Distribution Center Design and Integration Case Study – Health & Beauty Aid Manufacturer PEACH STATE Presented to: Warehouse & Distribution Science ISyE 6202 Georgia Institute of Technology By: Dean M. Starovasnik Practice Director, Distribution Engineering Design Peach State Integrated Technology © 2011 Peach State Integrated Technologies. Contents are confidential. All rights reserved. Overview This session will provide an overview of an objective design methodology and an example case study where this process was used. Peach State Overview Process High Points Case Study Data Analysis Results Design Requirements Financial Review Site Photos PEACH STATE Discussion Though “Discussion” is listed last, questions or comments throughout the session are welcome and encouraged. © 2011 Peach State Integrated Technologies. Contents are confidential. All rights reserved. 3 Peach State Overview PEACH STATE © 2011 Peach State Integrated Technologies. Contents are confidential. All rights reserved. Corporate Credentials Headquarters in Atlanta, GA. Regional offices throughout North America. Over 34 years of experience engineering and integrating supply chain logistics, distribution, and material handling solutions on a national and global scale. Results Oriented, Performance Driven, Team Based Culture. Deep expertise in Supply Chain Strategy, Distribution/Manufacturing Design and Engineering, Site Operational Optimization and Labor Standards, Material Handling Systems Integration, and Customer Support. © 2011 Peach State Integrated Technologies. Contents are confidential. All rights reserved. 5 Industry – Thought Leadership Council of Supply Chain Management Professionals (CSCMP) Track Chair 2004 and 2006 Conference Presentations o o o o ProMat Material Handling Equipment Distributors Association (MHEDA) – Member, Past Board Member, President 2003 The National Logistics & Distribution Conference (NLDC) Founder and Producer Georgia Tech Supply Chain and Logistics Institute – Lecture Presenter since 2000 DC Velocity – Editorial Board Member Frequent contributor to major trade journal articles Retail Leaders Industry Association (RILA) National Conference on Operations & Fulfillment (NCOF) HK Systems Annual Material Handling and Logistics Conference Peach State Speakers’ Bureau Numerous White Paper Publications © 2011 Peach State Integrated Technologies. Contents are confidential. All rights reserved. 6 Core Services Focused on Results – “From Strategy to Reality” Global Consulting & Engineering Facility Design & Engineering Material Handling Solutions Customer Service and Support • Logistics network strategy and design • Strategic distribution master planning • Rationalizing for outsourcing/3PL • Labor Management and Operational Excellence • Facility Designer Toolsettm determines the appropriate mix of people, space, equipment, and systems. • Solution development focused on delivering a rapid ROI. • Detailed engineering, bid management, procurement, and implementation of integrated material handling systems • High-speed sortation, automated order fulfillment, AS/RS, AGV/LGVs, and palletization. • Material handling systems spare parts to keep your facility running. • Service and maintenance programs that are tailored to ensure maximum ‘uptime’ and performance. © 2011 Peach State Integrated Technologies. Contents are confidential. All rights reserved. 7 Major Clients Serving the ‘Best of the Best’… Healthcare & Pharmaceuticals Food & Beverage Parts Distribution © 2011 Peach State Integrated Technologies. Contents are confidential. All rights reserved. Consumer Products/Retail Manufacturing 8 Facility Design Process PEACH STATE © 2011 Peach State Integrated Technologies. Contents are confidential. All rights reserved. Process Overview To begin, a summary of the overall process will help visualize the destination. This will help in understanding the path to get there. Where do we start? Operational Review Data Collection Data Analysis Profiling Select an Order Fulfillment Methodology (OFM) Based on order, customer and SKU profiles Minimize handling, maximize service level How big? & How fast? Forward pick? Which tools? Numbers of slots, facings, locations Sortation parameters and requirements. Connect the dots Keeping this process in view while examining each of the individual steps will help keep the forest in view while looking at each tree. © 2011 Peach State Integrated Technologies. Contents are confidential. All rights reserved. 