As Canada’s largest sporting goods retailer, the Forzani Group Ltd relies on effective deliveries to stores. The company has spent more than four years building and fine-tuning a sorting and allocation system to get the gear to customers faster. Deborah Aarts reports on how it’s all paying off.
Replenishment is everything in retail. Success at the cash registers is directly related to a company’s ability to stock its shelves quickly and accurately.
Few companies in Canada know this as well as the Forzani Group Ltd (FGL). As the owner of more than 340 corporate stores (including the Sport Chek, Sport Mart, Athletes World and Coast Mountain Sports banners) and the franchisor of more than 220 others (including Sports Experts, Fitness Source and Nevada Bob’s Golf), the company is responsible for filling more than 5.5 million square feet of retail selling space across Canada.
Most of that product is sorted at the company’s 475,000sqf DC in Mississauga, Ontario. Between 75,000 and 100,000 units, ranging from hockey sticks to bike locks to running shoes, pass through the facility every day.
Determining what goes where used to be as cumbersome as a loose pair of skates and as sluggish as a flat-tired bicycle. But an automated sorting system—designed and installed in two phases with the help of a partner—has changed all that. Today, the company can process more than 700 percent of the volume it could less than a decade ago.
All it took was some vision, plenty of planning and lots and lots of conveyors.
Shooting below par
Five years ago, FGL supplied most of its stores through a 200,000sqf building in Mississauga.
The building was cramped, and becoming more so as business grew. While the company did manage to get product out, it wasn’t doing so in an especially efficient or cost-effective way. There was no automation, and the technology in place was far from ideal. Most processes—including sorting and allotment—were highly manual and spread out across the space.
“To be successful anywhere, you have to give people the tools to do things effectively,” says Keith Lambert, FGL’s senior vice-president of supply chain/merchandise management. “In our old warehouse, we weren’t giving them the tools to do their job properly.”
He knew he could do better—and that the solution wasn’t going to occur in that facility. The company started the search for a new, larger DC that would allow it to process much more, much better.
FGL found its new home in an empty nearby warehouse with more than double the floorspace of the old facility. The company took over the new building in 2004. But the place needed a bit of work.
“It was a box when we got it,” says Lambert. “An empty box that smelled badly of tires.”
Since the previous tenant had used the product to store tires, a four-hour-rated firewall runs through the middle of the building. Right away, FGL decided to use this divide to separate receiving from shipping.
Other than that, the space was theirs to configure as they pleased.
The opportunity to design a DC from the ground up does not come often, so Lambert and his team spent a considerable amount of time making sure they were doing what was right for the business.
They started by listing some goals. They wanted to maximize the larger cube. They also wanted to add plenty of automation. And at the top of the list, they wanted to create a better way of sorting inbound product and allocating it for shipment to stores.
Coming up with these goals was easier than figuring out how to accomplish them, so Lambert decided to call in some help. FGL had worked with FKI Logistex on small-scale conveyor projects in the past. FKI was fresh in Lambert’s mind, as it had recently purchased Real Time Solutions (RTS), an automated picking vendor whose products he admired. So he set up a meeting. The two companies clicked—and then set to work.
“We spent a couple of months locked up in a boardroom and basically hand-drafted blueprints of what the processes should look like and how they should work,” Lambert recalls.
“That’s where I think the cream of the crop comes out,” adds Steve McElweenie, vice-president and general manager, FKI Logistex Canada. “They know what works from their view, we know what works from a technology view. If you put those two together with a common goal, that’s where you get the best ideas.”
Together, FGL and FKI came up with an intricate layout to fill the space with put-to-light equipment, racking, sensors and plenty of conveyors. FKI provided much of the new equipment and helped FGL procure most of the rest. Installation occurred relatively quickly, and FGL moved into its new distribution home in June 2004.
The heart of the building is a three-tiered mezzanine in the receiving area. Fitting 63,000sqf of workable space on a 21,000sqf footprint, the tower serves as the DC’s chief receiving site, sorting hub, order fulfillment zone and secondary replenishment area.
“In the old building we had all the puts being done on the floor in a spread-out area,” Lambert explains. “We really took a 100,000sqf operation and turned it into a 21,000sqf footprint, which now holds detailed count receipt, the putting area and residual inventory.”
On the ground level of the mezzanine, inbound product—which has been received through nearby dock doors—is broken down at the unit level, detail-counted and placed into a labelled box. Operators scan the label, giving the WMS—which is tied into FGL’s central merchandising system—an accurate update on what the product is, how much there is and where it is going. The box is placed on a conveyor and brought up to level two, where the allocation, or ‘put’, operations take place.
