Walking the talk

by Array

Canadian outfitter Mountain Equipment Co-op’s entire business is devoted to outdoor exploration. Its members value pristine waters, clean trails and unpolluted air. It should come as no surprise that its new distribution centre is a model of environmental sustainability. But it also happens to be propelling business into a very promising future.

Rare indigenous wildflowers surround the new Mountain Equipment Co-op (MEC) distribution centre in Surrey, British Columbia. Rabbits and birds have been known to frequent the greenery, which is framed by a band of trees that may one day become a nature trail. People show up regularly to take photos of the scenery.

Sure, it fits the granola stereotype associated with the co-op, but behind that bucolic exterior is a state-of-the-art DC that would turn the head of any shrewd logistician.

Like many operations dealing with unprecedented business growth, MEC needed a new DC to expand its distribution capabilities. It had to do so on time, on budget and with minimal disruption to the business—the usual requirements.

So MEC created a plan to meet all those targets. But it added a new summit to the climb by deciding to do so with a facility that would exemplify environmental sustainability inside the dock doors and beyond. No rhetoric, no “greenwashing”, just an operation that would support both its business goals and its eco-friendly philosophy.

And the co-op did it. This is the story of how to activate a green supply chain that makes good business sense.

Lost in the woods
MEC’s British Columbia distribution base is responsible for stocking the co-op’s 11 (soon to be 12) retail stores across the country and for fulfilling online and catalogue orders from around the world. The merchandise spans the outdoor gear gamut from climbing carabiners and rain jackets to tents and canoes.

Up until last year, these distribution operations were scattered across three storage facilities in nearby Richmond. Two were MEC-run; a third-party logistics provider operated the third. One of the MEC-run sites served as the main DC, while the other two were used to draw replenishment stock and store overflow. Together, the buildings provided about 130,000sqf of storage space.

It was a complicated arrangement, and by 2004 it was compounded by a change in the sourcing model. A new buying and design manager named David Labistour—now MEC’s CEO—started introducing non-MEC-branded product lines to the product roster. Much of this was sourced from Asia. Gone were the days when most merchandise could be replenished in small batches; in order to get factory time overseas, purchase orders had to be much larger.

The introduction of new products proved very popular among members, and business steadily climbed. The co-op responded by increasing its safety stock. As members became accustomed to options like seasonal colours and specialized sizing, SKU counts grew and product lifecycles shrank.

MEC found itself handling more volume, variety and turnover than ever before. The scattered and crowded three-site warehouse system was no longer sufficient.

“That was very stressful,” recalls Alan Fitterer, MEC’s vice-president of logistics. “You lose your mind and burn people out that way.”

It was time to move to a single DC big enough to handle the business.

Plotting a new trail
The change started in earnest when MEC bought a 16-acre plot in Surrey in April 2006. The land was ample for future expansion and was seismically sound—a big consideration on the earthquake-prone west coast.

The property included a 70,000sqf central building with two structures attached. The buildings needed work, but MEC saw potential. Instead of razing it all and starting from scratch, why not build on what was there?

“We wanted to put a high-bay section up and use the buildings that were here for the rest,” Fitterer says.

This would require expert help. After a comprehensive selection process, MEC hired two Vancouver-based firms, Bunting Coady Architects and Ledcor Construction, to design and construct the new facility, respectively. Both companies won out by demonstrating a willingness to adhere to one of the most important pillars of MEC’s operations: sustainability.

MEC retail stores are equipped with a host of environmentally friendly features, from green roofs to gear recycling depots. The co-op monitors and benchmarks the greenhouse gas emissions from all its facilities and the transportation of its goods. It has started pressuring carriers and 3PLs to do the same. So when it came time to build a new DC, finding partners with a real commitment to sustainable design was a priority.

Teresa Coady, CEO and founding partner of Bunting Coady, explains the unique motivation behind the co-op’s environmental mandate.

“Because MEC’s members are out in the wilderness on the weekends, they come back to the city and are very, very aware of the harm that we’re causing to our environment,” she says. “There really is a direct connection between their business and protecting the environment.”

Bumps on the path
Designing the building involved a lot of back-and-forth dialogue between MEC, Bunting Coady and Ledcor. The collaborative process balanced the co-op’s lofty environmental goals and operational needs with more practical considerations.