10 Data Analysis Methodology Our analysis methodology transformed historical data into future design requirements: Collect Data Analyze Data Construct Profiles Develop Parameters Model Scenarios Define Requirements Design Parameters: Assumptions: •SKU Base •Handling Unit Type •Cartons Shipped •Pick Face Days Supply Network •Planning Horizon •Growth Rates • Inventory Turns •Ship Window •Hourly Surges Design Requirements: •Order Fulfillment Methodology •MHE Throughput Rates •Pick Zones •Storage Media © 2011 Peach State Integrated Technologies. Contents are confidential. All rights reserved. 11 Facility Design Profiles Profiles of different data elements help to address the variety of questions that must be answered in the facility design effort. Planning & Design Issue Key Focus Primary Data Source Profiles Storage Sizing Right storage media & corresponding facings for reserve slots Item, Location & Inventory Data • ABC inventory distribution • Handling unit (pallets, cube, cases, etc.) inventory profile Order Fulfillment Methodologies Effective strategies for picking & packing (e.g., zone pick & sort opportunities?) Order Files • • • • Material Handling System Throughput & Capacity Peak hourly volumes to be processed Order Files • Daily activity profile (orders, lines, full cases, split cartons, total boxes) • Hourly activity distribution (particularly with respect to order drop & cutoff times) Warehouse Zone & Facing Requirements Right storage media & corresponding facings for primary slots Order, Item & Location Files • ABC activity (Pareto) profile • Cube movement distribution • Storage zone profiles (SKUs, volumes, etc. by special requirements - drug, cooler, etc.) Per order distributions (lines, units, cartons, cube, etc.) Per carton distributions Order mix/completion distribution Handling unit profile (broken/full case, full pallet, mixed) Actual development of most profiles involves generating each “day’s” activity, statistically analyzing them then developing the distributions. © 2011 Peach State Integrated Technologies. Contents are confidential. All rights reserved. 12 Profiling – Input to the OFM Decision Identifying the correct OFM’s for each portion of the operation is the first step in developing the facility design. Order Profiles Handling Unit Profiles •Per ship method (parcel vs. truck) •Per order distributions •Per carton distributions •Order completion •Single line percentage •Per day & hr distributions •Full Case Pct •Broken Case Pct •Full Pallet Pct •Mixed Orders Pct •Special handling SKU Profiles •ABC (Pareto) Distribution •Full Case, Broken Case, Full Pallet Volumes •Cube movement •Lot control •Hazmat •Refrig/Freezer ORDER FULFILLMENT METHODOLOGIES Broken Case OFMs Primary Manual vs. Automated Considerations: • Throughput requirements (hourly volumes) • Labor requirements (amount, cost, availability) • Service requirements (accuracy, service levels, costs of non-conformance) © 2011 Peach State Integrated Technologies. Contents are confidential. All rights reserved. Full Case OFMs 13 OFM Matrix Two primary factors in determining the appropriate order fulfillment methodologies (OFM) are facility volume and order profile. Volume Automation Product to Order Order to Product SKU Pick/Sort Pick to AutoPak Dynamic Zone Pick & Pass Automated Picking Storerooms Garages Cart Batch Pick OP to Pallet Line/Order © 2011 Peach State Integrated Technologies. Contents are confidential. All rights reserved. 