The Reject Shop’s new Distribution Centre at Tullamarine in Victoria, designed by Dematic , is utilising the Voice Picking technology in a batch picking Put process for high volume retail distribution.
This innovative approach to order fulfilment has delivered significant productivity gains and improvements in accuracy and OH&S, and given The Reject Shop the capacity to increase throughput to support its strong growth plans over the next five years.
Since they were launched in 1981, The Reject Shop have grown to become an innovator in the competitive discount variety retail market.
From early days with one shop in Melbourne, the business has grown to number 123 stores, located mostly on the east coast of Australia. Because The Reject Shop have grown in an ad hoc manner, so too had the company’s approach to logistics.
By the time Managing Director Barry Saunders joined The Reject Shop in 2000, the company were operating out of more than six separate outdated distribution facilities in Melbourne.
Having spent many years with several Australian retailers, Barry Saunders knew an essential ingredient to ensure the on-going growth and profitability of the group would be a supply chain that was closely aligned to The Reject Shop’s growth and profit strategies.
An important component of The Reject Shop’s new supply chain strategy would be to consolidate the various distribution operations into a single, modern, purpose-designed and built facility.
To assist him with the project, Barry Saunders called on the services of two of Australia’s most experienced retail distribution specialists, Philip Beckett and Mike Buxton.
Both Philip Beckett and Mike Buxton had worked with several well-known retailers in Australia and overseas, and been responsible for several large DC projects for Myer stores over the years.
Step by step
Once Barry Saunders had concluded building a team of logistics specialists, they set to working on ways to improve The Reject Shop’s logistics performance as soon as possible, working concurrently on the new DC development and rolling out temporary cost-effective distribution strategies.
Because The Reject Shop were working out of some of the most outdated distribution facilities in the country, Philip Beckett knew the company could not wait until the new DC came on line before they made improvements.
Working in conjunction with Dematic on the DC design, The Reject Shop discussed what components of the solution proposed by Dematic could be implemented in the existing operation. As a result, The Reject Shop decided to run a pilot Voice Picking programme.
Testing the concept
“We were very interested in Voice Picking. We had seen the excellent results that other distributors were achieving with Voice Picking and we worked closely with Dematic to develop a Voice Picking system that matched our particular order processing requirements,” said Philip Beckett.
“The fact that people can work with both hands and eyes-free is a big advantage, compared to paper-based order picking. We knew Voice Picking would make a big difference to our operation but to what extent we were not sure.
“Because of this we decided to implement 12 voice terminals in our EPC (Events Processing Centre) which supplied The Reject Shop stores with promotional stock for events like Valentines, Mother’s and Father’s Days and special catalogue promotions. We budgeted on making an 8% productivity improvement by moving to voice,” said Philip Beckett.
“After more than 12 months of operation, we had achieved a significantly higher level of productivity improvement with the actual increase in productivity where voice was being used being even higher, as products types, like uglies, were still being picked manually with paper pick lists,” he said.
Working out where to site the new DC was the first critical decision to be made. After looking at various options, the decision was taken to select a site within the Tullamarine Airport grounds, which has become a well-known location for bulky goods warehousing and distribution over the past couple of years.
Factors that influenced the decision were its close proximity to the Western Ring Road and the Hume Highway for interstate line haul. The fact that the majority of The Reject Shop’s staff lived in the vicinity of the airport also played a big part in the decision.
“It was great to be able to sit down with Dematic and a clean sheet of paper and design a totally new DC that would meet our needs for the short and medium-term,” said Philip Beckett.
“Variety retail distribution presents its own unique set of challenges. Firstly, there is the core SKUs which are always available. We know what our typical requirements for these types of products are so they are easy to plan for,” he said.
Then there are the promotional products. The Reject Shop publish about 10 major catalogues each year and, each time one hits the public, the business has to be capable of meeting the huge surge in demand that follows a catalogue release.
Add to this seasonal events, such as Mother’s and Father’s Day and, of course, every retailer’s busiest period, Christmas.
Christmas is such a busy period for The Reject Shop that they have always kept Christmas merchandise off site in a rented facility and fulfilled all Christmas-stock related orders externally so that it doesn’t impact on normal day to day operations.
“A key design decision was the method we would use to pick our standard store orders,” said Philip Beckett.
“Because we wanted to minimise capital intensive equipment like automated conveyor and sortation systems, our new DC design was based around a basic warehouse layout, overlaid with smart IT systems, including Voice Picking,” he said.
Innovative approach to order fulfilment
“Instead of picking orders discretely, we pick all of the products for all of our standard store orders and we “put” the products for all centrally allocated merchandise to the orders,” said Philip Beckett.
The put process
In traditional retail DCs, the typical practice is to assemble a complete store order at a time.
“At The Reject Shop, we have turned that principle on its head and instead of carting the whole order around the DC and picking products as we pass them, we pick all of a single product for all of the orders at the one time,” explained Philip Beckett.
“For example, if we are processing orders for 123 stores, we may require four pallets of chocolate bars to allocate the required stock for each store.
“The Voice Picking system will instruct the pickers to retrieve four pallets from bulk reserve, and those pallets are then taken to the put zone,” he said.
The put zone is a 4500m² area of the warehouse that is broken up into sections representing the stores, with larger stores having larger areas dedicated to them than small ones.
The pickers transport the batched picked products on pallet trucks, stopping at each store location where products are required, and they put the required quantity to the store order.
The pickers continue allocating stock to each store where stock is required until there is no more stock on the pallet truck. The pickers are then assigned another task.
Because the pallets still have to be manually built, The Reject Shop try to schedule the goods for orders in a sequence that results with heavy products on the base of the pallet and the lightest at the top.
However, because this can be a difficult process to control accurately, The Reject Shop have made building pallets easier for the order pickers by giving them two pallets onto which they can put stock for store orders.
This enables them to take more care during the building of the pallets, ensuring safe, stable pallets for handling and minimising product damage during transport.
As each item is ‘put’ to a pallet, the action is recorded by Dematic’s PickDirector order management system, providing The Reject Shop with full traceability of which products were put to which pallet.
The ability to tell which products are on which pallet, is important for the stores. If a store order comprises more pallets than they can accept at one time, knowing which products are on which pallets lets the store manager decide those they would like to receive as a priority.
All of the standard stock orders are picked through the Put system, which accounts for around 75% of throughput. Other catalogue lines are picked discretely, also using Voice Picking, with RF used in goods receipt, putaway, replenishment, despatch and for picking uglies.
The Reject Shop have used a variety of storage mediums to provide a range of storage options within the new DC.
- Double Deep storage for bulk reserve
- Pallet Live Storage for high volume picking
- Carton Live Storage for high volume split-case requirements
- A separate area for storing half pallets of slow moving lines
- A separate area near the despatch dock for storing uglies
- A separate hazardous goods store
In total, the facility provides racked storage capacity for 13000 pallets. A large floor area is also provided adjacent to the Put Zone, for block stacking stock that is pre-assigned for orders to be assembled.
The Reject Shop have significantly increased productivity and throughput following the construction of their new national distribution centre, with efficiencies delivered through:
- Picking speeds and accuracy assisted by Voice Picking and the elimination of paper
- The implementation of a high productivity voice-directed put system for the majority of store orders
- More productive work flows arising from better configured layout
- Special attention to workplace culture, including OH&S
- Working with The Reject Shop’s Stock Flow group to identify more opportunities for true cross docking including streamlined arrangements for volume items and collaboration on pack sizes, right sizing and right timing of deliveries for the majority of push distribution items