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Global Distribution Center Singapore: The foundation for another expansion in the Asian-Pacific region

Photo: Firefly Photography

Photo: Firefly Photography

Photo: Firefly Photography

Photo: Firefly Photography

Photo: Firefly Photography

Photo: Firefly Photography

Photo: Firefly Photography

Photo: Firefly Photography

Photo: Firefly Photography

Photo: Witron

Photo: Pepperl+Fuchs

Pepperl+Fuchs, one of the world’s leading companies for industrial sensors and technology for electrical shock protection, again decided to use the design and implementation experience of the general contractor WITRON Logistik + Informatik GmbH for the construction of the Global Distribution Center (GDC) in Singapore. Pepperl+Fuchs has already worked with WITRON on the successful implementation of its European Distribution Center (EDC) at the company’s headquarters in Mannheim, Germany. The intelligent processes in the GDC are characterized by numerous highlights: High work quality and cost-efficiency, an innovative goods-to-person solution, leading-edge workstations throughout the entire material flow, an intelligent linking of logistics, production, and distribution processes according to Smart Logistics 4.0, as well as the optimal use of an existing space, which is very important in Singapore. Moreover, the two sites in Singapore and Mannheim permanently develop and utilize numerous synergies.  

The headquarters for the Asian parts distribution is located in Singapore. In addition, local sales offices of Pepperl+Fuchs can be found in most Asian countries to assure proximity to the customer. The company has a small manufacturing facility in China that offers customized solutions in the area of electrical shock protection. Pepperl+Fuchs has looked at many Asian countries when searching for the suitable location. With its existing infrastructure, Singapore has turned out to be a perfect logistics hub. In addition, the country offers a solid platform through trade agreements with most European, American, and Asian countries. A key factor when selecting the location was also the legal security, which the company knows very well already and which had come to value due to its many years of experience in Singapore.

“Global Distribution Center (GDC)” in the focus

The heart of the logistics network of Pepperl+Fuchs in Asia is the automated “Global Distribution Center (GDC)” in Singapore. From here, the company supplies and distributes all Pepperl+Fuchs plants with a very broad product range. “The main reason for the realization of a global distribution center was the consolidation process of the worldwide stock for standard products”, says Mehmet Hatiboglu, COO at Pepperl+Fuchs. “The main share of our added value is within these product areas in the production plants in Biant, Vietnam, and in Singapore.” The worldwide supply of the regional distribution centers in Germany and the U.S. from Asia certainly makes sense. “We believe that we can supply our customers even faster with reduced stock through this consolidation”, says Hatiboglu. “In order to make this possible and keep maximum flexibility, and cost-efficiency during peak times, we decided to implement an automated logistics center.” Just like the existing EDC in Mannheim, Germany, the plant in Singapore was designed and realized by the general contractor WITRON Logistik + Informatik GmbH. System service and maintenance is carried out by a WITRON OnSite team. The specialists required for this work are usually very easy to find, especially in Singapore.  

The GDC supplies pre-picked raw, auxiliary, and operating materials in small quantities to the connected production area in the same building and to a production plant located 12 kilometers / 7 miles away. The same materials are also shipped in larger quantities to plants in Germany, the Czech Republic, Indonesia, Vietnam, and the U.S. Finished goods are sent in bulk shipments to the distribution centers in Europe (EDC) and the United States (UDC) each day via air freight and once a week via sea freight. In addition, up to 1,000 packages per day are sent directly to Asian end customers “door-to-door” via a courier service. The customers of Pepperl+Fuchs have direct access to the ordering systems of the GDC so that the order can usually be processed on the same day and the goods are ready for dispatch within a short time. One of the basic principles of Pepperl+Fuchs is to ensure maximum quality and transparency within the entire supply chain – from manufacturing, via the logistics center, transportation, and all the way to the customer. The GDC is a central component in this chain. 

Largest single investment in the company’s history

The business in Asia differs substantially from other parts of the world due to a number of factors. In general, Asian customers tend to place very high requirements. In addition to the high quality demands in some regions, the personal connection plays an equally important role. “In addition, making business can be complicated by the fact that Asian customers do not place too much emphasis on pro-active planning”, says Hatiboglu. “Consequently, we always need to be prepared for short reaction times.” This especially requires high availability and flexibility in terms of manufacturing and logistics processes. 

With a total of 44 million Euros, the GDC in Singapore is the largest single investment within the company history of Pepperl+Fuchs. The investment for the 32 meter / 105 feet high WITRON warehouse amounts to some 12 million Euros. The AS/RS contains 4 aisles. Every aisle is supplied by a stacker crane with a mast length of 18 meters / 59 feet. “The receiving area is equipped with six “intelligent” receiving workstations. Picking is done at eleven leading-edge and multi-functional workstations that can be converted from a pick to a pack workstation and vice versa at any time, and also to a workstation for value added service performances”, says WITRON Project Leader Juergen Huettemann. “Up to 4,600 order lines are picked and packed on a daily basis.” The system knows independently whether these are large, medium, or small orders and which individual circumstances have to be considered for every order. As of today, the GDC stores more than 97,000 SKUs. The filling degree is at an average of 80 percent. One third consists of finished goods, the rest are raw and semi-finished products.