14 Broken Case Methodologies Complexity (Automation & Technology) Order Picking Discrete (Single) Order Pick •Low volumes •Small footprint (travel path) •High Lines/order •Large Cube/order •Limited WMS Batch (Cluster) Order Pick •Low Lines/order •Low Cube/order •Small travel path •Frequent order release •WMS capable •Can fit >1 order on pick vehicle Pick To Tote •Precise order cube cannot be pre-determined •Re-handling/VAS at packing Sequential Sequential (Static) Zone (Static) Zone •Low order complete % within pick zones SKU Picking Pick Pick & Pass SKU Pick & Marry •Med-high volumes •Med Cube/order •Limited SKUs complete orders •Med-high Lines/order •Low lines/order •Opportunity to batch & release many orders •High SKU commonality across orders Pick Pick To To Carton Carton •Precise order cube can be pre-determined •Order ship ready at point of pick Dynamic Zone Bulk Pick & Re-Pick Pick To Put •Limited WMS •Large number of SKUs needed to complete orders •Low number of customerorder sort points per wave •High order completion pct within pick zones © 2011 Peach State Integrated Technologies. Contents are confidential. All rights reserved. Pick & Sort (Tilt-tray) •High hourly volumes •Sturdy/ durable products Enhancements: RF Voice PTL RFID Auto. Pick (A Frame) •Very high hourly volumes •Sturdy/ durable products •Uniform/ standard product shapes & sizes 15 Full Case Methodologies Complexity (Automation & Technology) Order Picking Single Order Pick To Pallet •Low volumes •Most applicable for large, truck (LTL) orders SKU Picking Multi Order Pick To Pallet SKU Pick Pick & Sort Sort Downstream Downstream •Small order size •Pick vehicle has capacity for >1 order Automation Considerations: •Throughput requirements (peak hourly volumes) •Labor requirements (amount, cost, availability) –current & projected •Service requirements (accuracy, service levels, costs of non-conformance) •Dock doors available/required •Staging space available/required Pick to Pallet & Sort •Limited WMS •Large number of SKUs needed to complete orders •Adequate sort & staging space © 2011 Peach State Integrated Technologies. Contents are confidential. All rights reserved. Zone pick & drop to induct point •Med-high volume •Most applicable for Parcel •Small footprint •Random storage Pick Belt Pick to Belt •Very high hourly volumes •Small # SKUs represent high % volume 16 Case Study PEACH STATE © 2011 Peach State Integrated Technologies. Contents are confidential. All rights reserved. Project Overview The design project we are reviewing proceeded through implementation. The client is philosophy, a high end skin care cream manufacturer. Growing through the recession (20%) Recently purchased by a private equity firm High profile, luxury product identity Persistent demand from existing customers New customers gained through Internet and QVC Originally in two fulfillment facilities Both space constrained Retail & QVC fulfilled in one facility Internet fulfilled (from same SKU base) at HQ Spec building selected prior to design Size and door count validated immediately Sufficient for 2015 and beyond Some expansion capability available They were moving very fast, with aggressive growth projections and desired a rapid evidence of return on investment. © 2011 Peach State Integrated Technologies. Contents are confidential. All rights reserved. 18 Data Analysis Results PEACH STATE © 2011 Peach State Integrated Technologies. Contents are confidential. All rights reserved. 19 Outbound Profiles – Daily Activity The below statistics help to illustrate the activity levels of the combined business, Retail DSDC and Internet channels. Combined Parameter Average 95th Percentile Max Peak to Avg Orders/day 934 2,240 3,882 2.40 Lines/day 3,875 9,485 14,611 2.45 Units/day 23,748 77,391 135,662 3.26 CubicFeet/day 502 1,420 2,802 2.83 Weight/day 14,931 43,814 87,689 2.93 SKUs/day 328 454 473 1.39 Orders/day 87 254 482 2.93 Lines/day 765 2,145 3,214 2.80 Units/day 10,278 33,098 91,685 3.22 CubicFeet/day 226 801 1,459 3.54 Weight/day 6,765 22,907 50,182 3.39 SKUs/day 103 178 218 1.72 Orders/day 894 2,227 3,815 2.49 Lines/day 3,282 8,197 14,160 2.50 Units/day 3,430 8,922 14,721 2.60 CubicFeet/day 71 190 374 2.70 Weight/day 1,794 5,024 8,503 2.80 SKUs/day 308 417 460 1.36 Retail DSDC Parameter Average 95th Percentile Max Peak to Avg Internet Parameter Average 95th Percentile Max Peak to Avg © 2011 Peach State Integrated Technologies. Contents are confidential. All rights reserved. 