After years of neglecting the stockroom, Mold-Masters Limited is moving from hands-on picking to high-tech inventory management. The manufacturer is phasing in change one step at a time and reaping big benefits along the way: two years in, productivity is up more than 300 percent. Deborah Aarts explains.
Like most successful Canadian manufacturers, Mold-Masters Limited has done a lot of things right.
Since the company was founded in the 1960s, it has become a global leader in the manufacture of hot runner technologies. It creates the systems that allow other manufacturers to inject molten plastic into the cavities of a mould. Major players in the automotive, housewares, medical, packaging and telecom industries rely on its wares.
However, like many manufacturers, Mold-Masters let some things fall by the wayside in the process. One of those things was managing the inventory at its global headquarters in Georgetown, Ontario.
Until two years ago, the company paid very little attention to the way it stored and retrieved the thousands of parts needed to build its hot runner systems. The process was manual, slow and rarely accurate, but—as is the case in so many plant stockrooms—it was considered good enough to get by.
That is, until delays and errors started constraining the company’s competitive position.
When this became apparent, Mold-Masters decided to embark on a multi-year campaign to make its inventory management processes more high-tech and less hands-on. With production planner Grant Richardson leading the charge, it adopted a broad, bold plan for modernization.
The hardest part was taking the first step.
Mold-Masters does not keep much finished stock on hand—like many manufacturers, finished items are sent out almost immediately after completion. The company ships out up to 200 complete hot runner systems every week.
Most product is shipped by air to locations around the world—to end customers, as well as to Mold-Masters branches in Brazil, China, Germany, India, Japan, Singapore and the US. Courier companies handle most of the work.
The company’s outbound shipments are strictly scheduled to meet the increasingly high expectations of its customers.
“A few years ago, we used to have six or eight weeks to deliver a system,” Richardson explains. “Now we’re down to a week and a half. That’s what we have to do to stay competitive.”
From the time an order is received at the Georgetown facility, the company generally has no more than two days to get it out the door.
This is much more complicated than simply opening one box and putting its contents into another. Workers must assemble each system out of a multitude of components—most of them very small—stored in the stock area. A single system can require up to 40 or 50 different order picks.
Then there are non-systems shipments. The company must also stock components for spare parts orders, breakdowns and re-stocking at other branches, as well as refurbished items. Often, Mold-Masters has to fulfill these impossible-to-forecast requests the same day it receives the orders.
“We have to incorporate spare parts shipments into the picking system as well, and co-ordinate it all with our timing with the couriers,” Richardson says. “It’s a real juggling act.”
An unsustainable process
The company has not historically had much of a strategy for managing this complicated inventory balance. Before 2007, most parts were simply stacked in the stockroom, a section of 12-foot-high shelving sprawled across more than 2,000sqf of valuable manufacturing floor space.
Inventory was loosely tracked through a paper-based system linked to the company’s SAP ERP. The ERP was not set up to manage locations for individual SKUs—instead, each of the eight to 10 individuals working in the stockroom had to rely on experience to know where parts were.
To fill an order, staff would have to walk back and forth, box in tow, until all the parts were gathered. It was a time-consuming and frustrating process, and it only got worse when demand spiked. During these periods Richardson would have to lure people from other departments—most of whom were unfamiliar with the intricacies of the stockroom—with overtime pay.
“At times I had 16 people working through the stockroom. Sometimes I had people working midnights just to get the orders out,” he says.
Even when the stockroom was staffed with veterans, mistakes were common. Since many Mold-Masters components look alike, the wrong parts were regularly sent down the line, meaning those working in assembly would find themselves with a titanium part, say, where stainless steel was needed.
Staff would often discover that a necessary part was out of stock. If the part—like 70 percent of Mold-Masters stock—was manufactured in-house, this would necessitate a rush order, which interrupted regular workflow and added hours to the process.
“It was just chaos,” Richardson says. “The accuracy was just not good. We had people working there who did not know what they were doing. It was acceptable then, because we had to get the orders out. But it just didn’t work.
“It was fairly simple. We had to move forward.”
Finding a new way
Armed with examples of these bad practices, Richardson had a fairly easy job convincing upper management that change was necessary.
And determining what that change should be proved surprisingly painless. Early on in his vendor and equipment evaluations, Richardson crossed paths with Mississauga, Ontario-based Johnston Equipment, whose staff suggested that automated vertical lift modules (VLMs) might be a good fit. After a few visits to sites where the VLMs were in use, Richardson was intrigued enough to invite Johnston in to see what could be done.
“We came in and learned their process, did a cube analysis and then came back with some proposals,” recalls Brian Rodway, sales manager with Johnston Equipment’s storage solutions group.
An early plan was to store parts in 30-ft high VLMs, which would have required an addition to the building. But since Richardson was not entirely comfortable making such a drastic change to accommodate a technology he had yet to use, Johnston devised a more easily digestible option.
“The shuttles are modular,” Rodway explains. “So to mitigate the risk, they said ‘let’s get the machines in, and let’s make them short machines. If we choose later to add a room and go 30-ft high, we’ll move them and make them taller.’”
This option satisfied Richardson, and the Johnston team created an implementation plan. Working off-shifts over the course of a week in June 2007, they installed two Remstar Shuttle XP units, each just over 14ft tall.
As expected, introducing automated equipment into a totally manual process presented some challenges.
After the Shuttles were installed, Mold-Masters assigned four work
ers—two per machine—to work with Johnston to populate them. VLMs work best when they contain a mix of different SKUs; this helps to distribute the picking burden between machines. But since the installation team had little hard information about the activity and quantity of any given item in stock, they had no structured methodology to determine what would go where. Ultimately, they chose to start by loading the parts they knew from experience to be popular.
