Warehouse Space Reduced By 20 Times In Record-Breaking Time

Tetra Pak Hoyer is the world leading supplier of production equipment for the ice-cream industry, and with new vertical storage lifts, which were installed in a record-breaking time, reducing the warehouse-space to five percent and speeding up the picking time significantly, the company is in better shape than ever to serve all its spare parts customers around the world from one single location.

Speed is a vital factor to us, says Logistics Manager Lars Madsen from Tetra Pak Hoyer A/S. Half of the spare parts we ship are for the US, and as you know the time difference is so significant that the Americans open their offices just a few hours before our closing time. Nevertheless, it is our goal to have our products shipped to our customers on the very same day they have been ordered. To be able to do so, we have received very speedy help from our new vertical warehouse lifts and their supplier.

Tetra Pak Hoyer is globally oriented and offers sales and services from six regional centres as well as from various representatives located all over the world. Company headquarters are situated in Hoejbjerg by Aarhus, the largest city in Denmark. It is from the newly created Customer Service Logistics section, managed by Lars Madsen, that all spare parts will be distributed in the future. Prior to this, the companys production-sites participated in this distribution.

5,000 products in just 15 square meters

What earlier occupied a warehouse space of 300 square meters, the section has now been able to reduce it to tiny 15 square meters, - contained in two LogiMat vertical lifts from the Danish company Handler A/S, which is located in the town of Humlebaek just 30 km north of Copenhagen.

We are talking about 5,000 different spare parts, and we have not only managed to save space but we have also become much faster in picking the items, as we have experienced a vast time reduction for in-loading. Lars Madsen emphasises somewhat surprised about this latter fact, The reduction of space as well as the increased ability to pick much faster, were expected improvements and the basis for our decision, but we did not have the same high expectations for the loading procedure.

Chaotic storage

LogiMat is what Handler themselves describes as a computerized chest of drawers, which optimises the possibilities of exploiting space from floor to ceiling. Both loading and picking is led by bar codes, and the vertical lift provides maximum capacity exploitation, as the systems software analysis on which drawer is the more convenient to store the particular items in. The analysis is done on the basis of requirements of drawer-size, which items the lift already has led and how often. In other words, the items are stored in a chaotic order or at fluid locations based on where the optimal location for the particular item is located. The computer-system keeps check of the items by using a first-in-first-out principle, and a continuous stock-taking is going on for each location.

Earlier, we did not use bar-coding for our items, says Lars Madsen. And therefore we had to spend a couple of days equipping all 5,000 products with such, but then again it means that we now know exactly what we have in stock at all times including an abundance of new information. This is also why the loading can be done with such fantastic speed. We simply feed the system by using a bar-code list.

Ergonomics served at the picking-counter

In pace with the ling of the lines on the picking list, which can be seen on the computer screen by the picking counter, the next relevant drawer emerges at the same counter. A counter with an ergonomically friendly height to work at, and which furthermore leads the operator in the right direction by pointing with a spotlight at the relevant compartment in the drawer. The operator then picks and scans the required number of items.

The drawer simply serves the items at the most convenient position for the operator, who avoids heavy lifting, a bent back or stretched out arms. At the same time a lot of walking or driving are avoided, when the items are brought to the operator (and not the other way around) and in this way the space is reduced significantly, says Sales Manager of Handler A/S, Kim Karhof. He also points out that the drawer, from which an item just have been picked, immediately returns to its original position leaving the vertical lift ready to fetch a new drawer at once.

Efficiency-gains for other purposes

With the lesser walking or driving also follows important time reductions resulting in a vastly increased number of pickings per operator per work day, stresses Manager Nick Shelvey from AutoScan Limited, which is Handler A/S representative in the UK. Our estimations tell us that a LogiMat-solution just requires salary-expenses of a little more than 40 percent to the expenditures of a solution using traditional shelf-racks requires. At the same time it is worth while noting that the salary part directly derived from picking is larger. The reduction in salary-costs can be attractive to companies, who wishes to rationalise and cut costs, as well as for companies who are increasing their turnover, and are able to avoid an enlargement of their workforce. Generally speaking, this system holds a short and attractive pay-back time, he informs.

At Tetra Pak Hoyer A/S the efficiency-gains has been named. Lars Madsen says: We have particularly seen an advantage in the fact that this rationalisation enables us to put more elements into this particular section. It is e.g. our goal to let the section le the distribution of sales materials etc. also. Accordingly, we have no intention of cuts in staff.

Delivered in record-breaking time

Tetra Pak had planned a relocation, but last minute internal shifts with the companys R&D Division, made it suddenly mandatory for the Customer Service Logistics section to have an extremely expedite deliverance and deployment of the new vertical lifts: Our tenancy was to expire, and all of a sudden we found ourselves in the situation where we had to rig new warehouse space and move the entire stock in just eight weeks time. At the same time one of our indispensable criterias of success was that our customers by no means should be affected, says Lars Madsen.

And fast they were! Within week 33 we started looking at some warehouse-systems, and by the end of week 37 we placed the order at Handler A/S, and in week 41 we were able to pick the first items from the LogiMat vertical lifts, he describes.

Various good reasons for Handler

With the possibility of being literally standing on the parking-lot, if we did not succeed in time, of course it weighed in our considerations that Handler was the only supplier who could deliver so rapidly, and furthermore consented to pay fines if they did not deliver in time. But from the onset we were very interested in Handlers system, which appeared to be very simple and logical as well as very innovative and robust. The system has an excellent user-interface and a remarkably well-designed software-solution, which the company has great experience in applying and integrating with existing systems, says Lars Madsen, who was dependent upon the LogiMat software-system functioning together with Tetra Pak Hoyers Baan ERP-system.

The software-solution from Handler is Windows-based and allows easy integration with any existing computer-system via an ordinary PC. At the same time the system provides e.g. automatic updates of stock, as well as a complete history of transactions and a broad spectrum of other reports. In other words a quite complex software, which would be costly for any company to develop themselves, but which our many users all have contributed to the development of, making it an advanced system at a reasonable price, says Kim Karhof.

Standard components from local world champions

Handler A/S has installed more than 400 LogiMats since the introduction of the system to the market in 1998, and since then the company boasts an impressive growth-rate.

The secret behind our success, supported by a list of references, which no competitor is able to match, lies among other things in the fact that we prefer buying local products, and willingly standard components, Kim Karhof explains. We plan and build everything ourselves, and as our sub-suppliers we always seek out the World Champions in our local area. We have in all about 30 suppliers, and we always keep at least two suppliers in all categories of components.

That means that we can act very quickly and that we can promise a very secure guarantee of deliverance and no less important - that we can provide a very efficient support and service. We always make sure to have confirmations from our suppliers before we accept an order from one of our customers, he says, adding that a typical project of this kind will involve about five people at Handlers: One coordinator, one project engineer, two or three in the installation team and one person from the companys software Division.