr Carpenter, Corporate Express decided not to implement automation similar to their previous facilities and instead modelled their new RDC around an advanced warehouse management system (WMS) coupled with a more manual batch-picking solution that had been proven within its majority shareholder Staples’ North American operations.

Erskine Park RDC manages their manual pick and pack operations linked directly to a Best-in-Class WMS system with highly-engineered alloy mobile pick carts, RF voice recognition technology, handheld software and a uniquely designed racking and storage solution.
“Erskine Park RDC is the only one of its kind in Australia and is a testament to simplifying manual picking and packing. Whilst industry perception is that you require advanced automation within a large complex such as this, Corporate Express has proven that it is not necessarily the way to go.” Mr Carpenter said.

Garry Chalmers, Executive General Manager, Supply Chain and Logistics for Corporate Express added that the three key systems elements that ensure the picking area is productive, highly accurate and cost-effective are the Manhattan Associates WMS system, the mobile pick carts and the modular materials handling solutions designed by Schaefer Systems International.
Warehouse Management Solution

“As the largest volume split-pack business in Australia, it is extremely important for Corporate Express to use a Best-in-Class Warehouse Management System for our facilities. The beauty of our new model is that although it may appear counter-intuitive, it allows us to ‘dumb-down’ the world of a highly-rigid infrastructure involving automation and move towards an infinitely flexible and therefore easily scalable process. The desired design required us to develop a sophisticated batch picking process using mobile pick carts coupled with RF voice technology,” Mr Chalmers said.

Corporate Express worked closely with the Manhattan Associates design team and implemented the latest version of WM for Open Systems with the required modifications in place to support the new model. Significant testing was undertaken on site to ensure any bugs in design and process were ironed out prior to full commissioning of the new software.  
With the help of the unique WMS solution, the Erskine Park RDC successfully integrates technology with manual picking and offers Corporate Express the flexibility, productivity, accuracy and efficiency for all of their order selection and picking operations.
“The cost to implement the mobile cart solution was approximately 20% of the cost of automated solutions implemented in previous facilities and delivers a far superior business benefit,” he said.

Mobile Carts and Batch Picking Solution
Moving away from automation brought the added challenge of designing a lightweight, flexible and easily manoeuvrable pick cart for the picking loop area. Custom designed in Australia by Corporate Express, and manufactured exclusively by Samcon Engineering, the new manual pick carts have been engineered with aluminium and a unique wheel design that ensures carts can be manoeuvred with considerable ease, irrespective of load weight. With a 36 shipper carton capacity the pick carts allow the pickers to have total ownership of their individual productivity and allows them move around the facility with ease.    
Corporate Express has manufactured 200 mobile pick carts for the new RDC and sees them as an integral component of their new manual split-case picking model.

The cart picking system utilises interactive pick-to-voice technology with all transactional flow managed by the WMS; meaning that the pickers can move their cart around the dedicated split-case pick loop with both hands free to pick and pack. Batches of the same item are picked for different cartons on the cart and wrist scanners are also used in conjunction with the pick-to-voice units. Pre-labelled carton barcodes must be scanned prior to locating the items which ensures a high degree of picking accuracy. The pick loop has also been laid out and items profiled for optimal productivity using Manhattan Associates’ product slotting tool.

The cart is ‘built’ with 36 cartons at the time of order release and placed in the staging area awaiting activation by the picker. Once any carton on the cart is scanned by the picker, the WMS directs the pickers based upon the volume metrics of each item within the database. These metrics include all size dimensions, weight and nesting capability of each product, along with the cubic capacity of each sized carton on the cart. This ensures that the correct size carton has been placed on the cart at the time of cart building. 

Once the cart has been completed the picker delivers the cart to the central despatch staging area where it checked for any quality assurance details, prior to sealing all cartons and finally transferred to the relevant despatch dock door. In this way the cart is also used as the storage and staging vehicle prior to the delivery loading process. This clever component of the design minimises double-handling while effectively negating any requirement for automated sortation systems, even though Corporate Express delivers more than 15,000 parcels per day to customers from this facility.   

