E-commerce company formulates healthy and efficient manufacturing and distribution center
Most of us think of automation as only for the big guys. A dietary supplement start up is turning that idea around with carousels, robotic extractors and goods-to-person picking – a formula Wayne Gorsek found to be a healthy recipe for the success of his distribution center.
Gorsek is the founder and CEO of DrVita.com, an etailer of dietary supplements, vitamins, minerals, herbs and other products to enhance a healthy lifestyle. When Gorsek launched DrVita about four years ago, he and Charles Woods, the company’s chief operating officer, decided to invest in material handling automation from day one, but to do it in a way that would allow them to scale their operation as order volume grows.
The heart of the facility is a goods-to-person picking ni (Integrated Systems Design – ISD) that stores 10,000 stock keeping units (SKUs) in just 855 square feet. Including the picking station, the system occupies roughly 1,400 square feet. The system includes:
* Two pods of horizontal carousels that utilize the facility’s 32-foot ceilings. Each pod consists of three carousels with 46 bins per carousel and eight shelves per bin for a total of 368 bins. In total, the system can provide as many as 17,664 SKU inventory locations.
* Robotic extractors that remove and replenish storage totes from the carousel conveyor line that feeds goods-to-person picking module.
* One goods-to-person pick module where items are picked into totes that are then conveyed to a packing station, and one replenishment module where an associate prepares totes for put-away into the carousel by the robotic extractors.
* Cubing and weighing technology to optimize storage in the reserved storage area and the carousels. Automatic carton erecting and taping equipment can be found in the shipping area.
In the system, warehouse and fulfillment processes are tied together by the order picking system and the warehouse management system (WMS). While the facility is currently handling 1,000 orders per shift with an average of three lines per order on a n eight hour shift, it is designed to scale up to 10,000 orders per shift by adding carousels and picking stations.
According to Gorsek, the competitive nature of e-commerce today meant that the 72,000 square foot facility, which includes manufacturing and quality testing, had to be as efficient as possible in every way. “When I formulate a high-quality supplement, such as a multivitamin that works based on science, it often contains 10 to 100 times the activde ingredients compared to the typical ingredients compared to the typical supplement sold on the market, which in our view is worthless. Yet we must still make the product affordable and of good value,” he says. ‘We knew we had to maximize picking and replenishment labor to manage our costs.”
Automation also enforced discipline and repeatability into processes. “That reduces picking errors and tracks everyone who touches a product from manufacturing to shipping,” says Charles Woods, the company’s CFO. Those are important factors for a company that prides itself on the quality of its products “The system allows us to establish a chain of custody,” adds Woods. “We can track product from our manufacturing lines to our test lab, our temperature controlled distribution facility and onto our carries’ trucks. That allows us to fill orders accurately, quickly and in a way that they arrive intact and without damage.”
He also adds that the accuracy rate is 99.9% and the return rate associated with inaccurate items being picking is less than 0.01%.
Designing for quality
Designed for quality, DrVita marks Gorsek’s second entrée into the nutritional supplement business. In 1994, he was a founder of Vitacost.com, a company that made Inc. 500 Hall of Fame five years in a row and went public in September 2009. Gorsek left the company in December of 2009. The company was recently acquired by Kroger. Restless in retirement, Gorsek decided to launch a new company with manufacturing, testing and distribution of its proprietary products in one facility. He chose Las Vegas for “Thirty percent of our customers are within one-day ground shipping of the facility and many of our suppliers ship into the West Coast,” he says.
Gorsek’s goal was to do what he had done in the past, but to do it better, including higher quality products and a superior, integrated manufacturing and distribution process. The distribution center began shipping its first orders about 2.5 years ago. While the DC currently picks just one shift, order received by 5 p.m. EST are filled and shipped the same day.
When it came to designing the business, Gorsek and Woods chose to improve on the processes and systems they had worked in the past. At their former company, they had used some carousel, but also relied on A-frame technology and pick-to-light and bar code canrs for slow movers. “There were six pick zones, and there was a lot of alking in the pick-to-light area,” says Woods. “You’d see a lit of fatigue among the workers by the end of an eight hour shift. In the new system, an order picker covers just 5 feet of space in the goods-to-person workstation.
