Deeley goes whole hog to speed delivery
Harley-Davidson shipper: New process allows faster distribution
Ref #: NP-BE1; Pub: National Post (2003)
By Paul Lima
On the surface, distributing products to retailers is a simple process. Products come in to a distribution centre and get put on shelves. Orders come in from the field. Products are picked, packed and shipped. However, doing it correctly is an Olympian task, say conscientious distributors who try to do it swiftly and efficiently.
For Deeley Harley-Davidson Canada, figuring out how to improve the distribution of parts -- to get the right quantity of the right products to the right retailers faster -- took two years to plan and implement and close to $1-million, says Buzz Green, vice-president and general manager of the Concord, Ont.-based company.
Compared with many distribution companies, Deeley has it easy, Mr. Green says. It handles only 26,000 types of parts, or stock-keeping units (SKUs), many ordered on a regular basis. There is only one supplier -- Harley-Davidson -- and 75 customers -- Harley-Davidson retailers -- located in one country.
Deeley has been distributing motorcycles and accessories in Canada for 86 years. In 1973, the company secured exclusive rights to distribute Harley-Davidson bikes, parts, accessories and other Harley-Davidson-branded items -- including coffee mugs, baby clothes, shirts, jeans, jackets, hats, barbecues and jukeboxes. Harley-Davidson, which celebrates its 100th anniversary this year, is one of the 10 most recognized brands in the world, and Harley-Davidson motorcycle owners are loyal to the brand. They like to be seen wearing clothes emblazoned with its eagle logo.
Deeley processes about 2,000 SKUs a day, or 500,000 sub-orders a year. Multiply that by the quantity of each SKU ordered and you have a busy distribution centre generating annual revenues "in the tens of millions of dollars," Mr. Green says.
While Deeley may only have 75 customers, they serve thousands of Harley-Davidson owners across Canada. If a part is not is stocked, bike riders have to wait or get their "hogs" serviced elsewhere. Mr. Green, an avid biker, understands how owners feel when their bikes are in the shop, and he admits Deeley was not a "best-in-class" distributor.
Although the distribution system was not broken, there were problems. The Deeley warehouse was not set up efficiently and the picking process was not automated. During peak periods, Deeley had to "throw more bodies" at the problem. Hiring untrained pickers on a temporary basis increased distribution costs and led to less-accurate order fulfillment.
Shipping inequities compounded the problem, adds Mr. Green. All orders were shipped by ground transportation unless retailers paid for air freight. Retailers close to the Concord distribution centre, just north of Toronto, received orders in a day or two; others had to wait or pay the premium.
In addition, bottlenecks were increasing in the picking area. The motorcycle industry is experiencing double-digit growth as a new generation discovers the open road and Baby Boomers -- with their children leaving the nest -- feel free to return to their Easy Rider ways. Many of "the come-backers," as Mr. Green calls the Boomers, are buying their first Harleys.
Rather than build new distribution centres in various regions, which would spread inefficiencies across the country, Deeley decided to improve productivity by using the existing warehouse space more efficiently and automating the picking process.
Six aisles of shelving units spaced four metres apart were moved much closer together so staff on order-picker vehicles can pick products from two shelves at the same time. An electronic track was embedded in the warehouse floor to control the vehicle's direction, based on picking-sequence software. Pickers carry wireless devices that display the type and quantity of parts required. Once they pick the SKU, employees scan a bar code on the shelf and the vehicle moves on.
Productivity in the rearranged aisles doubled from 22 lines per staff hour to more than 40. But Deeley did not stop there.
In space saved by rearranging the shelves, Deeley installed four 12-shelf carousels that will hold about 8,000 small, frequently ordered products. A picker will stand on a table in front of each carousel to fill eight orders in a batch. As orders are sent to the carousel software, the table automatically moves to the correct product shelf level. Flashing lights indicate which product to pick and LED readouts indicate the appropriate quantity. Then LEDs indicate in which of eight order bins to place the product. Products are scanned to ensure the order has been correctly filled.
If an order is completed on a carousel, the order bin heads down a conveyer to the packing and shipping area. Otherwise, it rolls down another conveyer to a picker working the aisles.
The carousel system, when fully implemented next month, will allow an employee to pick 150 SKUs an hour. When the carousel system is fully operational, Mr. Green says orders will be processed four or five times more productively overall.
Increased productivity means fewer temporary workers will be hired, which may also improve overall accuracy. It also means faster order turn-around times. The goal, once the carousels are activated, is to ship out any orders received by 2:30 p.m. on the day they arrive.
Mr. Green says he expects the project will pay for itself in two years. Deeley plans to pump much of the return on investment into a free air-shipment plan for retailers outside the one-day ground shipment radius. All of the retailers except eight who are located in more remote areas would then receive orders the next day.
"We want to get our retailers' customers back on the road ASAP," says Mr. Green, itching to get his motor running.
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