Designing for Agility

Track 2 Session 9
 Doug Pope
Director of Distribution Planning
The Facility Group
doug.pope@facilitygroup.com
770-437-2795

2006 MATERIAL HANDLING & LOGISTICS CONFERENCE SPONSORED BY HK SYSTEMS

Abstract
Dimensions of an agile supply chain are:
– Speed,
– Ease,
– Predictability
– Quality.
That holds for the part of the chain inside your
four walls as well. This session debunks the
myth that sophisticated solutions are inflexible.
Your speakers will share the secrets of
designing flexibility into highly integrated
systems in preparation for swings in your
business model, order profile and volume. As
the carpenter says; "Measure twice, cut once".
2006 MATERIAL HANDLING & LOGISTICS CONFERENCE SPONSORED BY HK SYSTEMS
Agenda
 The business drivers of agility
 Possible solutions
 A case study for the implementation of
the agile enterprise

2006 MATERIAL HANDLING & LOGISTICS CONFERENCE SPONSORED BY HK SYSTEMS

The Business Drivers of the
Agile Enterprise
 Labor Efficiency
 Unpredictable environment
 Space Efficiency
 Flexibility
 Financial pressures

2006 MATERIAL HANDLING & LOGISTICS CONFERENCE SPONSORED BY HK SYSTEMS

Automation as the Enabler
of Agility
 Competitive advantage
 Customization at the last minute
 Lowest landed cost of distribution
 Obsolescence curve
 Seasonality
 Lumpy Demand
 Speed of Response
 Labor Issues

2006 MATERIAL HANDLING & LOGISTICS CONFERENCE SPONSORED BY HK SYSTEMS

An In-depth Look At Labor
Issues
 Shortages  Staffing
 Quality  Competitiveness
 Cost  Customer Service
 Flexibility  Indirect Costs
 Regulation  ROI
 Efficiency  Non-value added
activities

2006 MATERIAL HANDLING & LOGISTICS CONFERENCE SPONSORED BY HK SYSTEMS

The Role of Information Systems
In The Agile Enterprise

2006 MATERIAL HANDLING & LOGISTICS CONFERENCE SPONSORED BY HK SYSTEMS

The Role of Information
Systems In The Agile
Enterprise
 Dynamic assignment of methods based
upon constraints
 Preparation of work assignments based
upon order profile
 Integration with material handling
hardware

2006 MATERIAL HANDLING & LOGISTICS CONFERENCE SPONSORED BY HK SYSTEMS

Agility in Storage Systems
Lowest Total Operating Cost

$22

$20
Total Cost
$18

$16

$14
Relative Cost

Equipment
$12
Cost

$10

$8

$6
Building
Cost
$4

$2
Land Cost
$O Labor Cost
Conventional Narrow Aisle Mechanized Automated

System Type

2006 MATERIAL HANDLING & LOGISTICS CONFERENCE SPONSORED BY HK SYSTEMS

 Trade Offs
Conveyor Monorail AGV

Accumulation Zoned Models Only Yes Yes

Relative Cost $$ $$-$$$ $$$

Material Flow Flexibility None Fixed Structure Some with track switches Yes- path is virtual

Throughput Flexibility None Somewhat- add carriers Yes- add vehicles

Material Flow Sequential Mostly sequential Random- multipoint

flow

Cost of Ownership $$ $$$ $$$

Maintenance Access Good Challenging Very good

Redundancy Single point of failure Carriers- Interchangeable Vehicles-

Track- Single point of interchangeable
failure

Throughput Medium for straight runs- Low High for long straight Medium
for direction changes runs- low for complex
navigation

Interfaces Usually one level of transfer Lifts, inclines, declines Lift, lower deck rollers
telescoping platen forks

2006 MATERIAL HANDLING & LOGISTICS CONFERENCE SPONSORED BY HK SYSTEMS

The Case For Agility
 Project Trafalgar
– Project overview
– Current Situation
– Drivers For Change
– Recommended Solution
– Benefits of implementation

2006 MATERIAL HANDLING & LOGISTICS CONFERENCE SPONSORED BY HK SYSTEMS

The Case For Agility
 Project Overview
– Project Trafalgar was a commission to re-
engineer the processes and methods of a large
consumer goods manufacturer
– The client was experiencing
 Long lead times
 SKU proliferation
 SKU obsolescence and excess inventory
 Missed shipping consolidation opportunities
 Lower than desirable customer service
 Poor labor productivity

