Turning the page

by Array

Once upon a time there was an educational book supplier that had reached the limit in its distribution capacity. The evil foes of obsolescence and inflexibility reared their ugly heads. Along came a dashing new picking system and, thanks to clever planning and smart equipment, order was restored to the operation. Deborah Aarts tells the tale.

Today, across Canada, hundreds of thousands of children are reading books from Scholastic Canada Ltd. The educational publisher has become synonymous with youth literacy, in large part due to its popular direct-to-school book club order program. Every year, it ships millions of books to classrooms from Victoria to St John’s.

Most of those books move through a facility in Markham, Ontario. Not long ago, the 170,000sqf distribution centre was struggling to keep up with a steady increase in both the volume and variety of SKUs. A series of temporary solutions—including equipment add-ons and expensive overtime—were enough to keep the operation running, but the company knew a total overhaul was required.

Here’s the story of how they did it.

Chapter one: The great capacity crunch
Scholastic runs a unique business. The Markham facility exists to support its book club and catalogue operations, which promotes a fresh slate of titles every month for students to choose from. Its picking area is thus populated by a constantly changing flow of books and learning accessories, as last month’s World War I storybooks must give way to this month’s Christmas titles.

The company feeds these shifting cycles from bays of tall racking on the building’s western half, where pallets and cartons of books are kept until they are pulled down for their seasonal spikes.

The DC’s old order-picking and staging system was installed when it opened in 1998, and it was considered quite high-tech at the time. Paperless order induction, pick-to-light capabilities and some automated conveyance made the process reasonably quick and efficient. Operators were picking into totes, so they had to re-pack and label all shipments by hand after picking, but the technology supporting them tended to work well.

Problems started to arise when the business grew. When the 1998 installation went live, the facility was processing more than 735,000 orders—nearly 8.7 million items—every year. But by 2006, that amount had mushroomed to more than 1,527,000 orders and upwards of 12 million items—increases of 108 and 39 percent, respectively. In short, there were many more shipments to get out, and they were smaller and more frequent than before.

This growth put significant strain on the system. Scholastic responded with a series of tweaks, including extending the flow racks to add more capacity at the pick faces, adding extra re-pack stations to ease bottlenecks and upgrading printing hardware to generate shipping documents faster. When that wasn’t enough, it hired more staff and expanded working hours.

These temporary fixes weren’t enough to compensate for serious technological flaws. By 2006, much of the original hardware—including scanners, controls and the pick-to-light server—was either obsolete or no longer supported. The company had experienced no fewer than 14 hard drive failures on its servers during the previous fiscal year, with each instance causing system downtime.

These shut-downs added to the already substantial costs of hiring extra staff and running overtime hours. Productivity was actually declining, with in-house turnarounds taking almost twice as long as they were supposed to. On one day in February of 2006, the company found itself with an unprecedented 64,000 orders in the order pool—and the ability to output fewer than 10,000. At that point, Scholastic Canada’s director of operations Christine Phillips tells MM&D, it was obvious that the system had reached its limit.

“We believed that we had exhausted our opportunities to make modifications to the system in an effort to squeeze additional capacity, efficiency or flexibility from it,” she says.

“In a mature market, we were limiting ourselves in our capacity to embrace new initiatives or drive the business in new directions. This left us in the unenviable position of absorbing increasing cost while compromising our ability to support business growth…The decision to move forward with a new distribution approach was critical.”

Chapter two: Mapping the journey
In the summer of 2006, with help from a group of corporate engineers, the Scholastic team set about planning redesigned DC. They considered a
number of new technologies to improve the picking process, including automated storage and retrieval systems and other advanced equipment.

The team determined that the best approach would build on what they already had. They saw value in using equipment that employees were fundamentally comfortable with in a familiar layout. The difference would come with the technology. The team wanted better pick-to-light capabilities, modern conveyors and an operating system with the intelligence to automatically determine replenishment and routing needs.

The team selected Dematic Limited, the vendor that co-ordinated the 1998 install, to take on the job. The plan won corporate approval in February 2007. With a go-live deadline of September that same year, the group had just over six months to co-ordinate and install a host of new equipment.

Dematic started working on the back end immediately, tweaking software, validating data and integrating technologies with the appropriate networks. The new equipment—including diverters, flow racking, pick-to-light interfaces and nearly 2,700 feet of conveyor—was staged in the DC.

Good timing helped the physical installation. Every year, Scholastic shuts down the Markham DC in July and most of August while its customer base takes summer vacation. This provided the perfect window to tear out the old and bring in the new.

In August, once the equipment was in and the systems up, the company called back its employees early so that they could get to know the new system through real-time physical simulations.

David Clarke, Scholastic Canada’s director of information technology, recalls one of the more complicated trial runs, which used the data from the busiest, most complex shipping day at the DC in the previous year.

“We dropped that data into the Dematic system and ran through it, using paper placeholders instead of actual product. We had a whole team of people in every zone and in the pack-out lanes,” he explains. “We picked that whole day’s worth of product, and it didn’t work so well. We did it again the next day, and it got better. By the end we were doing it with a fair degree of confidence, and by the time we got a real order in here, we were ready.

“I think the testing we did was one of the best experiences we had,” he continues. “It was a huge commitment on the business side, but it was key to our success.”

