Cost-Efficient and Highly Flexible
Boots, the UK’s leading health & beauty retailer, is reorganising its entire supply chain network, combining four national distribution centres and 17 regional warehouses into one central distribution centre in Nottingham. General contractor for the planning and realisation of the overall intra-logistic structure in currently one of the largest SCM projects in Europe is WITRON Logistik + Informatik GmbH from Parkstein in Germany.
Parkstein, 10th April 2008. - “The starting point in our deliberations for the reorganisation of the supply chain was the fact that in 2002 the on-shelf availability of our goods in the shops was completely unsatisfactory at around 85 percent,” says Gavin Chappell, who is in charge of all aspects of logistics at Boots. “Admittedly, we did manage to increase this availability to around 97 percent in 2005 through internal projects, but this entailed totally unacceptable costs and relatively low efficiency throughout the system. Another factor is that, generally speaking, costs in UK retail have risen much more sharply in recent years than selling prices. ”
At this point, a decision was made to completely automate the supply chain and to bundle all logistics activities within the national distribution centre in Nottingham. The concentration of all warehousing and picking processes at one site and an optimal level of automation are key advantages of this new Boots distribution structure. In the course of this project, Witron is going to integrate a new, highly dynamic tote and pallet picking system into the existing logistics buildings of Boots.
High cost efficiency and store-friendly deliveries
More than 2,300 Boots stores will in future be supplied centrally from the Store Service Centre (SSC) in Nottingham. For this to be possible, it is absolutely vital that around 25,000 different products are stored and picked efficiently. Consequently, Boots has opted for two systems provided by general contractor WITRON Logistik + Informatik GmbH from Parkstein in Germany: the Dynamic Picking System (DPS) for small parts picking and the Car Picking System (CPS) for case handling.
“We are expecting the completion of the SSC to produce impressive cost efficiency and sustainable optimisation through the introduction of store-friendly deliveries,” comments Chappell in reference to the core optimisation effects. As a consequence, the company will be looking to use this to strengthen its competitive position and create a stable basis for future challenges. “WITRON convinced us with their industry know-how combined with an innovative overall concept based on sophisticated standard technologies,” explains Chappell.
Productivity increase by 50 percent
The ramp-up of the first section of the DPS as well as the initial phase of renovating the Boots pallet warehouse was completed just recently between July 2007 and February 2008 – with the added challenge of integrating the Christmas and New Year trade during November and December. “We are extremely happy with this first phase of the project,” is the positive conclusion drawn by Boots Logistics Director, Gavin Chappell, on the basis of events so far. “We can even say that the results we expected, based on the business case we worked out, have been surpassed.” Even the Christmas and New Year trade did not suffer any adverse effects from the first part of the reorganisation of the supply chain. Quite the opposite, in fact: everything was processed without any problems whatsoever.
“We assume that our logistics productivity will increase by some 50 percent once the SSC project has been completed – this will be achieved by downsizing warehousing space, reducing staff costs and optimising processes”, forecasts Chappell. “Besides the tie-up of far less capital due to reduced stocks, this is one of the main advantages of the new solution. Even in the medium term, in other words before the overall SSC project has been completed, logistics costs are set to fall quite significantly. “
Demanding tasks – optimisation through standard modules
With more than 30 installations worldwide, the DPS has become a household trade mark concept in the order picking landscape. As with all WITRON warehousing and picking systems, it is based on modular components.
The tote picking system DPS works according to the goods-to-man principle. Depending on the order structure, the articles are arranged in the picking front either permanently or on a demand-oriented basis, whereby this is optimised at all times. Replenishment of the picking zones is controlled entirely by the system and is done by stacker cranes. DPS continuously monitors and adjusts the classification of the article structure. The picking operation is supported by a pick-by-light system.
The CPS standard module is an RF-controlled pallet picking system with distance-optimised order picking. The picking front is replenished automatically by stacker cranes. The positioning of an article is therefore controlled by the system and based on the concept of store-friendly order picking. Extension of the standard modules to include customised functionalities introduces maximum flexibility into the solutions.
“The size of the logistics project, the total range of functionalities required, an extremely tight schedule, and the graduated introduction and integration of the complete system into an existing building all mean that demands on the project partners and also on the suppliers involved are very high in the Boots project,” remarks Jack Kuypers, WITRON Branch Manager for North-West Europe. He goes on to say, “Here at WITRON we can fall back on our vast experience in realising similar plants and rely on our standardised logistics modules, which have proven their worth to great success worldwide, particularly for such tasks.”
