HIGHER ATTITUDES

DEENA AMATO-McCOY

Many distributors are benefiting from better storage practices in the warehouse. By stacking pallets higher to take advantage of often neglected vertical space, companies are maximizing space use and enhancing materials-handling efficiency.

With these new types of storage configurations, warehouse operators are discovering that efficiencies in picking and retrieval time can be significantly increased with the use of warehouse management systems.

The drive to maximize space is also headed out of the warehouse, sources told SN, with the use of plastic pallets for downstream distribution to retail stores. Such pallets can increase cube use of trucks, and are proving more resistant to wear and tear than wood pallets.

According to distribution executives, the first step to achieving more effective materials handling is to consider warehouse dimensions and decide the most efficient way to stack products.

Many companies are moving away from storing pallets four and five cases deep at lower heights, and are maximizing depot space by stacking cases only two deep, but to higher levels.

"It costs less for retailers to stack product higher rather than expanding their buildings," said Prudencio Pineda, senior vice president of warehousing and transportation for Minyard Food Stores, Coppell, Texas. Minyard currently stacks products 32 feet high. "We're stacking to our maximum right now, and we are purchasing materials-handling equipment with extended lifting capacity," he added.

"To make the proper materials-handling advances, warehouse operators need to take the layout of their distribution center into consideration," said an anonymous source from a major Southeastern retailer. "Depot layout and materials-handling equipment and processes all go hand-in-hand."

Piggly Wiggly Carolina Co., Charleston, S.C., is preparing to open a new distribution center next spring in which pallets will be stacked up to 35 feet high.

"Currently, we stock units 22 feet high, but we are changing our logic a bit and are only stacking two pallets deep," said Ron Sauls, vice president of warehousing and distribution for Piggly Wiggly. "What we are losing in depth we are making up in height.

"By slotting three, four and five pallets deep you are not getting the full utilization of the rack," he added. "Staying away from deep storage will provide better rotation by moving two pallets at a time, rather than the labor-intensive process of slotting four and five pallets."

Shifting to higher stacking levels and double-deep pallets will give distributors better retrieval time.

"Long retrieval times are not beneficial to warehouse operations,"said Ken Walker, principal consultant for Kurt Salmon Associates, Atlanta. "There are opportunities associated with stacking product higher, such as increased productivity. Through warehouse management systems distribution centers can also realize significant time savings, by selectors traveling a shorter distance to pick product, even if it is stacked higher."

Warehouse management systems, while effective on their own, are only one piece of the information systems architecture that can help maximize materials-handling efficiency.

"When warehouse management systems are linked to purchasing systems, both share the same accurate data based on what product is in the distribution center at any given moment," said the anonymous source. "By having the data in a real-time environment, buyers can order more efficiently and selectors can pick orders more efficiently."

Hy-Vee, West Des Moines, Iowa, is upgrading the warehouse management system in its Cherokee, Iowa, distribution center this summer to be year-2000 compliant and improve its accuracy when handling product orders.

"It is challenging to keep a system that is over 10 years old year-2000 compliant," said Tod Hockenson, director of distribution for Hy-Vee's Cherokee facility. "In addition, by upgrading our warehouse management system our accuracy will improve. Right now we run about 99.7% accuracy of orders, but the biggest issue in retail is not having any mistakes."

By the beginning of 1999, Hockenson expects to see a 25% improvement in productivity through Hy-Vee's new warehouse management system, he told SN.

Through the use of a warehouse management application, Piggly Wiggly is also increasing the productivity of its forklift operators and expects more improvements once its new facility opens.

"We have increased from 18 lifts an hour to 25 lifts an hour within a year's time," said Piggly Wiggly's Sauls. "Once we are in our new location, where conditions are not so cramped, we might be able to get an additional 15% increase from operators."

In addition, the role of the pallet is quickly changing in the supply chain, beginning with new carton options for shipping and receiving products. Several companies are making rapid moves away from wood pallets and opting for the strength of plastic versions to downstream products to the stores.

Though there is a significant cost difference between plastic and traditional wooden pallets, distributors are taking the plunge, expecting the return on investment to take the shape of a longer-lasting pallet in the distribution pipeline.

"All of our outbound shipments are done with plastic pallets and about 40% of our inbound shipments are as well," said Hy-Vee's Hockenson. "The key to getting a payback on the plastic pallets is keeping them in a closed loop, just between your distribution centers and your stores."

Sources said that plastic pallet costs range between $20 and $23, while wood pallets cost between $7 and $8. The attraction is the container's durability, according to Minyard's Pineda.

"We began phasing in plastic pallets three years ago and acquired 50,000 pallets," he explained. "Today approximately 95% of those pallets are still being used."

Another benefit of plastic pallets is that they use less space in the truck when being shipped. "Using standard wood pallets, we usually fit about 22 pallets in the trailer," said Piggly Wiggly's Sauls. "By pinwheeling the plastic pallets we can fit up to 26 pallets."

The pinwheeling process, also called nesting or honeycombing, is the process of laying pallets in opposite directions in the truck so they fit together like a puzzle. "By nesting or honeycombing the plastic pallets, retailers can save one-fourth of the [trailer] space," said Pineda.

While retailers favor plastic pallets for outbound shipments, the plastic containers still need to be developed for racking capability in the distribution center.

"If these units are introduced in a rackable version, I am all for it," said the anonymous source. "So far the plastic pallets are great in terms of receiving a return on investment, and we get a lot fewer splinters."