20 Outbound Profiles – Order Statistics The below statistics help to illustrate the nature of the orders across the combined business, Retail DSDC and Internet channels. Combined Parameter Average 95th Percentile Max Peak to Avg Lines/Order 4.7 8.1 37 1.73 Units/Order 52.8 176.4 2,251 3.34 Cubic/Order 1.0 2.9 34 2.85 Weight/Order 30.3 85.7 1,043 2.83 Units/Line 8.6 22.4 172 2.60 Lines/Order 11.1 24.8 56 2.23 Units/Order 277.8 927.2 7,372 3.34 Cubic/Order 6.5 19.6 304 3.01 Weight/Order 200.9 592.8 9,288 2.95 Units/Line 24.9 120.2 413 4.82 Lines/Order 3.6 4.4 8 1.20 Units/Order 3.8 4.6 8 1.22 Cubic/Order 0.1 0.1 1 1.38 Weight/Order 2.0 3.0 8 1.50 Units/Line 1.1 1.1 8 1.05 Retail DSDC Parameter Average 95th Percentile Max Peak to Avg Internet Parameter Average 95th Percentile Max Peak to Avg © 2011 Peach State Integrated Technologies. Contents are confidential. All rights reserved. 21 Outbound Profiles - Throughput The daily throughput profile reveals considerable seasonality, peaking in October & November. Total (No QVC) Daily Outbound Units Shipped 140,000 120,000 100,000 80,000 60,000 40,000 20,000 Units 95th Percentile © 2011 Peach State Integrated Technologies. Contents are confidential. All rights reserved. Dec-09 Nov-09 Oct-09 Sep-09 Aug-09 Jul-09 Jun-09 May-09 Apr-09 0 Average 22 Outbound Profiles - Internet The daily throughput profile reveals considerable seasonality, peaking in November. Internet Daily Outbound Units Shipped 16,000 14,000 12,000 10,000 8,000 6,000 4,000 2,000 Units Average © 2011 Peach State Integrated Technologies. Contents are confidential. All rights reserved. Dec-09 Nov-09 Oct-09 Sep-09 Aug-09 Jul-09 Jun-09 May-09 Apr-09 0 Percentile 23 Outbound Profiles – Retail DSDC The daily throughput profile reveals some seasonality, peaking in September & October. Daily Retail (DSDC) Outbound Units Shipped 100,000 90,000 80,000 70,000 60,000 50,000 40,000 30,000 20,000 10,000 Units Average © 2011 Peach State Integrated Technologies. Contents are confidential. All rights reserved. Dec-09 Nov-09 Oct-09 Sep-09 Aug-09 Jul-09 Jun-09 May-09 Apr-09 0 Percentile 24 Outbound Profiles – Lines Per Order Lines per order profiles were developed for Retail DSDC and Internet orders. 8.8 Average Retail - DSDC Lines per Order Internet Lines per Order 32% 30% 80% 90% 70% 80% 21% 19% 18% Pct 20% 60% 50% 15% 40% 9% 10% 30% 20% 5% 1% 0% 0% 1 2-5 Pct Orders 6-10 11-20 Pct Lines 21-50 51-100 100% 69% 90% 80% 60% 70% Cum Pct 25% 100% 70% 50% 60% Pct 35% 3.7 40% 50% 30% 40% 20% 10% 10% 0% 0% >100 Cumm Pct Orders © 2011 Peach State Integrated Technologies. Contents are confidential. All rights reserved. 16% Cum Pct Average 30% 15% 20% 0% 0% 0% 0% 10% 0% 1 2-5 Pct Orders 6-10 11-20 Pct Lines 21-50 51-100 >100 Cumm Pct Orders 25 Outbound Profiles – Units Per Order Unit per order profiles were developed for Retail DSDC and Internet orders. 118.6 Average Retail DSDC Units per Order Internet Units per Order 100% 80% 90% 70% 80% Pct 50% 50% 40% 40% 27% 18% 20% 17% 12% 0% 20% 20% 5% 0% 1 2-5 Pct Orders 6-10 11-20 Pct Units 21-50 51-100 30% 90% 80% 60% Cum Pct 60% 100% 68% 70% 70% 60% 10% 80% 70% 50% 60% Pct 90% 30% 3.9 40% 50% 30% 40% 20% 10% 10% 0% 0% >100 Cumm Pct Orders © 2011 Peach State Integrated Technologies. Contents are confidential. All rights reserved. 30% 16% 14% Cum Pct Average 20% 1% 0% 0% 0% 11-20 21-50 51-100 >100 10% 0% 1 2-5 Pct Orders 6-10 Pct Units Cumm Pct Orders 26 Outbound Profiles – Cube Per Order Cube per order profiles were developed for Retail DSDC and Internet orders. 2.6 Average Retail DSDC Cubic Feet per Order Internet Cubic Feet per Order 45% 100% 45% 40% 90% 40% 35% 80% 50% 20% 20% 40% 14% 15% 12% 10% 5% 5% 3% 0% 0-0.25 0.25-0.5 Pct Orders 0.5-1 1-1.5 Pct Lines 1.5-5 5-10 Pct 24% 23% 90% 35% 80% 70% 30% Cum Pct Pct 60% 100% 35% 70% 30% 25% 0.0 24% 25% 60% 22% 50% 20% 30% 15% 20% 10% 10% 5% 0% 0% >10 Cumm Pct Orders © 2011 Peach State Integrated Technologies. Contents are confidential. All rights reserved. 