In addition, manual systems were subject to error and required more labor. “If you need six people in a pick zone, you have to figure in a seventh to cover for sick days and vacations,” says Woods. Robots, on the other hand, “never take time off or get tired,” he adds.
As they looked at various goods-to-person solutions, Woods recalled evaluating a carousel system with robotic extractors in the past. He and Gorsek got in touch with the system integrator. “The first design was a $10 million system with six pods, 18 carousels, and multiple pick modules that could handle 10,000 orders in a shift. “We scaled down that design to meet our initial requirement, but did it in a way that can scale back up by adding equipment as the business grows. We won’t outgrow the existing equipment, we’ll just add on.”
A second consideration for the new system was integration between the various software systems. In this instance, the order fulfillment system that directs the carousels, robotic extractors and picking station is integrated with the WMS, which is integrated with the enterprise resource planning (ERP) system. The ovedrall system is integrated into the website software to facilitate customer orders and ensure that only inventory on hand is promised for delivery. “It’s that integration that allows us to track the chain of custody and provide customer service,” Gorsek says. “We also installed a HEPA filtration system in the manufacturing area and distribution is climate controlled, even though those are not required. Put them all together and we believe we have a significant strategic advantage.”
The system represents a significant investment for a new company, but it is one Gorsek believes was vital to the company’s early success. “I think a lot of new businesses fail today because they are not investing in automation early on with the intention of expanding in the future,” he says.
Filling orders accurately and efficiently
The system was designed to fill orders accurately and efficiently. The inventory management software uses advanced algorithms to create intelligent batches of orders with the highest levels of commonality. When a wave of orders enters the system, the six carousels rotate and preposition independently of one another. As soon as the first carousel is in position and ready to be picked, one of the two robotic extractors moves into position to retrieve a blue inventory tote. When the tote is retrieved, it is brought down to the conveyor station and routed to the order-picking module.
While at the conveyor station, totes waiting to be stored simultaneously move onto the robot. Totes are extracted and received simultaneously, helping to increase throughput. The dual-transaction system can restock a tote while moving to pick. After each pick or storing activity, the carousel is free to pre-position again for the next action. The system keeps repeating this process until the day’s orders are completed. On the storage side of the operation, a random storage algorithm based on first-available position helps eliminate dwell time. During the order picking process, operators usually only have to move about 5 feet in their workstation. The workstation constists of a conveyor, pick lights, and inventory control software that works in conjunction with the robotic system to dynamically queue totes in logical sequence and commonality.
One operator per sift currently does all the picking. The system relies on lights and images to ensure accurate picking. The monitor uses a 3D model of the tote to depict each SKU location/cell in the tote. The active SKU location is highlighted in yellow showing the operator where to where to pick. An image of the item to be picked is displayed for verification purposes and the number of items to be picked is displayed prominently by the workstation’s pick-to-light system. “Being able to pick with pictures and showing the SKU or UPC number of that item along with the description virtually eliminates errors,” Woods says. The system can also use laser pointers in addition to the graphics to direct the operator. Product labeling can be added at the station for automatic print and count validation, as well as recording lot or serial numbers.
Since going live the most important change to the system has been the addition of a replenishment station. “As our order volume grew, we noticed that we had to stop picking to replenish the system,” Woods says. “The extractor has a picking and put-away side. After it delivers a tote to the take-away conveyor, it can pick up at tote ready for put-away and handle that before the next pick.”
As the company continues to grow, it is configuring its WMS to drop ship orders for large retail customers selling DrVita products on their websites. “It makes no sense for us to ship to their warehouse only to reship the product directly to the consumer,” Gorsek says. “By handling their distribution, we’re a true partner to our retail customers.” Gorsek believes that the investment in automation has put his young company on the right path. “We’re going in the right direction in terms of our distribution expenses as a cost of sales,” he says. “We have the highly efficient operations we need to get orders out accurately and damage free.”