Interactions between Mannheim and Singapore

“Currently, the main challenge when distributing products for plant and process automation is the increasing number of customer-specific demands and country-specific import regulations”, explains Hatiboglu. “These include customer-specific barcode labels as well as the online data transfer of shipments in the respective country’s language.” In order to map these issues accordingly, Pepperl+Fuchs has set up a specific line for special processing in its GDC. A great benefit is the functional mapping of all requirements within the WITRON warehouse management system.  

The decision to award WITRON the order for implementing the project was made very quickly due to the existing successful partnership in Mannheim Germany. The intensive and trustful cooperation between Pepperl+Fuchs and WITRON has worked very well right from the start and has more than fulfilled the customer’s expectations: high system performance, lowest error rates, and best possible customer service were some of the major achievements. Now, the manufacturer of sensors intends to accelerate the additional expansion on the Asian market by implementing the competitive advantages achieved through the state-of-the-art logistics center in Europe. “It goes without saying that we have referred to the positive experiences gained during the automation of our “European Distribution Center (EDC)” in Mannheim and want to make use of them”, explains Hong Han Thanh, Warehouse and Logistics Director at Pepperl+Fuchs and responsible for the South-Asian region. “Both warehouses have similar constellations. They supply the manufacturing area with raw materials and end customers with finished goods so that a “copy-and-paste” option with smaller adjustments to the local requirements was the logical consequence for us.” It was also easier for the WITRON project team to understand the business processes of Pepperl+Fuchs Singapore and to implement the resulting demands. “Another benefit is that we communicate via the same IT interface”, says Hong. “This in turn had led to the fact that we were able to test and release new functions in the EDC upfront so that the GDC could immediately start with a fully functional version.” By training the employees from Singapore in Mannheim and through the commissioning support by employees from Mannheim on site in Singapore, the ramp-up was handled in next to no time without complications and delivery interruptions. 

In the meantime, the GDC stores everything such as raw, semi-finished, and finished goods, as well as auxiliary and operating materials. The GDC consists of three warehouse areas: the automated small parts warehouse (AS/RS) with 60,000 trays, a long goods warehouse with 400 locations, and a narrow aisle pallet warehouse with 1,800 storage locations. 

Consistent integration of production and logistics processes in terms of Smart Logistics 4.0

Just like the warehouse in Mannheim, the site in Singapore is also using the Order Picking System (OPS), which has proven itself in the parts distribution and in E-Commerce applications across the globe through the cost-efficient handling of broad product ranges. The OPS enables storage and order picking in one system. The modularly designed solution is an integration of automated small parts warehouse (AS/RS) and upstream picking workstations, which are largely decoupled from the speed of the stacker cranes through sequence buffers – or just as recently realized for Pepperl+Fuchs – through a transfer car solution. This allows maximum individuality in all work processes. The products are provided in the OPS at pick and pack workstations according to the goods-to-person principle and in an order-related manner. Due to the flexibility of the system it is possible to use trays, totes, cartons, and small load carriers with different sizes, heights, and compartments as load carriers. The picking workstations are occupied depending on the workload. In order to store the very high number of different products efficiently and in a space-saving manner, the load carriers (cartons) used at Pepperl+Fuchs are divided up to sixteen times. The cartons are transported on trays. The occupation of the trays is automatically scanned in the receiving area. Picking is done directly into shipping boxes or into order boxes for production supply. Every picking workstation is able to process up to eight customer orders at the same time. A multi-check system consisting of pick-by-light system, place-to-light, and surface scanning ensures maximum picking accuracy. Products from Pepperl+Fuchs are used for plausibility checks.   

Another special feature of the GDC is the consistent intra-logistical connection of the production area to the logistics operation. An automatically guided transport system (FTS) transfers the order from the logistics to the production area and vice versa. Once the production area has returned a box with finished goods and stores it into a pre-defined shelf an AGV (Autonomous Guided Vehicle) will automatically be requested via Wi-Fi. It picks up the box from the production line in an autonomous manner and transports it to an unloading station. This is where the idea of Smart Logistics 4.0 goes into effect: The box is scanned, the registration takes place in parallel in the background, and the goods are immediately available. If the system has open orders for this product the box will be assigned immediately and transported to the pick/pack location instead of it being stored. This is called “one touch handling” at Pepperl+Fuchs. The registration of incoming goods is done in real-time as a background process and the goods are immediately available. “If you think about intelligent, smart, and efficient processes today, there is no way around the philosophy of Smart Logistics 4.0”, says Project Leader Hong.

