Modernizing Warehouse Distribution

Control state leaders are always looking for ways to enhance operations and improve processes. One key focus area that’s always top of mind is warehouse distribution management. How can states effectively integrate the latest technology into warehouse operations to achieve the greatest increase in efficiency and return on investment?

StateWays connected with three states that recently made major enhancements to their operations by improving technology, which also resulted in better customer service. We’ve also included helpful tips on improving warehouse distribution from control state administrators who have successfully completed the process in their jurisdictions.

 

Maximizing resources (and floor space)

Integrating innovative technology into a warehouse operation system can have a profound effect on the way a state does business. When the Idaho State Liquor Division found itself running short on space at its Boise headquarters five years ago, executive leaders were faced with how to take their operation to the next level. The Division ships an average of one million cases per year, and only had a 65,000-square-foot warehouse to work with at the time.

Idaho opted to expand its warehouse and invest in an advanced Automatic Service and Retrieval System (AS/RS). First, a new 17,000-square-foot, 55-foot-tall bulk storage area was added to the existing warehouse. Then came the addition of the AS/RS, which uses robotic cranes to load and retrieve pallets from storage. The new storage area can hold 2,800 pallets, which is equivalent to the size of 200 truckloads of product.

Howard Wasserstein, Deputy Director for Procurement, Distribution, and Retail Operations, says that the new addition acts like a separate attached warehouse. When deliveries arrive, trucks are unloaded and products are directed either to the picking area or straight to the AS/RS, where they are stored until needed.

“The system really saved us because we were running out of room,” Wasserstein recalls. “States keep offering more and more products, and we needed to stay on top of it. At the same time, we have some brands that we ship hundreds of times a day, and other brands we only ship only once a day. It was a constant process of trying to keep up with things and reallocate space as needed to maintain efficiency.”

Idaho invested $7.5 million in the warehouse expansion and AS/RS system. Wasserstein says that is was money well spent, but acknowledges that the Division had anticipated the new system to save on labor as a result (which didn’t happen).

“Labor stayed the same, but I think if we didn’t expand a few years ago, we ultimately would have ended up adding more people,” Wasserstein says.

Ultimately, Idaho’s new warehouse system has enabled the state to improve customer service by offering more products and maintaining distribution efficiencies.

 

Voice recognition improves productivity and customer service

Like Idaho, other states have successfully integrated technological overhauls into their warehouse and distribution systems. Several years ago, the Wyoming Liquor Distribution Division committed to improving its overall warehouse operations. In February 2012, the state upgraded to a brand new, temperature-controlled, 145,000-square-foot warehouse in Cheyenne, which exceeds the size of the former facility by 45,000 square feet.

In addition to giving Wyoming much-needed space to stock additional products, the new 17-dock warehouse features enough room for separate shipping and receiving areas, along with a deluxe conveyer system with a 300-foot-long bottle line. It’s also equipped with Datria Voice from Knighted, a revolutionary voice recognition system. Instead of headsets, the new program uses wireless phones to communicate with the warehouse management system.

“The technology we gained as a result of the new facility really changed the way we approach problems and increase efficiencies,” says Greg Cook, Administrator of the Wyoming Liquor Distribution Division. “It’s very positive from a manpower perspective. We’re managing the warehouse much better now. It’s no longer managing us.”

In addition to a higher level of productivity, another major benefit Wyoming has seen as a result of the new warehouse system is an increase in employee morale. With 18 state employees and seven express personnel working in the warehouse across three daily shifts, the entire team was crucial to the effective implementation and ongoing enhancement of the overall warehouse management.

Scott Workman, Wyoming’s Warehouse Manager, says that although the Division’s administration was ultimately responsible for determining the technology that would be used to upgrade warehouse operations, buy-in from the entire staff was essential to the plan’s success. He also credits his staff with coming up with additional ideas to improve processes.

“When we first moved to the new space, we were still learning on the go,” Workman says. “Based on staff recommendations, we ended up reorganizing our picking zones so the guys weren’t walking as much, making their jobs a lot simpler. Everyone is happy to contribute ideas because good process improvements ultimately help everyone.”

