TGW Systems Case Study
A new mini-load system from
TGW Systems led the
transformation of Fastenal’s
Indianapolis distribution center
With 126,000 tote locations, the system delivers totes to workstations where
operators fill orders for 275 stores in the Great Lakes region and replenish
stock at 13 regional distribution centers around the country.
“Growth through customer service” has been
the motto at Fastenal, one of the nation’s
largest distributors of industrial fasteners,
since the company was founded in 1967.
From the start, Fastenal distinguished itself
by staying close to its customer with an evergrowing network of industrial supply stores
that provide local service and immediate
product availability.
Today, the company has 2,357 store locations across 18 regions of the country. But
Fastenal’s growth isn’t defined just by adding
new store fronts. Over the last few years,
Fastenal has also expanded the number of
products it sells by a factor of five.
To accommodate that growth, the Winona,
Minnesota-based distributor implemented
automated materials handling technologies
to turn its 530,000 square foot Great Lakes
Distribution Center in Indianapolis from a
regional DC serving 275 stores into a master
DC that stocks 163,000 stock keeping units
(SKUs) and replenishes the company’s 13
other distribution centers around the country.
At the heart of the system is a goods-to-theperson picking system powered by a miniload automated storage and retrieval system
(AS/RS) from TGW with 126,000 storage locations and 12 fast, double-handling cranes.
The mini-load delivers totes to workstations
where operators do order selecting in an
ergonomic and efficient environment.
The benefits: By using the mini-load to store
and retrieve totes, Fastenal has reduced the
number of times it touches a product in the
distribution center from as many as 12 to as
few as two. In addition, delivering totes to
order selectors at an ergonomic height has
cut down on the amount of travel time in the
DC, reduced injuries and improved morale.
Employee turnover is on the decline.
Combined with other materials handling
technologies, including a 13-crane unit load
AS/RS with 52,000 pallet locations, the new
system is processing an estimated 16,000
packages per day while picking from as
many as 100,000 unique SKUs each month.
Best of all, there is room to grow as the
company continues to grow. “High density
storage is huge for us,” says Walter Tate,
Fastenal’s manager of distribution development.
Better yet, the mini-load has “improved
inventory accuracy and eliminated errors,”
says Tate. “Every time you touch a product,
there’s an opportunity for a mistakes. By
eliminating those touches, we’ve reduced the
opportunity for error.”
A new strategy, a new DC
Fastenal’s business model is designed to
distinguish itself from the competition by
utilizing a network of industrial supply stores
that provide local service and immediate
product availability over a catalog of parts.
The network is supported by 14 distribution centers that average 125,000 square
feet and typically carry the 20,000 or so
SKUs that are most commonly ordered by
customers of the stores served by that DC.
Over time, Fastenal has developed three
distribution center models. One is for smaller,
manual distribution centers. As a business
unit grows over a five- or ten-year period, the
company moves that business into a bigger
facility. Eventually, Fastenal adds automation
as economies of scale dictate. That typically
occurs once a facility is processing 200,000
to 250,000 requests a month.
Three years ago, Fastenal began to investigate ways to grow the business at its
existing stores. Back then, the company
was purchasing or manufacturing about
32,000 SKUs. The next step was to expand
the number of SKUs by adding products
that would complement the products it
was already selling: instead of just selling
nuts and bolts, the company added new
items like cutting tools to bore a hole for the
belt, ratchets to set a bolt and wrenches to
tighten them. “The emphasis is to have the
product ready when our customers need it,”
says Tate.
One of the first steps was to add a purchasing group in Indianapolis to expand the inventory. In addition, the company allowed store
managers to purchase any piece of inventory
they might need to service a customer or to
create a new part number to buy something
the company has never purchased before.
Within three years, Fastenal was offering
160,000 SKUs, or 5 times the number of
products it had previously offered. Those additional SKUs began to generate new sales.
Since it was impractical for each DC to stock
all the products the company was carrying,
Fastenal’s CEO, Will Oberton and his colleagues designed a new distribution strategy
utilizing a master DC that can stock all of the
parts and then replenish parts as needed at
the regional DC’s. The Great Lakes
“We now have the capacity we need and the
system operates at a speed that allows us to
control our work flow.”
With as much as a 50 percent share of the
European market for mini-load technology,
TGW was an ideal partner for this installation.
“We have already designed and implemented systems for this type of operating
environment,” says Rostan Eaton, TGW’s
project manager and team leader. “We were
not reinventing the wheel with this project.”
In addition, the Fastenal system utilized
TGW’s Mustang crane, a double-deep handling base designed to move a 200-pound
load capacity with some of the fastest
speeds in the industry. “Since Fastenal
wanted to handle two totes at a time weighing approximately 75 pounds each, that was
our sweet spot,” says Eaton.
“At the end of the day,
the choice of mini-load
cranes delivered the best
return on investment for
this application.”
The cranes also feature a proprietary twopiece brazed mast; plus, they are modular in
design, adjustable for height and use parts in
common with other TGW products. “With a
modular product, we can easily add cranes
as Fastenal’s business expands,” says Eaton.
“And by using common parts, they can
expand their system without expanding the
number of spare parts that have to be stored.”
Adds Tate: “When we looked at the market,
TGW had the best throughput rate for double
deep storage, and the speed of their cranes
allowed us to use fewer cranes to get the
same amount of work done. They clearly
were a strategic partner in this project.”
The Mustang AS/RS brings the work to the worker at ergonomic pick stations.
