Shipping Solutions: Distribution Systems
August 1, 2010
by Shane Whitaker
Production and packaging consume so much of most bakeries’ capital spending plans that distributing finished goods is often an afterthought. In fact, bakers may be using the same distribution practices put in place decades ago, although they have invested in processing equipment to produce a greater quality and quantity of baked foods or purchased new packaging systems to offer a wider variety of package formats.
“The fact of the matter is warehouse management systems (WMSs) have a lot to offer in the industrial baking industry and the US market is still learning that fact,” said Marc Braun, president of US operations, Pcdata, Inc., Cambridge, MA.
No single metric indicates that a bakery should start looking for a WMS, according to Joel Miller, business analyst, Pcdata. However, if an operation has productivity or accountability issues or needs to address order filling accuracy, a company most likely would benefit from a new distribution system. “Productivity, accountability and traceability are the three items we focus on when introducing our Distrib distribution software to a new customer,” he added.
The two main reasons bakeries approach ToolBox Software North America, Inc., Scottsdale, AZ, about its paperless dispatching system is because they have space and/ or time issues in their shipping department, according to Ralf Ulmer, president, US operations. ToolBox focuses totally on bakery, he added. “We never tried and don’t intend to get involved in other industries,” Mr. Ulmer added. “Everything we do is 100% customized for the baking industry, so all the features are the result of more than 550 bakeries around the world using this system day by day.”
Genesta, Rockwall, TX, offers a hands-free speech-based system to improve efficiencies in staging and loading of finished baked foods for distribution. “We have taken traditional data collection methods, speech recognition and barcode scanning and automated the distribution process and made it hands free,” said Kelson Elam, managing partner at Genesta. “Imagine sorting donuts and pastries with icing on them, having an order sheet there is not very conducive because your hands are covered in icing.”
Bakeries should consider adding a WMS if they have issues with order inaccuracy or high labor costs and cannot access reliable inventory information quickly and transparently, according to Laura Worker, marketing manager, Westfalia Technologies, Inc., York, PA.
ToolBox customizes systems to meet bakeries’ specific needs, according to Mr. Ulmer. “Of the 550 installations we have completed no two run exactly the same way. We must see a bakery in operation, spend the necessary time there to understand how it works and see problems, and then we come up with a concept and solution,” he said.
The company doesn’t consider itself a typical software company. “We don’t just hand off software, give the client a little training and believe our job is done,” Mr. Ulmer pointed out. “Instead, we consider ourselves more of a standard equipment supplier, and we implement our systems. Our engineers are on-site until the system is up and running the way it should be.”
ToolBox’s dispoTool works with touch-screen PCs and/or handheld devices on which warehouse employees call up the products. Multicolor displays, installed on a flexible rail system, denote staging areas. A shipper scans or enters a product number into a handheld device or touch-screen PC, and the display indicates in that employee’s color what quantity of that baked food to stage. Each alphanumeric display features up to six colors and seven sections. After the product is staged to the routes/customers, the worker confirms and then selects the next item, and the cycle starts again. This is known as either pickto-light or put-to-light distribution, and products can either be staged by customer or route.
Bakeries using this system encounter fewer errors in staging with the wrong product or quantity. “A lot of issues with drivers or with customers are eliminated by dispoTool because we are really staging the correct numbers,” Mr. Ulmer said.
In the event that a bakery underproduces a product on a particular day, customers can be shorted equally because the dispoTool knows what is available for shipping. Also, it allows bakeries to protect particular routes or customers to ensure they receive 100% of their order in the event of overshort production, he explained.
“Drivers are happy because they have the highest accuracy they have ever had so they average what has been ordered,” Mr. Ulmer said.
Labor savings are the main reason most companies initially invest in a paperless distribution system, according to Mr. Braun. However, after installing Pcdata’s Distrib system, most bakeries find the primary benefits are the accuracy and accountability it provides. “Their service rates go up, and they get product out more accurately,” he said.
Independent bakeries often will do anything to get service rates up to 100%, including chasing misrouted product with additional runs, which is a huge cost, according to Mr. Miller. Paperless distribution systems greatly reduce overshorts and help to eliminate other issues that arise when using older paper-based distribution methods.
Despite the fact new distribution systems offer substantial labor savings, Brian Mahoney, logistics, Genesta, is reluctant to tell companies they are going to pay for it in headcount reduction alone. Instead, many realize their return on investment (ROI) by dramatically reducing order discrepancies. “Overshorts go from being a huge issue for some customers to being virtually eliminated,” he said. “That’s millions of dollars. The accuracy, customer satisfaction and the fact you are no longer dealing with overshorts are tremendous benefits.”
Bakeries offer a unique challenge for WMSs because of their fresh products. Sometimes not all the product is ready when shippers get ready to distribute it. At times not enough products are produced that day to fill all orders completely, and other times the plant produces more than what is needed. “We have found that traditional WMSs aren’t designed to accommodate bakery,” Mr. Elam said. “However, our logistic system allows you allocate and ship inventory as it comes off the line or out of your temporary inventory to meet fresh delivery schedules.”
Genesta’s SyVox distribution system uses voice commands to tell workers what quantity and what product to stage where. It eliminates clipboards to reduce handling, and it also ensures warehouse workers are working more efficiently, according to Bill Anderson, partner, Genesta.
