Inside Logistics

Alcon extends warehouse

Consolidating operations means more room needed for inventory


New and old space merge at Alcon's Canadian headquarters (Photos: MM&D)

November 19, 2013
by Carolyn Gruske

MISSISSAUGA, Ontario—The wall is coming down at Alcon Canada Inc.

The Mississauga, Ontario-based manufacturer and supplier of eye care products—including contact and intraocular lenses and contact lens care products—is getting ready to take the final steps that will join its existing warehouse to its newly built expansion.

“We’re just in the throes—during the next week or week-and-a-half—of taking the existing false wall down and opening up the entire warehouse to the new warehouse space. I’m very excited at this point in time,” said Roy James, head of operations at Alcon.

The wall James is talking about is a false wall built in its existing, 42,000sqf warehouse. The wall was constructed to block off part of the existing warehouse while the new addition was being attached.

“It was challenging in the sense we had to maintain all our existing operations in the facility while we took down the exterior pre-cast walls, and expanded the steel structure, put the roof up and put the new pre-cast panels up. That was a challenge to maintain our current operations in a very constricted space,” said James.

Before construction started, Alcon had 42,000sqf of warehouse space on site. The new addition—which forms an ‘L’ around the existing space on the south side of the building—includes a 58,000sqf warehouse and and extra 7,500sqf of office space.

“We’re going to be going from approximately 3,400 pallet positions in the warehouse up to 6,400 pallet positions, as well as taking up 20,000sqf of that space for the contact lens distribution facility, which will incorporate an A-frame as well as a lot of other shelving, separate from those pallet positions,” said James.

While the basic structure is close to being completed—James says that’s expected to happen over the course of the next few weeks—the full project won’t be finished until April 2014

“The next phase involves some interior work which involves moving some existing inventory and existing racking into some of the new space. Then we’re going to be building a mezzanine partially within the existing space and partially in the new space.

“That mezzanine on the first floor will be the contact lens distribution facility, which is about 21,000sqf of space, and on the second floor will be about 7,500-8,00sqf of finished office space, with the remainder available to be finished out at some future date. When that’s all done, our Alcon sign will go back up on the south side of the building facing the 401 [Highway]. The sign should be up the end of February, maybe before that.”

Alcon intends to use exactly the same type of materials handling equipment and storage products in the new space as it does in its current DC.

“It’s structural steel racking. It’s narrow aisle, wire-guided lift equipment. Each row is only one deep, but they are back-to-back. We’re 33ft to the underside of the steel, so we’re basically five-levels high.

“It’s identical to what’s in the existing space. The wire guidance system and lift equipment is all going to be identical to what we currently have. From a safety perspective for the operators and making sure the equipment can operate anywhere in the facility—in the existing and new warehouse space—it makes perfect sense.”

James said the company also intends to replicate its cold storage set-up.

“We do have a walk-in, drive-in cooler that holds about 60 pallets of between two and eight products. We have a very small freezer that handles one biological product.

“The walk-in, drive-in cooler is in our existing space. We are going to be relocating it to a different location in the new warehouse space in a new cooler.

“It will be inside the pre-cast panels that are a foam sandwiched between two layers of aluminum. They’re about five-inches thick. They’re pre-manufactured. They just erect them inside the existing space. They structurally hold themselves up.”

Alcon needed the new space as a result of both organic company growth, and a change to the corporate structure of the company. In August 2011, Alcon was purchased by the Basel, Switzerland-based Novartis Group.

“With that, some of the products that had been handled by Novartis Pharma became part of the Alcon portfolio because they were eye-related. Those SKUs required us to expand our warehouse. Also, as part of the merger with Novartis, the Ciba Vision contact lens distribution centre, which is in a separate building in Mississauga, Ontario, is being brought over and consolidated into our facility. Those two activities, plus just general business growth of our legacy Alcon brands has required the expansion.”

Because contact lenses come in so many prescription strengths, even a small product line can produce thousands of SKUs, which puts demands on the the DC.

“The biggest challenge with contact lenses is simply the sheer number of SKUs. There are about 18,000 SKUs. We are adding two more styles next year. So our total number of SKUS will go back up to the mid 30,000 range. It’s just physically a huge number of individual items sitting on shelves or in an A-frame. It’s a large volume of orders on a daily basis. Anywhere between an average of about 2,000 orders per day but it can go up to 2,500-2,600 per day at times. It is fairly labour intensive and high volume,” said James.

When the Mississauga contact lens DC gets moved into the new facility, so will the staff that work the off-site location. James said that at present, Alcon employs about 30 people in its main DC, and it expects about 20 employees to transfer to the new building.

As well, the company will be employing support staff to help it transition from a JD Edwards ERP and WMS system to an SAP solution in January.

While James is excited about the current state of the project, he says it hasn’t always gone smoothly. Originally construction was supposed to start in fall 2012, but it didn’t actually begin until June 2013.

“This is actually my third warehouse build. That’s why I found this one interesting because it has been more challenging than the previous two. I just think probably the biggest thing is to expect the unexpected and add a lot of contingency plans in place, because what you think is going to happen doesn’t happen in the time you want it to happen.

“At the very beginning, the general contractor’s lack of success in receiving a building permit in a timely fashion, that was a cause of probably three-month delay, right at the front end. And there wasn’t anything we could do. It was under their control.

“The lesson learned is don’t short-change in your project schedule how long it’s going to take to get that building permit because if you do, you’re starting off from a bad place.”

Another reason the project was initially delayed was Alcon had to get approval from its landlord, since it only leases the facility. The landlord agreed to the changes and paid for the cost of the construction.

“From a cost perspective—from the lease negotiation—we actually got our lease rate down to a lower rate than it was previously. So we have more square feet we are paying for but the cost per square foot has gone down. The landlord got more years and we got a lower lease rate. So we both came out winners.”