FULL HOUSE


When it comes to enlarging, renovating, redesigning and upgrading warehouse operations, “almost all of the control states are looking at it,” said Jim Sgueo, president & CEO of the National Alcohol Beverage Control Association (NABCA). Last April, the NABCA sponsored one person from each control state to attend ProMat, a warehouse trade show held in Cleveland.


“Our sales have doubled in the last eight years, from $100 million to $200 million,” said Lynn Walding, administrator of the Iowa Alcoholic Beverages Division (ABD). More sales equals more receiving of product and more picking of orders at the warehouse level.


And those sales are comprised of a much greater number of different products than ever before. “We used to carry 300 items; we now carry 1,200,” said Bill Applegate, product general manager at the Idaho State Liquor Dispensary (SLD). Each product carried requires its own storage and picking positions in the warehouse.


The bottom line is that the warehouse operations of control state agencies are being asked to process more orders and those orders are made up of many more different items. “And we don’t get extra people to do it,” said Scott Workman, warehouse manager of the Wyoming Liquor Division (LD). And often, they don’t get extra space either.


The only solution: Be more efficient.


 


Space Case


There are two main divisions in a warehouse operation: bulk storage, where product is put until it is needed, and picking, where the outgoing orders, to state stores, agencies or licensees, are assembled.


For many control state agencies, the bulk-storage area is the first to be redesigned.


For example, in 2003, the Utah Department of Alcoholic Beverage Control (DABC) built an addition to its existing warehouse to handle bulk storage. This addition is 10 stories high and can hold over 500,000 cases of product. It is equipped with an automated storage and retrieval system (AS/RS) comprised of five cranes that run along tracks. This entire part of the warehouse is handled by a single employee who works at a computer terminal. Once the system “knows” what to do, it runs automatically. It could run at night, if need be. It is often run with the lights out. Once a shipment of product is received, the cranes will automatically put it away. As orders are being picked on the other side of the warehouse, it will replenish the stocks of a particular product, by delivering it to a conveyor system, when the department’s warehouse management system (WMS) signals that a picking station has need of and room for another full pallet of that particular product.


Utah’s AS/RS system is precisely calibrated to make use of every cubic inch of space. It knows the dimensions of all the cases of product it handles. “That dead space at the top of the highest pallet and the next rack?” said John Freeman, Utah’s deputy director. “That’s used. We use very condensed racking. We are packed to the roof with liquor.” In fact, the new addition, because it is ten stories high and because it uses all of that vertical space, can, in a 40,000-square-foot footprint, holds much more liquor than the more conventional half of Utah’s warehouse, which, at 100,000 square feet, takes up more than double the land.


But Utah’s liquor sales have been growing at such a clip that the department will be expanding this automated warehouse. “It can hold over 6,000 pallets now,” said Freeman. “And we’ll be adding another 4,000 pallet positions.”


The department, which is in the process of opening seven more stores, each at least 12,000 square feet in size, is looking at adding special transfer vehicles (SPVs) to its warehouse system. Right now, the cranes deposit product on conveyors that bring it into the conventional side of the warehouse where it is removed manually. And therein lies a bottleneck. “The cranes move faster than the people can unload,” explained Freeman. “The SPVs are like little high-speed trains. They move along tracks and would take products from the cranes to their picking stations.”


The Utah DABC was one of the first control state agencies to use an AS/RS system. “Dennis Kellen [now the DABC’s director] deserves all the credit for our beautiful warehouse,” said Freeman. “It was his brainchild. No other state agency had this. Dennis saw AS/RS used in other industries. He was a visionary.”


When the Idaho State Liquor Dispensary realized that it had outgrown its warehouse, it looked at what other control state agencies were doing. “We really liked what Utah had done,” said Applegate. “They had also done a good job of evaluating all the different methods they could have used in their warehouse.”


The Idaho SLD is in the final phase of a three-year, $7.5 million expansion and upgrade of its warehouse system, which will include the addition of an AS/RS system. The first phase was a 17,000-square-foot, 55-foot-tall expansion of the existing warehouse, which was completed in August 2007. This will eventually house the AS/RS system. The Idaho SLD now has a total of 75,000 square feet of warehouse space. The second phase, completed in October 2008, was the construction of a mezzanine, which will be a larger area for “repacking,” the processing of orders containing “split” or “mixed” cases, where less than a case of a particular product was ordered and the right number of bottles have to be repackaged for shipment to a store or agency. The current phase of the expansion is the implementation of a warehouse management system (WMS), which is necessary to run an AS/RS system.


 


Where in the Warehouse


WMS is a software system that tracks everything within the four walls of a warehouse. It keeps track of where all the products are. It also sequences the picking process of orders and makes sure that the amount of product necessary to fulfill orders from stores and agencies is kept at each product’s picking position. The Dispensary hopes to have its WMS- and the AS/RS – up and running by July 2010.


The Oregon Liquor Control Commission (LCC) also implemented a WMS in 2002. “The WMS is a life-saver,” said Bill Mallon, distribution center manager. The WMS “knows” a number of things: what’s in all the spaces in the warehouse, which spaces are empty and it knows certain “parameters” about every incoming product, such as how much of the product is being shipped into the warehouse, how it is generally ordered and where it is generally sent. It uses this information to determine the best place to put each incoming shipment.