Distribution Center was chosen as the master
DC because of it’s location and at 460,000
sq ft, it was the largest facility in the network.
While the Indianapolis DC would continue to
support the 275 stores in the Great Lakes
region, it would also receive and store product
in bulk and then break those pallets down if
necessary to replenish other DCs – or ship
directly to a store – with product not typically
stocked in those regions. “By utilizing our fleet
of semis and by utilizing UPS and FedEx for
smaller shipments, we can hit most of the US
in one day from Indianapolis,” explains Terry
Hanley, a regional distribution manager.
Bring in automation
Handling those additional SKUs also required
a makeover of the Indianapolis facility. Until
that time, Indianapolis was a traditional semi-
automated warehouse, using narrow-aisle
pallet rack, lift trucks, some conveyor and
sortation equipment and RF-directed picking driven by an internally developed WMS.
The new design incorporated automation to
maximize storage, direct fast, accurate and
efficient picking and accommodate the growth
strategy. “We started with automated storage
because we were going to run out of room,”
says Tate. “We added the mini-load AS/RS to
increase throughput and decrease touches.”
Mini-load technology was also the best
solution for handling medium to mediumfast moving SKUs in a facility that offers
same-day order processing. “We didn’t
have the room to add the number of people
we needed to keep up with demand in a
traditional picking environment,” says Tate.
How it works
Mixed pallets with more than one stock
keeping unit (SKU) are scanned at the
receiving area and delivered to a workstation
for processing. There, operators scan the
cartons into a storage tote. Once the tote
is full, it’s conveyed to the mini-load AS/RS,
where the warehouse control system (WCS)
chooses a putaway location and updates
the WMS. That inventory is now available to
promise to branches nationwide.
Meanwhile, Fastenal’s branch locations
report sales in real time to the corporate
inventory system. That information is used
by the WMS to create replenishment orders
in both branch locations in the Great Lakes
region as well as regional DCs. The system
may also process cartons for parcel delivery
to branch locations that need a small quantity
of an item not stocked in a regional DC.
Once the orders are dropped into the WMS,
the mini-load AS/RS retrieves totes from
storage based on the departure times of the
trucks. The totes are conveyed and sorted
to an operator at a workstation. The operator
scans the tote to verify the product. A screen
displays the part number, a quality control
number and the quantity to be picked. Once
all the items for an order have been picked,
the tote is returned to a storage location
in the mini-load. The shipping container is
closed, placed on the conveyor system and
sorted to the pallet build area.
In the shipping area, cartons are either loaded
directly into a truck for parcel shipment, or
scanned and palletized onto a mixed SKU
composite pallet and queued for a later
delivery. Full pallets are similarly queued for
delivery. Trucks typically depart the facility
between 10 PM and midnight so they can
arrive at a branch location before it opens the
next morning.
Automating benefits
By delivering the totes to order selectors
who previously walked to picking locations,
Fastenal eliminated a significant amount of
walking time in the warehouse. In addition,
the combination of automated bulk storage
and the mini-load has eliminated a significant
number of touches to the product, which is
not only more efficient, it’s more accurate.
“We touch the product when it arrives at the
receiving dock and when we pick it to ship
it out the door,” says Tate. In between, all of
the handling is executed by automation.
The system also eliminated a secondary sort
for many orders. “The mini-load can deliver
a part to a picker based on where it’s going,
which allows us to get more product to more
areas of the country quicker,” says Tate.
An unexpected benefit of the goods-to-theperson picking has been a safer work environment for Fastenal’s employees and better
morale. “We’re now delivering 75 lbs totes to
the operator at waist level instead of them picking it from a shelf,” says Tate. “Our reportable
incidences have been cut in half, and we’ve
seen both a decrease in turnover as well as an
increase in the number of people willing to go
to work in the warehouse on the first offer.”
That latter is especially important to Fastenal’s recruitment strategy: Traditionally,
the company has hired part-time college
students who may transition into Fastenal’s
sales force or management after graduation. “It’s a great way for us to recruit bright
young people who have good ideas they can
bring to the company,” says Hanley. “With
the automated system, this is a much more
appealing environment for them.”
Planning for the future
The initial automation project in Indianapolis is
complete. But Fastenal has plans to continue
to add automation in the future. For instance,
the company has implemented a scaleddown version of the mini-load, with 42,000
tote locations, in Dallas, a fast-growing DC
that is servicing two regions. “We were
sending out 200,000 or more packages
a day and had outgrown the facility,” says
Tate. “The dense storage units will allow us
to grow our business without moving from
that facility.” The company also has plans
to create a second master DC in Modesto,
California to receiving shipments from Asia
and distribute to regional DCs in the west.
After nearly a year of operation with the new
system, the benefits are becoming clear. “At
the end of the day, the choice of mini-load
cranes delivered the best return on investment for this application,” says Tate. “That’s
the name of the game.”
About TGW
TGW is an integrated logistics solutions
and material handling equipment provider
that plans, designs, manufactures, installs,
and supports integrated logistics solutions
tailored to your needs that offer increased
efficiency and higher productivity. As a
global company, TGW has a worldwide
perspective and resources, and is one of
the largest material handling system
suppliers in the world.
Learn more at www.tgw-group.com
Product Solutions
Ermanco brand carton and tote
conveyor & sortation systems
Unit load conveyor & sortation
systems
Automated Storage & Retrieval
Systems (AS/RS) for case, tote,
carton and pallet loads
Warehouse Control (WCS)
and Warehouse Management
(WMS) Systems