Case study: Kubota solves storage problems

by Array

MARKHAM, Ontario: It’s a busy time in the Kubota Canada Ltd parts warehouse.

Right now Kubota’s national distribution and logistics manager, Doug Ward, is overseeing two major projects designed to improve the way the warehouse operates.

Kubota numbers

•5,575sqm (60,000sqf) warehouse
•78,000 SKUs
•$30 million in parts sales in 2011
•20 percent sales increase in 2012
•4 Kardex Remstar Shuttle VLMs
•6 horizontal carousels
•200-225 lines per hour (horizontal)
•80-100 lines per hour (vertical)

But making continuous improvements is nothing new to Ward. It’s pretty much his standard business practice—and it’s a practice that is easily reflected in the company’s bottom line.

“With the growth we’ve experienced, going from roughly $10 million [in parts sales] twelve years ago to $30 million last year in 2011, that’s quite an increase in sales, but we’ve really only thrown an extra three bodies into the employee pool,” says Ward.

According to Ward, the main reason the tractor and equipment manufacturer can keep up with the growing demands on its parts supply chain is the automated storage and retrieval equipment the company is installing.

Six months ago Kubota purchased two vertical lifts—Kardex Remstar Shuttle VLMs from Mississauga, Ontario-based Johnston Equipment. Even though they’ve been in the warehouse a while now, they still aren’t fully stocked.

“We have actually suspended the filling of the VLMs due to increased sales—20 percent over last year and continuing this year. We hope to get back at it soon with the addition of some summer students.”

They are the second pair of vertical lifts Kubota has purchased. Three years ago, the company installed its first two vertical lifts, and those lifts were preceded by the purchase of six pick-to-light horizontal carousels, also produced by Kardex Remstar.

“Back in the old days—and I hate to sound like an old guy—before we had any automation, we were picking 18-20 lines per hour, walking them down the stairs and hand-delivering the parts to the packing station. On the horizontal carousels, we are getting 200-225 lines per hour. On the vertical lifts right now we are probably getting in the 80-100 lines per hour range and once we have the vertical lifts fully loaded, we expect to be in the 125 range. As far as manpower goes, we have one person dedicated to the horizontal carousels and one person dedicated to the vertical lifts.”

The vertical lifts improve picking efficiency, but they also solve a problem Kubota’s Markham Ontario warehouse shares with many others: lack of space. The 5,575sqm (60,000sqf) of parts warehouse space was just getting too small. Kubota keeps parts for its tractors and equipment available for 20-years after their date of manufacture. The parts inventory includes over 78,000 SKUs.

Before moving into its current building, the company had a 3,716sqm (40,000sqf) facility, which had also become too small over time. Ward supervised the move from that building to the current one. So when space once again became an issue, he knew he needed to find a solution that didn’t involve renovating or moving. The vertical lifts, which reach 8.5m (28-feet) in the air and bring parts down to work counters 84-cm (33-inches) high, have eliminated the need for extra storage space. Including the picking area, the four lifts and workstations take up 58sqm (620sqft) of space. They replaced 335sqm (3,600 sqft) of shelving.

The carousels contain Kubota’s faster-moving parts. The slower movers are stored in the vertical lifts. In addition, the company still maintains traditional racking to house large tractor components such as hoods and doors and even slower-moving small products.

Figuring out what parts to put where was a challenge. Before parts could be assigned to first the carousel and then to the lifts, information about them had to be compiled, says Johnston Equipment’s system sales manager for Ontario, Brian Rodway.

“They had very limited data on the sizing of parts, so we took a random sampling of their parts and mapped out the bin sizes we felt were going to work and figured out that we should be able to get 26,800 parts into two [vertical lift] machines, and that’s exactly what they stored.