For instance, the co-op’s original intention to use all the existing buildings on the site had to be spiked: the two secondary buildings could not be brought up to seismic standards, and had to be demolished. At the same time, the main structure had to be completely gutted in order to be usable. This produced tonnes of scrap metal and concrete, which created an interesting recycling opportunity.

“The bulk of the materials—the concrete floors, the tilt-up walls, the roof trusses—were utilized on-site for the expansion and the refurbishing of the existing building,” Fitterer explains. “We took the trusses out of the demolished buildings and reinforced the roof structure of the existing building. We chipped up the concrete for road base fill and base for the concrete floor in the high-bay.”

This recycling brought about a bonus: it saved MEC the significant cost of trucking away tonnes of materials to a landfill or scrap yard.

Construction began in January 2007 and took less than a year. By the second week of December—a full month ahead of schedule—the co-op was moving in, a phased-in process that involved transporting more than 600 trailerloads of merchandise from Richmond to Surrey.

Inside the operation
The new DC provides 190,000sqf of storage, 40,000 of which is mezzanine.

The space holds several different zones designed to handle the new inventory demands seamlessly. The existing 80,000sqf building—gutted and completely refurbished—is now the receiving area. Twenty-two dock doors line the walls, some dual-purpose, others dedicated solely to either shipping or receiving. The only racking in this area is used to store large items like canoes or kayaks.

Attached to the old structure is a 80,000sqf high-bay area with 36-ft clear ceilings. Much of this is rigged with 34-ft racking.

“We went high-bay to utilize the footprint,” Fitterer says. “It’s a lot cheaper going up than it is spreading out. Land costs are pretty expensive here in the Lower Mainland.”

Wire-guided swing-reach forklifts and order-picker trucks—part of a 32-unit electric fleet—run in the aisles of the high-bay racking. A new battery exchanger and charger keeps the trucks powered, complete with a pressurized watering system to prevent employee exposure to sulphuric acid.

Beside the high-bay section are two horizontal carousel pods. One of the pods is a used unit purchased specially for the new DC. The other came from the main Richmond facility, and was dismantled, transported and re-erected at its new home over a two-day period. The carousels each have 240 carriers, giving the DC 480 carriers to work with.

“They’re for small items,” Fitterer says. “Climbing gear, reference books, clothing—all products that would fit in a 24- by 24- by 24-inch bin.”

Overlooking the high-bay area is the 40,000sqf main mezzanine, where sorting takes place. Reach trucks transport product from the high-bay racks to the mezzanine, where employees use hand jacks to manoeuvre the pallets onto flow racking. From there, employees fill orders using a pick-to-light system. Powered conveyors bring orders down to the shipping area, where they are staged for transport.

The entire building is co-ordinated by a WMS from JDA. Workers in the receiving area and mezzanine use handheld readers to pick up barcode information, while the trucks are equipped with on-board full-screen emulation readers.

It’s a busy operation, and it works. During the seasonal changeover period this past spring, the DC contained no fewer than 18,000 SKUs. That’s slated to climb to 19,000 for the fall, and Fitterer is confident the building is ready.

Eye on the prize
So the DC has proven that it can handle MEC’s bustling business, but how does it meet the co-op’s green standards?

According to its architects, getting there required some creativity.

“Normally, an industrial building is an energy hog,” Coady says. “A lot of people don’t look at them as a venue for green building.”

The technical formulas that shape a modern DC—things like bay heights and conveyor distances—meant that the architects had indisputable rules to work around. The scale of the project did not make it any easier.

Early on, Bunting Coady identified lighting as a major source of energy savings. Since much of the DC’s activity takes place during daylight hours, the decision was made to use as much natural light as possible. As a result, a broad band of angl
ed skylights connects the old low-bay section to the high-bay, and each high-bay aisle has a vertical slot window at the end.

Windows are rare in DCs containing apparel, as many companies prefer artificial light to the damage UV rays can have on fabric. To prevent this, the skylights at the MEC site are set at angles that keep sunlight from hitting inventory directly. Each window is also coated with a glaze to dull the sun’s harmful effects.

The windows and skylights produce enough ambient light to minimize artificial light usage, and motion sensors ensure usage is efficient.