40% 30% 9% 5% Cum Pct Average 20% 3% 2% 10% 0% 0-0.0025 0.0025-0.005 0.005-0.01 Pct Orders 0.01-0.03 Pct Lines 0.03-0.05 0.05-0.1 >0.1 Cumm Pct Orders 27 Outbound Profiles – Cartons Per Order Cartons per order profiles were developed for Retail DSDC and Internet orders. Average 3.4 Retail DSDC Cartons per Order Internet Cartons per Order 50% 100% 43% 35% 70% 30% 60% 25% 50% 19% 18% 40% 13% 15% 10% 30% 20% 4% 5% 2% 1% 0% 2 Pct Orders 3-4 5-10 Pct Cartons 11-20 21-50 100% 100% 100% 80% 100% 60% 100% 40% 100% 20% 100% 10% 0% 1 100% Pct 80% Pct 40% 20% 120% 90% Cum Pct 45% 1.0 0% 0% 0% 0% 2 3 4 5 0% 0% 0% >50 Cumm Pct Orders © 2011 Peach State Integrated Technologies. Contents are confidential. All rights reserved. Cum Pct Average 100% 0-1 Pct Orders Pct Cartons 6-15 >15 Cumm Pct Orders 28 SKU Data Review PEACH STATE © 2011 Peach State Integrated Technologies. Contents are confidential. All rights reserved. 29 Pareto Profile - Lines A Pareto profile helps illustrate the concentration (or lack thereof) of activity within a particular range of products. The below shows the variation in line activity across the SKU base for Retail, Internet and Combined orders. Retail Pareto by Lines Internet Pareto by Lines 100% 100% 90% 90% 80% 80% 70% 70% 60% 60% 50% 50% 40% 40% 30% 30% 20% 20% 10% 10% 0% 0% 0% 10% 20% 30% 40% 50% 60% 70% 80% 90% 0% 10% 20% 30% 40% 50% 60% 70% 80% 90% Combined Pareto by Lines 100% 90% 80% 70% 60% 50% 40% 30% 20% 10% 0% 0% 10% 20% 30% 40% 50% 60% © 2011 Peach State Integrated Technologies. Contents are confidential. All rights reserved. 70% 80% 91% 30 Pareto Profile - Units The below shows the variation in unit activity across the SKU base for Retail, Internet and Combined orders. Retail Pareto by Units Internet Pareto by Units 100% 100% 90% 90% 80% 80% 70% 70% 60% 60% 50% 50% 40% 40% 30% 30% 20% 20% 10% 10% 0% 0% 0% 10% 20% 30% 40% 50% 60% 70% 80% 90% 0% 10% 20% 30% 40% 50% 60% 70% 80% 90% Combined Pareto by Units 100% 90% 80% 70% 60% 50% 40% 30% 20% 10% 0% 0% 10% 20% 30% 40% 50% © 2011 Peach State Integrated Technologies. Contents are confidential. All rights reserved. 60% 70% 80% 91% 31 Pareto Profile - Cube The below shows the variation in cubic velocity across the SKU base for Retail, Internet and Combined orders. Retail Pareto by CF Internet Pareto by CF 100% 100% 90% 90% 80% 80% 70% 70% 60% 60% 50% 50% 40% 40% 30% 30% 20% 20% 10% 10% 0% 0% 0% 10% 20% 30% 40% 50% 60% 70% 80% 0% 90% 10% 20% 30% 40% 50% 60% 70% 80% 90% Combined Pareto by CF 100% 90% 80% 70% 60% 50% 40% 30% 20% 10% 0% 0% 10% 20% 30% 40% 50% © 2011 Peach State Integrated Technologies. Contents are confidential. All rights reserved. 60% 70% 80% 91% 32 Total Active SKUs by Month The total SKUs active in a month at peak is over 800 SKUs. This compares to a baseline of ~1,370 total SKUs with activity across the timeframe analyzed. © 2011 Peach State Integrated Technologies. Contents are confidential. All rights reserved. 33 OFM - Zone Pick & Consolidate PEACH STATE © 2011 Peach State Integrated Technologies. Contents are confidential. All rights reserved. 34 Outbound Profiles – Full Case vs. Broken Case To determine how orders “are” fulfilled, full case and broken case volumes were calculated for both Retail DSDC and Internet orders, first in lines. Lines 800,000 700,000 Lines - Quantity Total Full Case Only Broken Case Only Both All 771,105 52,824 682,098 8,065 Retail 150,695 42,197 100,143 7,949 Internet 620,410 10,627 581,955 116 Ulta Sephora 2,533 5,915 956 1,279 937 1,346 615 3,187 Full Case Only Broken Case Only Both Retail Internet 28.0% 1.71% 66.5% 93.80% 5.3% 0.02% Both 500,000 Broken Case Only 400,000 Full Case Only 300,000 200,000 100,000 - Lines - % All 6.85% 88.46% 1.05% 600,000 100% Ulta Sephora 37.7% 21.6% 37.0% 22.8% 24.3% 53.9% All Channels Retail Internet All Channels Retail Internet Ulta Sephora 90% 80% 70% 60% 50% 40% 30% 20% 10% 0% © 2011 Peach State Integrated Technologies. Contents are confidential. All rights reserved. Ulta Sephora 35 Outbound Profiles – Full Case vs. Broken Case To determine how orders “are” fulfilled, full case and broken case volumes were calculated for both Retail DSDC and Internet orders, next in units. Units 5,000,000 4,500,000 Broken Case Only 4,000,000 3,500,000 Full Case Only 3,000,000 Units - Quantity All Retail Total 4,725,811 4,077,473 Full Case Only 3,263,052 3,249,327 Broken Case Only 1,456,572 828,025 Internet Ulta 2,500,000 