Innovation: AS/RS erected on top of the pallet warehouse

As it is usual in Singapore due to the local soil conditions, Pepperl+Fuchs has erected the logistics center on stilts. For this purpose, 200 bearing pillars with a length of up to 40 meters / 131 feet have been put into the ground. The construction of a 32 meter / 105 feet high fire protection wall between the logistics center and the production and administration facility was a huge challenge. In addition, land property is very expensive in Singapore. “Due to this, the optimal use of the existing property was of utmost importance for the project team”, says Hong. “This has led to the implementation of a silo solution.” For a high bay warehouse in silo design, the rack serves as a load-bearing component for roof and wall elements. Moreover, WITRON installed the fully automated tray warehouse directly on top of the pallet warehouse – a solution that is probably unique in the world. Thanks to this construction method, the facility costs could be reduced to a minimum. 

“Based on these special conditions and the missing spaces in Singapore, the material flow is arranged over several floors. The focus on maximum usability of the height and efficient connection of all areas, has been a new challenge for WITRON as well”, says WITRON Project Leader, Huettemann. “Of course, it was a huge benefit that both companies knew each other from previous projects and that the IT interfaces were known to all parties.” Nevertheless, all processes were questioned regarding their interactions between Mannheim and Singapore. “The major approach was: How do decisions impact Singapore and Mannheim and vice versa”, says Huettemann. “In Singapore, for example, we have adapted the order consolidation process on various floors and integrated the logistics processes for a production order to the assembly lines.”

Smart processes - high efficiency

Pepperl+Fuchs is very satisfied with what has been achieved so far. “The availability of the system is definitely above standard”, says Project Leader Hong Han Thanh. “In addition, the pick performance increased significantly. Today, it is three times higher in the automated logistics center than in the previous manual warehouse, with a rising trend.” Moreover, the “smart” receiving registration process has made it possible to completely register a 40-feet container within three hours. In the old warehouse it took almost two days for the last case to be registered and stored.

There are additional benefits coming from the automation technology. The operators at the workstations are guided by the specifications given by the system. “Thus, it is possible to apply “Poka-Yoke” concepts to these workstations resulting in a high work quality”, says Hong. “We can also create synergies within the Pepperl+Fuchs Group.” In the future, the manufacturing area will pack its products into load carriers, which are provided with a clear identification number. Thus, the receiving process can be even more accelerated.  

The GDC offers interesting expansion possibilities for the future as well. “We obtain a significantly better overview in terms of design”, says Hong. “In the future, we will be able to offer our customers real-time information to their orders, just like B2C companies do.” Thanks to the expansion of the warehouse, Pepperl+Fuchs can offer additional cost-efficient performances such as special packaging for customers or the individual combination of complete sets. Or as project leader Hong Han Thanh puts it: “The GDC and its smart logistics processes combined with a seamless integration of the Asian manufacturing plants have laid the foundation for the expansion in the Asia-Pacific region.”

Author: Thomas Woehrle, specialized journalist, Karlsruhe


Project figures:

Size of the logistics center:7,350 square meters /  71,100 square feet
Implemented WITRON system:OPS
Number of different products:97,000
Picked order lines / day:4,600
Tray storage locations in the AS/RS:60,000
Cranes:4
Repacking stations (receiving area):6
Pick and pack workstations (order picking): 11
Storage locations - manual pallet warehouse:1,600
Storage locations - manual long item warehouse:400


About Pepperl+Fuchs:
Pepperl+Fuchs GmbH, headquartered in Mannheim, Germany produces electronic components and sensors for plant and process automation. These include components for chemical plants and offshore platforms, for the automotive industry, as well as mechanical engineering and construction. The company is known as a “pioneer and innovator in the sensor technology for plant automation and as an expert in electrical explosion protection for process automation”. Pepperl+Fuchs currently employs 5,600 staff members across the globe, almost half of them are based in the Asian-Pacific region (APAC). The company’s turnover amounts to 555 million Euros, while Asia accounts for 137 million Euros. The company operates more than 60 own sites and subsidiaries across the globe, including 14 in the APAC region.

About WITRON:
WITRON Logistik + Informatik GmbH, founded in 1971 (headquartered in Parkstein, Bavaria, Germany), designs and realizes customized logistics and material flow systems that generate sustainable competitive advantages for their clients. WITRON has all the decisive key elements of a successful project under one roof: logistics design, information and control technology, mechanics design and production, as well as functional responsibility as general contractor for logistics. The WITRON Corporate Group has some 2,800 employees worldwide. WITRON’s annual revenue in 20156 amounted to 485 million Euros (656 million USD). Other WITRON branches are located in Rimpar (Germany), Arlington Heights, Illinois (USA), Toronto (Canada), Venray (The Netherlands), Stoke-on-Trent (UK), Madrid (Spain), Strasbourg (France), and Singapore.