The first put line—appropriately called Put Line One—was constructed with the mezzanine. It consists of a central roller conveyor system framed on either side by flow racking. Each rack location contains a carton destined for an individual store.
As an inbound box comes up from the ground level, it enters Put Line One and passes through a scanner, which reads its barcode to determine where it needs to go. The scan is linked to a bi-directional diverter system, which automatically pushes the box aside at the appropriate rack locations.
“The system receives a signal from the scanner, and know exactly where to divert the carton to get to the correct space,” explains Arnold Cunje, national accounts manager with FKI Logistex Canada.
An operator then scans the barcode of the diverted carton. The scan activates a put-to-light system on the racking. This gives the operator a visual cue as to how much product from the box is required for each store-specific outbound carton in that particular zone.
If the system calls for two pairs of shoes for a particular store, the operator pulls the shoes from the box, places them in that store’s carton on the racking and extinguishes the light. That put is now complete and the inbound box is sent down Put Line One to fill orders for other stores.
If the operator is busy, or the space is already occupied, the inbound box travels around the mezzanine on a dedicated re-circulation conveyor and is inducted into the put line again.
“It’s continuous flow,” Lambert explains. “You want to keep the operators busy, but you don’t want to overload the put station if it’s full.”< /p>
When the outbound carton is full, the operator closes the carton and pushes it across to the other side of the racking, where another operator places it on a parallel belt conveyor, which merges with the main takeaway line at the end of the mezzanine.
“Any carton that’s taped and shut will go on its merry way to shipping,” Lambert explains, pointing to the takeaway conveyor, which bisects the entire receiving area and travels through the firewall to the shipping area.
Above the put floor, just below the 32-ft clear ceilings, is the third level of the mezzanine. This is known as the overflow level.
When full-case product comes into the warehouse, about 60 to 70 percent is immediately broken down on level one of the mezzanine and absorbed into the put system. The remaining 30 to 40 percent is back stock, and is sent to tall racking at the far end of the receiving side of the building.
Lambert and his team quickly identified inefficiencies with this setup. If the company had an order from back stock, operators would have to travel out to the racks, break into a full case, pick exactly how much was needed and bring it back to the mezzanine to be processed through the put-to-light system. Instead, the team came up with a way to use the third floor as a replenishment buffer zone.
“With this mezzanine, we started to use the back stock area as a full-case picking area only,” Lambert explains. “Instead of only picking six units out of a box in the tall racking, we get the whole case and put a label on it. We process it here; it comes here and goes through the put-to-light. The six units that are needed are picked. The balance of the product is left in the box and sent up to the third level, where we put it away.
“It saves the time of going out to the back stock racks to pick by unit from the case. The units that are left over are now very close to the put-to-light, so we can do very quick picks from the third floor.”
This creates two inventories of many products at any given time: one for full cases and one for partial cases. This may seem counterintuitive, but Lambert says the gains in efficiency are worth any redundancies.
The mezzanine system is ideal for cartons of smaller products, but not so much for items that are too big for boxes. Golf clubs, hockey sticks and exercise bikes don’t quite fit the confines of the conveyor system.
Irregularly sized items in the DC have a separate—less automated—put-to-light process. It uses the same logic as the mezzanine put system, but is fed by forklifts instead of conveyors and uses handheld RF readers instead of in-line scanners to collect data.
On the road
Once cartons (and non-conveyable items) are sorted and allocated, they travel through the firewall to the shipping area.
On the conveyor ride to shipping, a scanner picks up the carton information and sends it to the WMS. The WMS sends that data to the host merchandising system, which then transmits it to the point of sale. This serves as an electronic advance shipment notice to let individual stores know exactly what they are getting and when it was packed.
The master conveyor feeds several offshoot lines in the shipping area, each of which leads to a different dock door. These lanes are divided according to geographical destination.
Cartons destined for stores in the greater Toronto area are built into pallets, wrapped and sent out for delivery every day.
Long-haul cargo has a different fate. All cartons headed to a single city—Calgary, for instance—are floor-loaded into one container, regardless of the final store.
Workers on the shipping docks are trained to configure the cartons and non-conveyables—usually about 2,000 items per container—to fit perfectly, with very little empty space. Lambert estimates that this approach is 20 percent more cube-efficient than palletization.