Improving the heating and cooling system proved to be more of a challenge. The architects originally envisioned a system that would channel air through the racking itself, but could not find the right equipment to do the job.

“We still think there’s an opportunity to do that in a DC, but we’d need somebody to come up with a customized racking system that would incorporate an air vent,” Coady explains.

They also looked at radiant cooling and heating, but that would interfere with the high-bay’s forklift wire guides. In the end, when a standard HVAC system proved the most realistic option, the team decided to install a high-efficiency boiler and insulate the high-bay building with high-performing composite panels. Like the lighting, temperature and airflow is all monitored by controls to make optimal use of the energy.

The architects’ plans extended to the building’s exterior as well. Rain in British Columbia can come swiftly and powerfully; in industrial parks with flat roofs and sealed paved lots, this can wreak havoc on the local ecosystem.

“For a building the size of ours, if the rains are concentrated it just produces a huge amount of water and runoff,” Fitterer says. “That goes into the creek system and damages it.”

With help from the City of Surrey, which funded part of the development as a pilot, the architects surrounded the DC with permeable pavers. Stormwater now seeps around the interlocking stones and into the soil—not the sewer system. (The wildflowers pay a big part in this process as well).

The exterior also includes tanks to collect nonpotable water, which is then used to irrigate the site and supply its toilet facilities.

Greening the chain
MEC made a point to weigh the environmental effects of all aspects of the development, including equipment sourcing. For example, one of the reasons it turned to its racking vendor—Vancouver-based Arpac Storage Systems Corporation—was because the manufacturer is located close to the DC. This choice proved to be as cost-effective as it was eco-conscious.

“It saved us about 20 trailerloads that would have had to come in from outside Vancouver,” Fitterer says. “Your costs for freight like this can escalate quickly.”
Another issue was improving employee transportation to and from work. Several high-end bike lockers at the front of the building have prompted more people to commute on two wheels. Regular bus service from a nearby SkyTrain station has led to a spike in staff public transit use.

“We have more people commuting to work on public transit than we did in the old location,” Fitterer says. “They don’t have to drive…so they’re saving money. And we actually have people switching shifts now so they can carpool.”

The “green equals green” mantra—that environmentally responsible decisions can save money and therefore improve the value for members—has taken hold at MEC in a big way. In fact, the DC is becoming the nexus of its efforts to clean up its entire supply chain.

While many companies dealing in apparel choose to ship by air, the co-op moves most of its inbound inventory from Asia by ship. The time differential is small, Fitterer says, and is far outweighed by the benefits. “For us, airfreight is about ten times the cost of a container coming across,” Fitterer says. “And the carbon footprint is atrocious.”

The DC is close to Port Metro Vancouver’s Deltaport at Roberts Bank, so trucks shunting inbound cargo have a relatively short and clear trip in.

On the outbound side, all product currently moves out by truck—although not for long. MEC plans to start shipping to its Ontario and Quebec stores using rail in the near future. It did so in the past, but moved to truck when problems with rail service started causing shipment delays. Today, Fitterer is confident that the rail infrastructure has improved enough to warrant a switch back to the tracks.

The view from the summit
The DC has positioned MEC comfortably for the future. Fitterer says the plan is to add more automation to the facility, possibly in the form of a vertical
carousel to handle bikes and bike parts—a new market the co-op is entering.

A physical expansion will likely occur further down the line. There is room to add up to 80,000sqf to one end of the DC and 100,000sqf to the other, meaning that the space could virtually double.

It’s a safe bet any expansions will stick to the green trend. There’s no good reason not to. The project was expensive—some $42 million for the land, design, construction and equipment—but Fitterer anticipates a quicker-than-expected return on investment. The exact amount of energy saved will be calculated at the end of the first year in December, but all internal measurements point to excellent performance so far.

“It’s never exactly as you’d like to have it, because you’re restricted by regulations. And reusing an existing building, that was a challenge,” Fitterer reasons.
“Our expectations at MEC, especially from our staff and ourselves as management, are high…We didn’t want to just bang up a building carelessly, not caring about the environmental impacts. Our partners had to be willing to take the time to use best practices they’re not normally accustomed to using. When you start getting into green features, it gets you into another level of motivation.”