“They didn’t have any data, so we couldn’t go through the SKUs to say ‘we have 10 of this item that would fit in that bin,’ for example,” Rodway explains. “It was all kind of on the fly. We said ‘we know these are the faster movers; let’s group them together first.’
“We didn’t want any downtime. Once we got that initial load of fast-movers in, we had the time to load the rest in.”
Even though the installation occurred during a very busy period for Mold-Masters, the addition of the carousels did not hinder productivity. In fact, the manufacturer did not miss a single shipment deadline during the changeover.
It didn’t take long for Richardson and his team to recognize a success—within two months, they’d ordered another two shuttles—but in those early days, the machines were not yet able to operate at full potential. The biggest problem was that the company had no way of directly transmitting activity occurring in the VLMs to the ERP.
To temporarily bridge this gap, Rodway and his team created manual Excel workbooks on each machine, which workers uploaded into SAP each night. This gave some visibility, but the tickets only told workers which shuttle the required item was in, not its location within the shuttle.
“They had a guy at each machine doing hot picks, picking one item at a time. They knew where the inventory was, and they didn’t have to search like they did through the old racking, but it was tedious for labour,” Rodway admits.
“But it was still faster than what we were doing before!” Richardson points out.
After about eight months of this, at Johnston’s suggestion, Mold-Masters implemented some software to streamline communication between the shuttles and the ERP. A carousel operation module from Sologlobe called Solochain now serves as bi-directional interface with SAP.
The shuttles in action
Today, the four VLMs contain between 5,000 and 6,000 parts, sorted into bins defined by length, width and size.
Orders are downloaded from the ERP and printed daily as paper pick tickets. Each ticket is placed in a tote. A worker takes four totes—representing four orders—into the shuttle area. For each order, the worker scans the pick ticket, which calls up information on all the parts needed and presents it on both a small touch-screen monitor and a large overhead screen.
Once the operator selects a part on the touch-screen, the shuttle goes into action, moving to get the appropriate tray to the pick face. Once the tray makes it to the pick face, an LED band below the opening lights up, informing the operator where the item she needs is positioned on the tray.
The operator makes the pick, confirms it on the touch-screen, it in the appropriate tote and moves on to the next pick.
The Solochain software has taken the responsibility of making sure the shuttles are stocked correctly. It contains a database of the specs of every Mold-Masters part. When an item reaches a minimum level, the software can either automatically re-order the part, or let it deplete and assign another part to its bin location—but only if that part is actually available. It will not hold space in the VLMs unless there is something to fill it.
“Typically [in stockrooms] 15 percent of cube is lost on empty bins,” Rodway explains. “When people actually go through the inventory reports, they’ll notice that they’ll never have that SKU again. It’s just a matter of no one telling the stockroom that.
“[The software] is a clean-up mechanism to make sure that doesn’t happen.”
The software also tracks the history of every part movement. This helps Mold-Masters identify and group fast-movers in order to minimize the move time and distance required for each pick.
Faster, smaller, more accurate
The company’s first foray into automation has yielded some serious improvements for the business.
Accuracy is up by at least 50 percent. Since only trained staff members are allowed to use the VLMs, the old problem of people grabbing parts without recording it has been eliminated.
“Unless you have a login ID, you can’t get on the machine,” Rodway says.
Only two individuals work in the shuttle area each shift, which has pushed regular labour costs—not to mention overtime—way down.
Since all four VLMs take up less than 500sqf, Mold-Masters has been able to reclaim nearly 80 percent of the area previously used for stock. This has given it space for new equipment, including a machine to re-sharpen its manufacturing tools in-house—a task it previously had to outsource.
Perhaps the biggest difference is speed in getting orders out. One example: as with many manufacturers, back-orders are common at Mold-Masters. But they’re not necessarily a problem. If certain parts for a system aren’t yet available, staff will assemble what they have as a work-in-process and set it aside until the missing components are in.
Before, a semi-assembled system could sit for days after a backordered part was available. Now, as soon as the part enters the inventory, a picker on duty is alerted. Since nearly 50 percent of orders involve some work-in-process back-and-forth, this has sped things up considerably.
Improvements like this have solidified Richardson’s suspicion that better materials handling processes will be crucial to the success of Mold-Masters going forward.
“My employees used to say ‘we’re just stock keepers’ all the time. But if they don’t do their job, there’s no business. If inventory isn’t correct and they continuously have to back to the stockroom for the correct parts…well, we just don’t have time for that.”
The shuttles’ installation is just the first of several projects Richardson has planned to update and automate the way Mold-Masters manages its inventory.
First on the agenda is the addition of two more shuttles—one for semi-assembled work-in-process systems awaiting spare parts, and one for tooling equipment.
The company is also considering using the Solochain software to automate its kanban system, which is still manual. It is also exploring the software’s ability to better manage the receiving process—today, inbound materials regularly show up in the ERP well before they are inducted into the shuttles.
Richardson’s wish list is long; among many other things, it includes the implementation of internal barcodes, the electronic transfer of freight tickets into the ERP and the addition of a giant electronic ‘scoreboard’ to let everyone on the floor—from inventory to assembly to shipping—the status of each order.
“We want to incorporate everything from shipping to receiving,” he says. “We want evolution on the distribution side. More visual cues, more status updates.”
If his plans seem overly ambitious, it’s worth noting how far Mold-Masters has come in the past two years. All told, the company’s f
irst step towards automating the stockroom has improved productivity by more than 300 percent.
“The inventory setup of the whole operation has changed,” Richardson says. “We’ve gone from mass confusion with people running around the shelves to a stable area with good quantities where everything is correct.
“Everything’s in place, and everything flows.”