Sephora 2,000,000 1,500,000 648,338 256,854 1,908,940 11,504 221,555 1,778,472 628,547 35,298 130,465 Units - % Full Case Only Broken Case Only All 69.0% 30.8% Retail Internet 79.7% 2.1% 20.3% 97.9% Ulta Sephora 86.3% 93.2% 13.7% 6.8% 1,000,000 500,000 All Retail Internet Ulta All Retail Internet Ulta Sephora 100% 90% 80% 70% 60% 50% 40% 30% 20% 10% 0% © 2011 Peach State Integrated Technologies. Contents are confidential. All rights reserved. Sephora 36 OFM Rationale & Criteria The benefit of zone pick & consolidate OFM is a reduction in non-value added labor and an improvement in quality & cycle time. Multi-channel order fulfillment in common areas provides considerable benefits: Improved utilization of labor throughout year Increased opportunity to use shipping sortation automation Common shipping area increases flexibility due to variations in channel seasonality Handling full case separate from piece pick allows for proper slotting of the SKU by cubic velocity in that UOM while reducing the walk time. Performing all piece picks in a common module consolidates repack operations in one location for enhanced process control and efficiency. Consolidation can be error prone and also increase non-value added handling. A shipping sorter assist with palletization of LTL and fluid load of parcel carriers will address both issues. Repack replenishment can also be supported by “picking” the required replenishment cases, and then delivering to the repack module, either via conveyor or, after palletizing by SKU, by vehicle. © 2011 Peach State Integrated Technologies. Contents are confidential. All rights reserved. 37 Full Case OFM – Pick to Label PEACH STATE © 2011 Peach State Integrated Technologies. Contents are confidential. All rights reserved. 39 Full Case Pick to Label Rationale The benefit of a pick to label OFM is the elimination of non-value added repack activity while improving quality with verification of cases at the shipping sorter. Retail orders require a large portion of their volume in full case quantities (80%). Creating a full case pick zone using a pick to label approach will eliminate the non-value added handling of repacking all case quantities into repack containers. Units 5,000,000 4,500,000 Broken Case Only 4,000,000 3,500,000 Full Case Only 3,000,000 2,500,000 2,000,000 Pick to label addresses the issue with small cases while retaining efficient picking. Cases 3” tall or less will be handled as piece picks. 1,500,000 1,000,000 500,000 All Retail Internet Ulta Sephora Repack replenishment can also be supported by “picking” the required replenishment cases, palletizing by SKU and then delivering to the repack module. © 2011 Peach State Integrated Technologies. Contents are confidential. All rights reserved. 40 Pick To Belt – MHE Capital The Pick to Belt concept is quite simple and economical. The below budgetary estimate illustrates the expected capital needed to implement this capability. SKUs Pallet Flow Bays Conveyor Length Connecting Conv. Total Conv. Pallet Flow Conveyor MHE Total © 2011 Peach State Integrated Technologies. Contents are confidential. All rights reserved. 285 96.6% of case volume 143 2 SKUs/bay 590 8.25 Bay width 50 Access to Sorter 640 $100,600 $304,200 $404,800 41 Broken Case OFM – Zone Pick & Pass PEACH STATE © 2011 Peach State Integrated Technologies. Contents are confidential. All rights reserved. 43 ZPP – Rationale The expected benefit of a pick and pass order fulfillment methodology is the elimination/reduction of non-value added labor. Cartons requiring units from multiple zones must be manually moved from zone to zone increasing walk time by pickers. Pickers remaining in their zones while conveyor moves the cartons from zone to zone will eliminate the non-value walk time. By separating full case volumes from broken case, the pick faces in the ZPP can be reduced to minimize pick travel paths. Appropriate configuration of powered and gravity conveyors can assist with the passing required to complete cartons. © 2011 Peach State Integrated Technologies. Contents are confidential. All rights reserved. 