2006 MATERIAL HANDLING & LOGISTICS CONFERENCE SPONSORED BY HK SYSTEMS

The Case For Agility
 Current Operations
– Currently the client has a single method of
manufacture that, for economic reasons, dictates
larger than necessary production runs
– It is currently taking up to eight weeks to
assemble all the material needed to fill an order
– Inventory is stored in multiple warehouses
– There is no WMS, order management, or labor
management system
– Labor utilization needs improvement
– There is a high seasonality component
2006 MATERIAL HANDLING & LOGISTICS CONFERENCE SPONSORED BY HK SYSTEMS
The Case For Agility
 Drivers For Change
– High Obsolescence
– SKU Proliferation
– Long lead time
– Labor inefficiency
– Seasonal Profile
– Space Utilization

2006 MATERIAL HANDLING & LOGISTICS CONFERENCE SPONSORED BY HK SYSTEMS

The Case For Agility
 Recommended Solution
– Cellular Manufacturing
– WMS Software
– Voice directed activities
– Smart Karts
– Dynamic Slotting
– Pick and pass conveyor system
– Overhead Monorail
– Narrow aisle storage and turret trucks
– Vertical Lift Modules
2006 MATERIAL HANDLING & LOGISTICS CONFERENCE SPONSORED BY HK SYSTEMS
Cellular Manufacturing
 Manufacture small quantities in a cost
effective manner
– Work cells versus a progressive assembly line
 Need to bring display modules and
components together from raw materials
together at the time the assembly is taking
place
 Order management software determines
assembly method and orders materials
from storage

2006 MATERIAL HANDLING & LOGISTICS CONFERENCE SPONSORED BY HK SYSTEMS

Cellular Assembly
 Raw materials selected
from storage and placed
into a tote and
transported using
conveyor to VLM
 Display units taken from
receipt to assembly
station using overhead
monorail conveyor
 Component tote removed
from the VLM when the
display unit arrives and
assembly begins
 Computer terminal
displays layout of
components on the
display module
2006 MATERIAL HANDLING & LOGISTICS CONFERENCE SPONSORED BY HK SYSTEMS
Overhead Monorail System
 Just in time
sequencing to the
cells
 Using “free”
overhead space
 No labor requirement

2006 MATERIAL HANDLING & LOGISTICS CONFERENCE SPONSORED BY HK SYSTEMS

Vertical Lift Modules
 Acts as a buffer
between components
and display units
 Allows accumulation
of rapid deployment
of all components in
the manufacturing
cells

2006 MATERIAL HANDLING & LOGISTICS CONFERENCE SPONSORED BY HK SYSTEMS

Narrow Aisle Storage and
Turret Trucks

2006 MATERIAL HANDLING & LOGISTICS CONFERENCE SPONSORED BY HK SYSTEMS

Finished Goods Assembly
 Order management
software determines
selection method
– Batched single line orders
– Batched multiple line orders
using Smart Karts
 Voice pick system directs
selection activities and
insures accuracy
 Completed orders
inducted into a pick and
pass system for
consolidation and
packing, sealing and
labeling
2006 MATERIAL HANDLING & LOGISTICS CONFERENCE SPONSORED BY HK SYSTEMS
Finished Goods Assembly
 WMS system directs
the activity in the
dynamic pick line

2006 MATERIAL HANDLING & LOGISTICS CONFERENCE SPONSORED BY HK SYSTEMS

The Case For Agility
 Benefits of Implementation
– Reduced Inventory
– Reduced Lead-time
– Labor Efficiency
– Transportation Savings
– Capacity For Seasonality
– Manufacturing Flexibility
– Customer Service Improvements
– Space Savings

2006 MATERIAL HANDLING & LOGISTICS CONFERENCE SPONSORED BY HK SYSTEMS

Key Takeaways
 The agile enterprise delivers superior
customer service at lower cost
 The agile enterprise is an integration of
information and processes that enable the
delivery of customer-specific products at
near mass produced cost
 Automation is a key component in
designing the necessary speed and
flexibility to respond seamlessly to
changes in demand

2006 MATERIAL HANDLING & LOGISTICS CONFERENCE SPONSORED BY HK SYSTEMS

Questions?