“Doug and I figured 90 percent of the parts were going to fit into a cell that’s 10cm x 10cm x 10cm (4in x 4in x 4in) and then I calculated the trays like that—how many cells we can get on a tray, and then how many trays can a machine can hold? We gave ourselves a buffer of about 20 percent for fluctuation. Doug’s experience of being there for 12 or 13 years and knowing the parts we were dealing with and knowing the sizing, and then just my experience of doing this all the time we just mapped it out that way. Then they basically pulled the parts files of those 26,800 parts and mapped them to a bin and if there was any problem, they’d make an adjustment when they were loading it. But there were very few adjustments. Almost everything fit in those sizes.”

Just because products were mapped once doesn’t mean the job is over. Kubota regularly re-examines its parts data, says Ward.

“We analyze that information once or twice per year in case there are any changes—in case a part picks up in demand, we want to make sure we bring it down from a high spot to a spot that’s easy to access. And vice versa. If a part, for whatever reason, falls out of demand, let’s get it out of that golden zone and put it at a higher height where it’s not being retrieved so often.

“It’s fairly simple. Just a matter of running some reports, putting them into an Excel spreadsheet, and slicing and dicing them the way you want. Then, of course, the rest is down to maintenance. Having an operator go around the warehouse and make the necessary changes.”

Along with parts inventory maintenance, equipment maintenance is a priority at Kubota. Ward keeps a strict schedule.

“We do maintenance every quarter on the horizontal and vertical lifts. That’s probably the key to avoiding any downtime. We’re extremely busy from 2:00pm to 6:30pm, picking orders, packing them and getting them out the door for next day delivery to our dealers. If these things go down, that stops us from making our shipments to our dealers, and if we’re not making shipments to our dealers, the end user has a piece of equipment he can’t use to make his living. So downtime has to be kept to a minimum and for that reason, we’ve opted for the quarterly service calls and service maintenance.

“We’ve scheduled our maintenance so it is done very early in the morning from 7:00am to 10:00am. We’ll do that two days in a row, so all the machines are taken care of in two days. What it does affect is our put-away ability, but we can always catch up on that. We can’t always catch up on our picking ability.”

Ward says that so far, neither the carousels nor the vertical lifts have suffered any unexpected downtime. While that’s to be expected of the brand new lifts, Kubota bought used carousels.

“The carousels we have right now are 25-years-old. We’ve had them for twelve years. They were 13 years old when we bought them. I think they are probably getting towards the end of their lifecycle, but 25 years, that’s a long time.”

Ward hasn’t decided yet what he will do when the carousels are ready for replacement.

“I’ve given it thought. There are two schools of thought on that. One is to replace it with horizontal carousels as is, because we get a much better productivity rate out of them. Or if we really wanted to save some more space, we could add another couple vertical lifts. I’ll just have to cross that bridge when we get there.”

While Ward still has lots of time to make decisions about carousel replacement, he has made one important decision recently: Kubota has purchased a new warehouse management system.

“We have gone with Tecsys. Our first meetings have just concluded and we expect implementation this summer with a go-live date of September first, so we are looking at an extremely busy summer.”

Until then, the company will continue to rely on its existing software.

“Currently we have a system called Nova. Nova is integrated into the horizontal carousels and vertical lifts. So it is operating those and bringing the parts to the operator. But we find with Nova there are certain [things] it just can’t do, such as define golden zones and directed-put away. So as we’ve outgrown the manual processes, we’ve outgrown the Nova system we have, which is really a stock locating system versus a warehouse management system. So with a warehouse management system, we are now going to be able to enjoy further enhancements by having that directed put-away and the golden zone, and perhaps even zone our warehouse.”

Once the software project is over, it may once again be time to start buying more vertical lifts, says Ward.

“I think we maybe be able to pick up another one later this year or early in 2013 because we do have two different business units here. Our other business unit is what we call whole goods, those are the actual power units themselves, the tractors with all the implements, the attachments and the tires. They’ve got a few small parts over on that side I think we can bring into the integration of the current vertical lifts and perhaps store them in another vertical for even more space savings.”