44 Broken Case Pick Module A broken case pick module with pallet & carton flow and static shelving provides flexibility and efficient order fulfillment across both Retail and Internet channels. © 2011 Peach State Integrated Technologies. Contents are confidential. All rights reserved. 45 Design Requirements PEACH STATE © 2011 Peach State Integrated Technologies. Contents are confidential. All rights reserved. 47 Growth Projections The different fulfillment channels contribute varying amounts to the overall corporate growth of Client. Year Total Revenue Internet Volume Retail Volume QVC Volume Internet Vol % Retail Vol % QVC Vol % Growth QVC Growth Rate Multiplier Turns Turns Change Mult 10.9% 71.3% 17.7% 2009 $150.0 $16.4 $107.0 $67.5 10.9% 71.3% 17.7% 3% 1.00 4.00 2010 $188.0 $24.9 $91.1 $72.0 14.0% 48.4% 38.3% 25% 3% 1.25 4.17 0.96 2011 $238.0 $40.4 $121.1 $76.5 17.0% 50.9% 32.1% 27% 3% 1.59 4.33 0.96 © 2011 Peach State Integrated Technologies. Contents are confidential. All rights reserved. 2012 $300.0 $60.0 $159.0 $81.0 20.0% 53.0% 27.0% 26% 3% 2.00 4.50 0.96 2013 $330.0 $63.6 $183.0 $83.4 19.3% 55.4% 25.3% 10% 3% 2.20 4.67 0.96 2014 $363.0 $67.4 $209.7 $85.9 18.6% 57.8% 23.7% 10% 3% 2.42 4.83 0.97 2015 $399.3 $71.5 $239.3 $88.5 17.9% 59.9% 22.2% 10% 3% 2.66 5.00 0.97 48 Storage Requirements Storage requirements were based on increases in shipping volumes for all three channels. Baseline storage for 2012 was calculated from inventory data for retail and internet volumes and historical requirements for Primary Location storage. Category QVC/Internet KA Components Total 2009 1,697.7 7,000.0 8,697.7 2010 1,762.0 7,168.0 8,930.0 Pallet Inventory 2011 2012 2013 2,236.5 2,169.5 1,796.0 7,323.1 7,466.7 7,416.0 9,559.6 9,636.2 9,212.0 2014 1,793.5 7,375.1 9,168.6 2015 1,790.5 7,343.1 9,133.6 Max Util 2,236.5 85% 7,466.7 Capacity 9,636.2 11,337 Note that the driving factor is kitting storage. The growth associated with this area does not overcome the improvement in turns until 2012. © 2011 Peach State Integrated Technologies. Contents are confidential. All rights reserved. 49 Pick Module Sizing Each SKU was assessed for its broken case volume, Internet and Retail. These volumes were then assigned to pick media. Replenishment was assumed to be every four days on average for a slot classification. Bays SKUs 2010 Media PF 57 63 CF - 3 27 30 CF - 2 69 76 CF - 1 113 124 Shelf - 3 69 76 Shelf - 2 125 138 Shelf - 1 907 998 Total SKUs 1367 1,505 SKU Growth 10% 2011 69 33 84 136 84 152 1,098 1,656 10% 2012 2013 2014 2015 76 36 92 150 92 167 1,208 1,821 10% 84 40 101 165 101 184 1,329 2,004 10% 92 44 111 182 111 202 1,462 2,204 10% 101 48 122 200 122 222 1,608 2,423 10% Faces/ Face/ 2012 2015 SKU Bay 1 2 40 54 3 40 2 40 1 40 12 16 3 120 2 120 1 120 16 22 Total Bays 68 92 Bays/Slice 4 6 Slices 17 15 A “slice” is one bay wide, includes both sides and all levels of the module. The number of slices determines the overall length of the module. © 2011 Peach State Integrated Technologies. Contents are confidential. All rights reserved. 50 Conceptual Design PEACH STATE © 2011 Peach State Integrated Technologies. Contents are confidential. All rights reserved. 51 Facility Overview While the overall concept has remained unchanged, some elements were modified to meet requirements and improve design. © 2011 Peach State Integrated Technologies. Contents are confidential. All rights reserved. 52 Full Case Pick Lines The below two lanes with shelving in 3 bays at the downstream end support over 99.2% of the full case units, 73% of those in the pallet flow bays. © 2011 Peach State Integrated Technologies. Contents are confidential. All rights reserved. 53 Material Flow Key Inbound Internal Outbound © 2011 Peach State Integrated Technologies. Contents are confidential. All rights reserved. 54 Reserve Storage © 2011 Peach State Integrated Technologies. Contents are confidential. All rights reserved. 56 Broken Case Pick Module There are currently 18 “slices” in the module. However, as the below illustrates, there will be some losses due to stairs, trash chutes, etc. Note: Each slice increases capital by about $20K. © 2011 Peach State Integrated Technologies. Contents are confidential. All rights reserved. 