Chapter three: The system in action
The system went live as planned in September 2007, and while there were a few hiccups replenishing the pick lines, the improvement was obvious.

The process starts at the order induction area. An operator wearing a voice-directed headset logs into the order pool. She calls for an order, which is sequenced through a software interface connecting with the host system. The software pre-cubes the order to best fit one of seven standard Scholastic shipping carton sizes. The operator retrieves a carton of the dictated size—or a tote, if the order is to small to be conveyed effectively—attaches a barcode to it and scans it with a hand scanner.

“This is the
entry portal to the whole system,” says Dematic technology specialist Tim Post.

From there, the carton goes in one of two directions. If its order list includes a SKU that is not currently in high demand, it is sent to the slow-pick area. This area is for slow-moving items, like older or off-season titles. Using voice technology, employees pick the slow-moving item, place it in the carton and update the system by scanning the carton’s barcode.

This approach ensures that the more valuable space in the pick-to-light lanes is being used for high-velocity items. Also, since it is relatively capital-light, it gives Scholastic the capability to have a greater number of titles on hand, a very valuable proposition given the recent increase in SKUs.

“This system allows them to make a business decision about individual SKUs. They can say ‘Ok, we want this title out of the pick-to-light. It’s not worth our money to keep it there. We can move it over to the slow-mover section, get a good efficiency rate there, and get the full benefit from the pick-to-light,’” explains Derek Lynch, system sales manager at Dematic.

Chapter four: Let there be light!
From the slow-pick area, cartons are placed on the motorized roller conveyor system. If the order is complete, it simply circulates through the building and makes its way to shipping. If it is not, it joins the cartons from induction that only require fast-moving product for a trip through the pick-to-light area.

The pick-to-light area consists of 32 zones fed by two central conveyors equipped with a total of eight quad-directional diverters. Readers embedded in the conveyor frame determine the path of each carton as it passes. When they detect that a carton requires an item from a particular zone, the diverters shunt it to that zone’s lane.

An employee will then scan the carton. Immediately, the pick faces underneath the required items—which are replenished via flow racking—light up and display the quantity to be picked. The operator turns off a light—one of 2,200 in the system—once that item has been filled and sends the box on its way.

The conveyor network winding through the pick-to-light operates on the principles of continuous flow. This way, a carton can recirculate through the system several times—if a zone it needs to visit is full, or if stock is temporarily out for one of its required items—without backing up the system.

“[Our goal] was build a way for these orders to flow through each other without dependency on soldier-line flow,” explains Post.

This setup also allows for multiple induction points, which means that if activity is slow in any zone, its operator can tap into the order queue and place a new carton on the line.

“Any operator can actually launch an order in a zone and make work for themselves,” explains Lynch. “If the zone balance just happens to be off that day, instead of sitting there and twiddling their thumbs, an operator can create an order and induct it onto the conveyors.”

Chapter five: The home stretch
Once a carton is filled, it travels down the line to the pack-out area. Before arriving, it passes through an in-line scale to capture the weight and verify that it is within its pre-determined tolerance.

“If an order is out of tolerance, it is diverted into an anomalies lane at the end,” Lynch explains. “There they can deconstruct the order, see if it was an over-pick or an under-pick, communicate any data about bad weight upstream and move the carton back to the picking system.”

“We were quite concerned about adding this process,” Phillips says. “A lot of our product is small, so the weight tolerance is an issue.” Currently, only about two percent of the cartons passing through are flagged for problems, which Phillips says is very manageable.

Once a carton is verified, an operator scans the carton, confirms that it is complete and prints paperwork for the end customer. The operator puts a shipping label on the box and seals it by running it through a case taper. From there, the carton moves out to shipping, passing through one final scale and overhead scan for manifesting purposes. It is then routed into a shipping lane, divided either by geography or carrier. Employees build the cartons into trucks—usually by hand-balming—and send them out the door.

The process is supported by a sophisticated network of warehouse control technology. The voice and light picking modules use Dematic’s Pick Director program, which interfaces with its Staging Director suite to control carton routing. Both programs tie into the WMS, which Scholastic developed in-house. The WMS runs on an IBM operating systems platform, which is responsible for sending orders down into the system.

As part of the installation, Scholastic also opted for a Dematic program that allows it to run data from any day—past or forecast—through a virtual computer simulation. This helps the company identify the cause of any delays that have occurred, or map out how a spike in order volumes would affect the system, or simply get a quick summary of how a shift transpired.

Epilogue
Since go-live, the company has been able to increase the number of SKUs in the building by 20 percent, while increasing throughput to more than 11,000 orders per day and improving labour productivity by 66 percent.

The transformation has also positioned Scholastic to make other processes more efficient. For example, the space freed up by more efficient pick-to-light stations allowed the company to repatriate a 2,500-SKU catalogue fulfillment process that had been forced out to an outside facility. The company is also evaluating a project that will bring even more manual processes into the voice-picking methodology.

More importantly, the change has given Scholastic the capability to easily adjust to changes in its business. For instance, Phillips says that the company is looking at new technologies to give customers more choice in ordering. The system now has the capacity and the agility to respond to whatever the resulting operations requirements may be.

“The new installation has provided the flexibility we believe we require to fulfill our mandate,” she says. “We are able to plan appropriately and execute our plans with a stable and reliable system.”

Talk about a setup for happily ever after!