“The new manual batch-picking model is easily flexed up or down, depending on the volume demands placed on the facility each day. This is a critical feature in terms of optimal efficiency as we work on ‘live’ orders placed by customers on the same day,” Mr Chalmers said.

“It is easy to control – you simply add or subtract carts and people into the pick loop as the volume ebbs and flows throughout the day,” he said.

There was some expected apprehension amongst existing employees when they heard that the Erskine Park facility was moving away from automation and conveyor systems. A comprehensive ‘change management’ plan was developed and included on site training at Erskine Park in a simulated environment, as well as assisting with testing of the new systems. A ‘Cart Champions Group’ was also established from the existing picking team to assess and provide feedback across many areas including cart design, picker fatigue and travel path length during the design phase. 

“Our pickers had been used to the conveyor line system and orders being brought to them. We received some invaluable feedback from the Cart Champions Group and implemented many of their suggestions which were a critical factor in the success of the change management. Within one week of working live with the new manual picking solution the picking team realised that it was far more advanced and productive than the previous methods we had used and quickly embraced and took ownership of the new system,” he said.

Employees now believe that Corporate Express has moved forward in their operational capacity and productivity levels thanks to the manual picking solution.

Materials Handling and Storage Solutions
The development of Erskine Park not only brought together five disparate distribution centres, but it also processes orders for seven different business units under one roof. With each business unit requiring varying materials handling and storage solutions the design and layout of the RDC not only had to match their individual specifications but also needed the flexibility and modularity to accommodate changes, growth and adaptations within any, or all of the units, at any given time in the future.
According to Corporate Express, Schaefer Systems International offered the most highly-configurable and flexible racking and storage systems that matched the requirements of each business unit.

“Schaefer Systems International offers a great deal of flexibility and modularity within their storage and racking solutions and were a crucial partner in the successful design of our flagship distribution centre,” Mr Chalmers said.

“Schaefer are more than 3rd party suppliers; their staff were a part of our project team from inception, and their storage and racking solution was one of the more critical components of the RDC development,” he said.

Working around builders and inclement weather conditions during the building of the facility, Schaefer designed and erected over 150 kilometres of storage and racking within Erskine Park.
Garry added that the ability to reconfigure any element of the Schaefer storage and racking within the RDC was paramount to the design of the facility.

“Schaefer systems are modular ensuring that the aisles can be easily re-configured at any given time in the future to suit the business units,”

The RDC incorporates a mixture of Schaefer storage and racking including: KDR carton live storage, Interlock I600 selective pallet racking, carton flow racking, Mezzanine areas with floors, pallet live storage, VRS shelving, Interlock I600 drive in racking, Interlock I600 long span shelving with mesh decks, raised storage area and post upright protectors and rack post protectors. Schaefer also custom-painted all of the racking and storage to adhere to Corporate Express branding.

The team at Schaefer custom designed a significant amount of their storage and racking to suit Corporate Express requirements including sourcing Rhino racking from overseas to work within the carton live storage area.

“That is the beauty of the Schaefer systems; they are designed with so much flexibility that they can easily incorporate third party specific components within their racking,”

Garry added that Corporate Express moved away from static shelving design to mini shelving for the picking area. In the simplest of terms the pick loop is designed in a U-shape so that the pickers travel from start to finish with ease.

Carton Live Storage with Rhino Rollers
Once again modelled from an overseas site, Corporate Express required carton live storage for their picking area to accommodate the split case packaging operations of the business. The carton live storage area Schaefer built is extremely deep – four metres long with two different lane widths, 5 lanes and 7 lanes across each bay and the Rhino rack rollers have been imported from the United States. The Schaefer system ensures that replenishment levels are minimised within this business unit.
Additional business units that required specific storage and racking solutions included the aerosol area, the carton erectors, the liquor business unit area and the drive-in area for high-volume products.  

Aerosol storage area
The aerosol storage area required specific fire retardation systems to meet compliance requirements.  Schaefer were able to incorporate these requirements into the design of a combined aerosol storage cage and mezzanine.