The changes implemented in Wyoming’s warehouse have positively impacted overall distribution initiatives. Wyoming has increased its average number of orders picked per hour from 60 to almost 80, and expects that number to climb even higher. The distribution team currently boasts an accuracy rating of 92.2 percent, the highest in its history. That statistic is even more impressive considering the fact that the Division split-cases every single item it lists, making quality control an even bigger challenge.

Division leaders are extremely pleased with the positive outcomes that resulted from this overhaul. The customer service experience has been vastly improved. Approximately 1,200 independent Wyoming licensees enjoy next-day delivery service on orders that are placed by noon (not including special orders). Cheyenne customers receive deliveries two days per week, and are given the option of picking up their own orders at the warehouse anytime. Overall revenue for the state is also on the rise. In the first quarter of the 2015 fiscal year, Wyoming sold a total of 266,333 cases, an increase of 5.1 percent from the same quarter the previous year. Total sales during that period amounted to $29,426,182 – an increase of 5.5 percent over the same quarter the year prior.

 

Utilizing existing internal resources

While some states like Idaho and Wyoming have seen their warehouse and distribution initiatives come full circle, other states are earlier in the planning and implementation stages. Such is the case with the West Virginia Alcohol Beverage Control Administration (WVABCA), which began working on a new Bailment Control System (BCS) in March 2014. The request for a more sophisticated system came directly from WVABCA Commissioner Ronald Moats, who charged his team with developing a new inventory management tool. The goal was to create a more modern system that was technology-based and utilized information in a more profitable manner.

Intended to replace the state’s legacy inventory management system, the new BCS has been developed entirely in-house by West Virginia’s own IT group.

“Our current system is over two decades old,” says Gig Robinson, spokesman for the WVABCA. “We decided to incorporate a lot of modernizations to enhance the distribution center. The new system will include all the functions of warehouse management, including picking and receiving.”

With the new BCS in place, West Virginia is poised to implement the next phase of the overhaul project in Spring 2015. Once the state successfully migrates the core functionality from their legacy system, they will then move to surface automation mode. This will give vendors a self-serve model to interact with the WVABCA, and also let them submit pricing and label information electronically.

According to Robinson, creating the system in-house allowed the state to completely customize the functionality of the new BCS to fit its specific needs. Development costs were nominal, although the state will invest in all-new hardware during the next phase of the implementation project. In addition to streamlining internal processes, the new system will also be very beneficial to vendors, who will now be able to access the system 24/7 and make up-to-the-minute price and listing changes. Additional features may also be added to the BCS as time goes on.

 

Warehouse reorganization advice

For states preparing to embark on a warehouse and distribution system overhaul, or those that are already immersed in the process, here are some tips to take away from other states’ experiences:

Learn from your peers. By being involved in the National Alcoholic Beverage Control Association (NABCA) and communicating with other control states, you can easily discover what worked well (and what didn’t) for other divisions. There’s no one-size-fits-all universal warehouse improvement plan, but get advice from other professionals who have undergone this process and use that information in your own decision-making.

Shop around. If you decide to partner with an outside vendor instead of developing your new system internally, take plenty of time to research your options. “When it comes to bidding, don’t look for the lowest. Look for the best,” Wasserstein advises. “Also, consider maintenance, service, and training as part of the whole package. Ours is a very complex system. It uses lasers, and it breaks sometimes. Make sure you’ll get the necessary support when that happens.”

Make a decision and stick to it. Your team will invest a great deal of time in choosing the best solution for your state. Be confident in your decision and champion the idea from start to finish. “Implementation doesn’t happen overnight, and you’ll have to figure out a lot as you go along,” Cook says. “That’s just the way it goes.”

Empower your staff. Get input from people across the division, and especially from the people who work on the warehouse floor. “Listen to their ideas and see what comes of it,” Workman says. “We challenge all of our people to come up with new ideas, and we listen to and value their input.”

Think about the future. If you invest in any kind of new inventory management system, will it allow you to add or adjust certain features down the line? Ideally, a new program should be able to evolve with your state.

With so many options at their disposal, states have plenty of available resources to help them determine how to best enhance their warehouse and distribution efforts, making them as high-tech and efficient as possible.

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