Another advantage it is that the system sends pickers to the oldest product so that the bakery is constantly rotating its inventory, Mr. Mahoney added. Also, it’s diffi cult to measure employee productivity at bakeries using paper-based systems. “SyVox looks at transactions and sees exactly what everybody is doing,” Mr. Anderson explained. “So we can help find a lot of gaps that help from a labor standards standpoint.”
SyVox can guide workers through multiple jobs. Its sophisticated logic assigns workers to specific areas to reduce walking and handling of product as much as possible, according to Mr. Anderson. “With our system, we are able to move that person from one role to the next seamlessly, which helps to reduce labor costs,” he said. “It adds more effi ciency. That dedicated role that may not have work can use that excess time to perform another function, and SyVox drives them through that. It offers flexibility by understanding what work needs to be done and assigning the idle worker a new task.”
Pcdata’s Distrib helps bakeries to save approximately 30% on labor costs in shipping, according to Mr. Miller. “So if your bakery has at least three employees in shipping, it likely will see significant savings by implementing a WMS,” he said.
Pcdata, which started in The Netherlands, has been in business for about 25 years, and more than 80% of its installations are in the baking industry. “All of our targets suit the specific needs of the baking industry,” Mr. Braun said. “Bakeries have a lot of various, small peculiar items, and a generic WMS solution doesn’t work. From the short shelf life of products to working with numerous SKUs to the fact that product gets ordered late or cut very late, the system needs to deal with those peculiarities of this industry, and an offthe-shelf WMS typically doesn’t.” Pcdata offers the Distrib suite of products. Distrib WMS is its core module, and bakeries can add other modules such as Distrib Dock Manager, which scans product leaving the facility and closes the loop on accuracy going out the door. Distrib Performance Manager is another module that allows companies to review realtime and historical production data and assists with labor scheduling.
While traditional WMSs are inventory driven, Distrib is demand driven, so it is more suited for the fresh bakery, according to Mr. Miller. Nonetheless, its system still handles inventoried product as well as fresh product. “We haven’t found a bakery yet that we didn’t feel we could tackle its distribution needs,” he added.
Foolproof user interfaces are another reason Mr. Miller believes Distrib has been successful for bakeries. Pcdata systems are designed for all level of users, and the vendor can limit menu items and options so users can only select what he or she should. “Complex user interfaces and menus can contribute to unsuccessful experiences,” he observed. “We have seen that from customers.”
New employees can efficiently learn to stage product within a day using Distrib, he added, because of the reduction in nonvalue-added steps and the foolproof user interface.
TRAINING AND TRACEABILTY.
Paper-based dispatching systems can require up to two months for training because workers have to learn to match products with their product numbers on order sheets, but with paperless systems training can be done in a few days in most instances.
ToolBox even offers picture menus so new employees can easily discern what product they are staging. “If somebody has no clue about a bakery item, does not know bread from a bun or which kind of topping is on a product, then by scanning or recognizing the picture, he could do the job of shipper,” Mr. Ulmer said.
Also, WMSs provide an excellent tool to assist bakeries with tracking where products are distributed after leaving the bakery. “We can actually go back to when that loaf of bread came off the manufacturing line, and we know what rack it got stacked on and what truck it goes on,” Mr. Miller said. The program records which route received the product, enabling the bakery managers to determine what happened to it after it left the plant.
Pcdata’s Dock Manager module, which allows the bakery to track and trace product, features scanners that are mounted near trailer doors that record racks as they are loaded onto a trailer. When it is then unloaded, the driver can hand scan to reconcile where it has been sent. “In case of recalls, it provides complete traceability back to where and when it got shipped from the plant,” Mr. Miller said.
Westfalia’s Savana.NET WMS offers transparent, real-time tracking and reporting of all goods, according to Ms. Worker. Its systems feature flexible designs and the ability to update for future needs, she said. “Savanna is designed on the Microsoft.NET framework and can easily operate with all customary enterprise resource planning (ERP) programs including SAP.”
Savanna is a modular WMS, where clients start with a set of basic inventory management and reporting functions. Bakeries can add on more functionality to fit their specific needs, and the WMS is ideal for companies using both conventional and automated warehousing equipment to keep track of their inventory and order picking operations, Ms. Worker added.
Bakeries should expect a fairly short payback on a new distribution system. By reducing labor and addressing accuracy issues, these systems can easily have an ROI of easily less than two years.
On average, dispoTool’s payback time is 18 months or less, according to Mr. Ulmer. “We can reduce dispatch costs by up to 30%,” he said. The paperless dispatching system also most effectively uses available space, he added.
And if issues were to ever arise, ToolBox offers a 24/7 hotline staffed by engineers who are able to log into a bakery’s distribution system anytime night or day. “Bakers need somebody on the other end who speaks their language, is connected with engineers and can help get the system running immediately,” Mr. Ulmer added.
Many bakeries have overlooked opportunities to improve efficiencies in shipping, according to distribution software system vendors, who agreed that it was one of the last areas many bakeries have sought to upgrade. Companies that have ignored opportunities to improve staging and distribution of finished goods may find a new distribution system to be an excellent opportunity to address labor, space and accuracy issues.