Once the container is full, it is trucked to CN’s intermodal yard in Brampton, where it is sent across the country by rail. At destination, a carrier will pick up the container, do a secondary sort at its terminal, and ship the cartons out to the appropriate stores in the city.
This method has helped to dramatically reduce the cost of shipping to stores: when Lambert joined FGL in 1999, the company sent out all
shipments via courier.
“You can’t imagine how expensive that was,” he says. “We’ve come a long way.”
Filling out the roster
For four years, FGL enjoyed the productivity gains afforded by its new home. The automated upgrades proved immensely popular with workers, and Put Line One steadily brought its efficiency—measured in the number of cartons that are processed without error—up to 99.9 percent.
Earlier this year, with all the kinks worked out of the first installation, FGL determined that business was bullish enough to warrant an upgrade. Since the first round had gone well, it chose to again work with FKI.
Lambert and his team decided to start by adding a second put line to the second floor of the mezzanine.
Put Line Two operates similarly to Put Line One, but features a few modern upgrades. It has quad-directional diverters, which allow containers to go to four different put zones after their initial scan on the put line—twice the number that the bi-directional diverters on Put Line One can handle.
“This allows us to double the number of operators we have in here, effectively doubling our putting capacity,” Lambert says. “Our operators can double the units handled on a daily basis. They get more in their zone, they have less distance to walk, and they can do more puts than they could before. It’s working smarter, not harder.”
Put Line Two also includes FKI’s new EasyPut software and a simpler put-to-light interface.
The new put line has allowed the company to get much more throughput from the mezzanine. It has now taken on most of the high-volume Sport Chek orders, with Put Line One handling product for other, less-active banners.
Away from the mezzanine, FGL also decided to install new technology to create capability for cross-docking, a burgeoning activity at the DC. Over the past few years, the company has found that, for certain store-ready products, it is valuable to skip the sort and put modules altogether.
“We’ve started to get our vendors to pre-pack and pre-ticket our product for us,” Lambert said. “They put on price tickets before it enters our facility. When it comes in, it’s basically cross-docked. We stick a store-specific label on it and it goes out to one of our stores.”
To accommodate this business, FGL had FKI install a new slapper line—a short, steep conveyor that moves cartons directly from the receiving area to the main conveyor line, where they head straight through the firewall to shipping.
This approach reduces the handling requirements and the time spent in the DC for each cross-docked item. Other than the application of a label upon receipt, there are no touches to the case in the facility until the carton reaches the shipping dock. This keeps the mezzanine from becoming crowded with cases that don’t need to be sorted at the item level.
While Lambert knows that he’ll never be able to cross-dock all products—many stores don’t have the sales volumes to receive full-case quantities all the time—he hopes to soon see more of the activity in his warehouse. Several of FGL’s big-ticket vendors are already labelling product at source. Many of its smaller suppliers will soon do the same—the company is in the process of rolling out an EDI system that will make it
easier to match purchase order and
allocation information, allowing vendors of all sizes to pre-pack shipments for store delivery, if required.
Going for gold
As effective as these changes have been for FGL, there is still room to improve.
A few of the company’s more recently acquired retailers are not yet compatible with the central merchandising system and the DC’s WMS; similarly, the franchise branches use a system of their own. Product for these stores is currently stored and processed within the facility in labour-intensive self-contained mini-warehouses. Lambert plans to remedy this situation by linking these operations into the main merchandising platform, which should occur by the middle of next year for most.
Of course, these changes have—and will—cost money. One of the pillars of the collaborative process with FKI was making sure the projects were within FGL’s financial means.
“We worked with Keith to come up with a budget that would work with them over time,” explains Cunje. “Every company needs to be at a certain level so that we can spend that kind of capital in order to improve the facility. But there’s a payback. The payback is in the turnaround time to get that merchandise into stores. You don’t have it sitting around in a warehouse. Everybody wins.”
From Lambert’s perspective, there is no questioning the value of the capital investments to his operation.
“A smart CEO today will see that once you have a seamless supply chain, you will see the ROI come back on the capital investment in a big way,” he reasons. “We’ve seen it in a big way. We are spending roughly the same amount on labour as we were nine years ago when I started at Forzani, and the same amount of dollars on the warehouse. But the number of units we’re putting through the warehouse today is in the range of 30 million pieces per year, compared with approximately four million in 1999.
“This whole process has achieved exactly what we wanted it to achieve. It allowed us to take something that didn’t exist and turn it into a thing