57 Packing The packing configuration below allows for future expansion, consumable material staging and operator egress. © 2011 Peach State Integrated Technologies. Contents are confidential. All rights reserved. 58 Shipping The shipping sorter supports a peak throughput of less than 40 cpm. Technology of this type can manage approximately twice that, if necessary. MHE Capacity Full Case Throughput BC Throughput Total Cases/Day CPM - 1 shift, 85% 2009 1,052 1,074 2,126 7.9 2010 1,318 1,346 2,664 9.9 2011 1,669 1,704 3,373 12.5 2012 Peak 2,103 5,760 2,148 5,882 4,251 11,643 15.7 28.7 © 2011 Peach State Integrated Technologies. Contents are confidential. All rights reserved. 2013 2,314 2,599 4,912 18.2 2014 2,545 2,859 5,404 20.0 2015 2,799 2,859 5,658 21.0 Max Peak 2,799 7,667 2,859 7,829 5,658 15,496 21 38.3 P2A 2.74 2.74 59 Budget & Staffing PEACH STATE © 2011 Peach State Integrated Technologies. Contents are confidential. All rights reserved. 60 Detailed Budget The below reflects some budgeting allowances but could serve as a GMP. Category Investment Descriptions Reserve Rack $417,100 6,500 new pallet positions, 6,000 used relocated Pick Module $375,900 18 slices, 2/3 pallet flow, 1/6 carton flow, 1/6 shelving Pack Stations $7,000 4 pack stations, 1 singles pack station, 1 QA capable station Full Case Conveyor $110,300 2 pick aisles plus merges, including 3 shelf bays & flow lanes Pick Module Conveyor $197,500 two levels power, gravity outriggers, gates Spiral $48,000 second to first level, powered Sorter Conveyor $232,500 recirc, accumulation, merge, pack station conveyor, lanes Sorter $215,000 11 diverts (6 reused), 9 LTL, 1 parcel, 1 NR/Reject WCS $140,000 WMS interface, sorter, accumulation control Total $1,743,300 Note: ~1,500 pallet positions are lost above the used rack. To cube out this area completely would increase capital by ~$225K with re-used beams). © 2011 Peach State Integrated Technologies. Contents are confidential. All rights reserved. 61 Outbound Staffing The modifications to the order fulfillment method recommended will affect only the outbound personnel. Below is the conservative staffing estimate. Rates 24 150 20 180 60 60 36 100 14 250 36 100 Daily Activity Shipping (cpd) Palletization cph Fluid Load cph Packing cph Broken Case Picking lph Full Case Picking cph Broken Case Replen cph Total FTEs (avg) 2009 2,126 1,052 1.0 1,074 1.0 1,074 2.5 2,634 4.0 1,052 0.5 1,074 1.5 11.0 2010 2,664 1,318 1.5 1,346 1.0 1,346 3.5 3,301 5.0 1,318 1.0 1,346 2.0 14.0 2011 3,373 1,669 1.5 1,704 1.5 1,704 4.0 4,179 6.0 1,669 1.0 1,704 2.5 17.0 2012 Peak 4,251 11,643 2,103 5,760 2.0 4.0 2,148 5,882 2.0 3.0 2,148 5,882 5.5 9.5 5,268 12,447 7.5 12.0 2,103 5,760 1.0 2.5 2,148 5,882 3.0 6.0 21.0 35.0 2013 4,912 2,430 2.5 2,482 2.0 2,482 6.0 5,795 8.5 2,314 1.5 2,482 3.5 24.0 2014 5,404 2,674 2.5 2,730 2.0 2,730 6.5 6,374 9.5 2,545 1.5 2,730 4.0 26.0 2015 5,658 2,799 2.5 2,859 2.5 2,859 7.0 7,012 10.5 2,799 1.5 2,859 4.0 28.0 Max Peak P2A 5,658 15,496 2.74 2,799 7,667 2.74 2.5 5.0 Pltzr 2,859 7,829 2.74 2.5 4.5 Loaders 2,859 7,829 2.74 7.0 13.0 Packers 7,012 16,567 2.36 10.5 16.0 Pickers 2,799 7,667 2.74 1.5 3.0 Pickers 2,859 7,829 2.74 4.0 7.5 PJ 28.0 49.0 Peak Units cases cases FTEs cases FTEs cartons FTEs lines FTEs cases FTEs cases FTEs FTEs Note: Peak values reflect operating for 1.5 shifts for peak. © 2011 Peach State Integrated Technologies. Contents are confidential. All rights reserved. 62 Project Implementation PEACH STATE © 2011 Peach State Integrated Technologies. Contents are confidential. All rights reserved. 63 Implementation Schedule This schedule reflects a first pass at the phases of the implementation. It reflects decommissioning the existing facility as well as relocating equipment to the new DC. © 2011 Peach State Integrated Technologies. Contents are confidential. All rights reserved. 64 Questions? © 2011 Peach State Integrated Technologies. Contents are confidential. All rights reserved. 65 CONTACT INFORMATION E-mail: dstar@peachstate.com Web: www.peachstate.com Phone: 678-327-2013 PEACH STATE © 2011 Peach State Integrated Technologies. Contents are confidential. All rights reserved.