Installation in two project phases
The Boots project was divided into two phases. One reason for this is that it was important to observe the framework conditions specified by Boots in the relocation concept, such as the minimisation of time spent renting external warehousing and picking space for the transitional period. Secondly, a graduated implementation process was ideal for ensuring that trade over the Christmas and New Year period, which is enormously important for Boots, could be processed. With the completion of the first phase of the project in February 2008, and the conclusion therefore of a ramp-up phase of just six months, the DPS in the Boots logistics is currently using 16 of the total 20 picking lines as planned.
With the DPS coming into service, the Boots retailing system now has not only the old existing system at its disposal, but also another picking system in the form of the DPS. “This constituted the greatest challenge of the first construction phase,” comments Josef Bauriedl, WITRON Project Manager. “Since the Boots retailing system can only manage a given article in one picking system, it would not have been possible to return the article to the old system after its relocation to the DPS without significantly impairing delivery capability. Hence, it was extremely important to ensure that the WITRON system would work with maximum availability and data reliability from the very first minute given that the topmost priority right from the outset was to supply stores with all articles without any problems.”
During the second project phase, which will begin as from May 2008, the so-called Order Consolidation Buffers (OCBs) will be integrated in December 2008, followed by the CPS in January 2009, and the second DPS section in April 2009. Final acceptance of the complete project is scheduled for autumn 2009.
Convergence of the two project phases
As general contractor, WITRON bears overall project responsibility during all phases of the project. “The challenge to come will be to merge the logistics and material flow systems of both development phases to create one complete system while keeping plant availability consistently high. Here, it will crucially be a matter of integrating those articles that were already allocated to the second DPS project phase during project planning step by step, merging DPS project phase II with DPS project phase I into one unit during ongoing operation and synchronising the functionalities and dynamics of both construction phases”, explains WITRON Project Manager Bauriedl. “We need to do all this while ensuring 100% article availability and supply to the stores, just like in the first ramp-up phase.”
A total of approximately 180,000 tote storage positions, nearly 39,000 pallet storage positions and 70 stacker cranes will be installed for the automated small parts and pallet high bay warehouses, within the picking areas and for the Order Consolidation Buffer. As part of the DPS and CPS solution, storage and order picking will be merged into one complete system.
To guarantee the high availability of the SSC, WITRON is also utilising a variety of other components. For example, the automated Pallet Exchange Machine (PEM) will be used to exchange all supplier pallets for in-house system pallets – this will apply not just to external suppliers, but to the internal Boots production department as well, thereby ensuring the quality of the pallets is consistent and enabling any conveyor problems caused by pallet wear to be avoided in advance.
Future Changes - In the next two years alone, Boots will also be rebranding around 800 Alliance Pharmacy stores to “your local Boots pharmacy”, which were not part of the original design scope as Boots completed the initial design pre acquisition. “Our customers’ order structure will become much more fragmented as a result, which is why we need the DPS with all its benefits as a highly flexible order picking solution,” says Boots Supply Chain Director, Gavin Chappell. “As we are a company that adopts a very deliberate approach to things, we will analyse these new requirements very precisely as well and get the appropriate preparations underway. Our relationship with WITRON, which is built on a high level of trust and mutual respect, represents an effective basis for this and makes me extremely optimistic about the future.”
Author: Thomas Wöhrle, freelance journalist, Karlsruhe.
- DPS for pallets and totes: 252 workstations, 2 levels, 32,000 picking flow-channels, 160,000 storage locations for totes, 900 picking shelves and 1,900 storage shelves for pallets, 28 tote cranes, 4 pallet cranes
- CPS: 15 order picking mobiles, approx. 3,600 pallet locations, 540 picking flow-channels, 5 pallet cranes
- OCB: 20,000 storage locations for totes, 3 modules with a total of 18 PMLs (on 2 levels)
- HBW: existing pallet warehouse with approx. 35,000 storage locations, renovation of 6 existing cranes, installation of 9 new cranes
- Basic data (20 hours): 29,200 SKUs per day, 1.2 million order lines per day (= 2.860 million picks), 5,200 inbound pallets, 98,000 outbound totes (=9,540 dollies), 4,640 outbound roller containers
The following sub-suppliers are being used in phase I:
- Conveyor system and stacker cranes for totes, special machines: TGW Transportgeräte GmbH, Wels
- Pallet cranes: Dambach Werke GmbH, Gaggenau
- Conveyor system for pallets and dolly: Binder GmbH Fördertechnik, Burgstetten
- Racks for pallets and totes, platforms: voestalpine Krems Finaltechnik GmbH, Krems
- Strapping machines (totes on dolly): Strapex GmbH, Holzgerlingen
- Labelling machines: Logopak Systeme, Hartenholm
- Pallet Exchange Machine: Gebhardt Transport- und Lagersysteme GmbH, Cham