Carton Erectors and Packaging Materials
Carton erecting machines make up the only true mechanised automation on the site and add yet another unique aspect to this facility. Three carton erectors (one for each carton size) were imported from Nashville, Tennessee and are ‘Little David’ machines manufactured by Loveshaw in the United States. Garry had been very impressed with the simple design and reliability of these machines during a visit to North America, “These machines were not available in Australia, so we encouraged Loveshaw to establish a local distributor so that we could ensure local support once we had imported and commissioned the machines. A Loveshaw representative flew out and set it all up and we now have the only machines of this type in the country,” Mr Chalmers added.

Corporate Express identified early on that their carton erectors were going to take up costly floor space within the RDC and sought a solution that could reduce the carton erector footprint within the new facility. Schaefer custom built a 200 m2 mezzanine floored area with load-bearings above the fully-encaged aerosol unit to accommodate the carton erectors and consequent packaging materials. The mezzanine area needed to meet strict height regulations within the RDC.

The mezzanine area now serves three purposes as it separates the carton erectors and packaging materials from other business units in the RDC, it saves a substantial amount of floor space that is used for aerosol storage and it providing the necessary fire retardation infrastructure required for this area.

Liquor Business Unit
Schaefer was contracted to build security fencing around the alcohol area to create a couple of different storage zones for the alcohol. This now includes a separation of high-value wines and customer-owned inventory, storage for third parties. The high-value area is securely locked off from the standard alcohol operations of the Corporate Express business. The Schaefer design team were able to encapsulate all of the alcohol operations within one area and still maintain varying levels of compliance and regulations that govern the storage of alcohol within the RDC.

In addition Corporate Express needed a liquor hood fabricated to adhere to all of the regulations and guidelines for storing spirit alcohol (>20% alcohol content). This storage area required all of the sprinklers to be fully-contained under a custom sprinkler hood and yet the Schaefer racking still needed to maintain the flexibility and modularity of the rest of the materials handling solutions within the RDC to allow for adaptation at any future stage of the business.

Drive-in Racks
Schaefer also provided drive-in racking areas for high-volume items and furniture storage. The drive-in is required to maximise storage density to ensure that the products could stored to the greatest storage density whilst minimising damage. No longer are the high-volume goods stacked on top of each other.

KDR Carton Live Storage System
The Schaefer KDR carton live storage system is designed as a flexible, modular slot-in system with an ergonomic flow bed layout, infinitely adjustable in height to fulfil any specification. With smooth-running roller tracks the RDC can optimise the system for smooth picking of materials from the flow bed.
“What you see at the Erskine Park RDC is a significant number of different modes of storage and order picking solutions that were custom-designed to suit the Corporate Express movement profile for both fast and slow movers. The facility encapsulates the ‘best-of’ Schaefer solutions and is a fine example of how one facility can incorporate a number of materials handling and storage solutions under one roof,” Mr Chalmers said.

“The entire team is extremely proud of the Erskine Park Regional Distribution Centre and believe that it has pioneered the way warehouses can be designed. Building a complex of this magnitude and not using conveyors was simply unheard of until now and Corporate Express has proven that operating with Best-In-Class systems technology, yet limited automation, can in fact provide higher returns-on-investment.” he said.

With an estimated $70 million return-on-investment over the 12 year lease the Erskine Park RDC is undoubtedly a flagship complex.

SIDE BAR FACTS & FIGURES
•    43,000 m2 warehouse
•    150 kilometres of steel for the storage and racking
•    65 off 40 feet of TEU’s of product
•    7000 orders per day
•    Consolidation of five CBD facilities
•    No automation, conveyors or sortation systems
•    50,000 SKU’s
•    200 mobile pick carts
•    7 different business units operating under one roof
•    Carton Live Storage 4 metres deep
•    200 employees
•    Largest split case picking facility in Australia
•    47 doors in the despatch area
•    1 million kilograms of product
•    Best-in-Class WMS system
•    25 receiving doors
•    Flagship RDC for Corporate Express globally
•    One of the largest providers of office products in the world
•    Corporate Express major shareholdings in Australia were acquired by Staples in 2008

COMPANY BACKGROUND
In July 2008, Staples acquired Corporate Express, one of the world’s leading suppliers of office products to businesses and institutions. Staples invented the office superstore concept in 1986 and is headquartered outside Boston, US.
Corporate Express cater for every aspect of your business with office products, IT solutions, print services, promotional marketing, business furnit