When people put away product, they tend to organize it in a way that makes sense to the human mind. All of a certain product may be stored in one place, for example, or products might be arranged by product number. These type arrangements are not necessary when a WMS is tracking everything. A WMS functions almost as if it is Google and the warehouse is the internet. If someone needs to know where a certain product is stored, they can type in even the beginning of a keyword and the WMS will tell them all the locations, how much is in each and how long that product has been in storage. And when the WMS is given tasks, such as to replenish the picking positions or tell the pickers what they need to pick in the most labor-efficient sequence, it will simply call up the product positions it needs.


 


Pick and Choose


When it comes to “picking,” the process of assembling outgoing orders, control state agencies have several layers of options.


Each order can be picked in its entirety. An employee can drive around the warehouse and assemble all the components of a single order. Or the agency can decide to use sortation. This option uses a conveyor system to process several orders at once. Employees man positions along the conveyors, handling the products immediately around them. They are instructed, by the WMS, on how many cases or bottles of each product to throw onto the conveyor and record these products, using scanners. The conveyors converge onto a sortation table and the right number of each product is sent toward the staging area for each specific order. “We’ve been told that 1.6 million cases [picked per year] is the point at where sortation is more efficient. We’re just now getting to the point where it might make sense for us,” said Iowa’s Walding.


The Wyoming Liquor Division, which serves the least populous state in the union, ships approximately 800,000 cases per year and has its 14 employees assemble each order individually. But the LD will be adding $200,000 worth of “pick to voice” technology to its operation to make it more efficient. With this technology, the warehouse worker wears a headset and a voice from the WMS tells the worker where to go and what product, in what quantity, to pick up there. The WMS automatically arranges the most efficient itinerary possible, to cut down on the worker’s travel time. This system is paperless.


The Idaho State Liquor Dispensary is in the midst of integrating “pick to voice” technology into its system. Currently, its workers use handheld scanners. The scanner’s screen tells the worker where to go next. “Pick to voice is safer because it is hands-free,” said Applegate. A third option is called “pick to light,” where a light above the next product to be picked goes on.


The Oregon LCC is looking to make the switch to sortation. It already uses a conveyor system. Workers man one of four conveyors. They receive word for what cases of product from their stations to put on their conveyor and use wrist-mounted scanners to record them as they go. But each “wave” of product thrown onto the conveyor is destined to a single store. All four conveyors converge at a merge point. Using this system, at the OLCC warehouse, all the full cases of a store’s order are loaded onto a truck within 20 minutes.


“The next big thing for us will be sortation,” said Mallon. Rather than have each wave be one store’s order, each wave would encompass the orders for four stores. “The workers would put stickers on the cases with which store it was destined for,” he explained. “Rather than make one trip around their conveyor for each store, they’d make one trip around and gather the products for four store orders.”


Rather than use only one door at a time to process orders as the OLCC does now, it would use all four of its doors. At the merge point, the cases of product would each be scanned by the system and sent to the appropriate door, via more conveyors, for its store’s order.


Split-case orders, where less than a case was ordered, and individual bottles have to be taken from the original cases and repackaged to be sent out to the stores or agencies, is a different animal from full-case picking. In fact, some control state agencies, such as the Utah DABC, don’t allow orders of less than a case of product at all. “It really streamlines the process for us. Split-case orders are much more labor-intensive,” said Freeman.


But some control state agencies do offer it. “Many of our stores are so small, that a full case would be too much,” said Idaho’s Applegate. “Allowing split-case orders allows them to carry a wider selection and offer more choices to their customers.” There are 61 state stores and 102 contract agencies in Idaho. Idaho’s split-case orders are assembled on its warehouse’s new mezzanine and brought down to join the full-case portion of a store’s order on a conveyor.


In Oregon, the split-case portion of an order takes a two-day cycle to process, compared to the 20-minute process of assembling the full cases.


The Wyoming LD just outfitted its “split room” with new flow racking, which allows product to “flow” forward as some is removed. All of the open cases for split orders are in one aisle with 66 bays. “By having them all in the same place, we can do a 250-bottle order, which used to take over an hour, in 45 minutes,” said Workman.


Control states are constantly looking at ways to make their warehouses more efficient. Sometimes, these ways are small, such as using a different style of racking. Other changes are large, complex and very labor- and cost-intensive, such as adding an AS/AR system or switching to sortation. But the whole point, always, is to handle the control state’s increasing and increasingly complex business with ease.


 


 


The Green (Ware) House


When the Iowa Alcoholic Beverages Division (ABD) embarked on a renovation of its warehouse, it took seriously an executive order issued by Governor Chet Culver. The governor said, “State government can and must be a model for greening Iowa’s homes, schools and businesses.”


The warehouse’s heating and air conditioning system was replaced by a more efficient Heating, Ventilation & Air Conditioning (HVAC) system in the spring of 2008. New insulated dock doors were installed. These doors can be opened and closed with the touch of a button, to make it easier for employees to keep them closed, retaining the warehouse’s heat or air conditioning, when they’re not in use. The warehouse’s new roof has enhanced insulation and its new windows are made with tempered glass to reduce energy loss. More energy-efficient T5 florescent bulbs were installed in a computerized system that monitors light levels, turning down lights where there’s natural light and using motion detectors to turn off lights in unoccupied areas.


The renovated warehouse now uses 36% less energy than it did before and the ABD expects another 5% decline in energy use as it finishes up its greening of the facility. While the special insulation used in the roof cost an additional $2 million, “the cost of ownership of the warehouse decreased by 44%,” said Lynn Walding, administrator. In fact, the ABD received a $51,000 rebate from its utility company, Mid-American, because of the energy-conscious changes it made to its warehouse and offices.

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