Warehouse retooling

To support its growth in the local market, Black & Decker has moved its distribution operations into a new facility. The centre is twice the size of the company’s old one and has room for yet more expansion.

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By  Neil Denslow Published  December 31, 2006

|~|Binoyno.jpg|~|Binoy George Philip|~|Black & Decker has drawn up ambitious growth plans for its operations in the Middle East, Africa and the Indian subcontinent. To support these aims, the company has moved into a new distribution centre in Jebel Ali. The centre, which was one of the first buildings to be completed in JAFZA South, is much larger than Black & Decker’s previous base in the free zone, and it also has space for further development as well. The power-toolmaker has had a distribution centre in Jebel Ali since 1985. It was one of the first organisations to move into the free zone, and its centre was enlarged over time from an initial 1000 m2 to around 3400 m2. However, as there was no longer any space for further expansion at this site, the company opted to build a completely new facility. “We have made the move, mainly because our volumes have increased over the years,” explains Binoy George Philip, distribution manager, Black & Decker Middle East & Africa. “We have had excellent business growth, so it is quite logical to move into a bigger facility.” The new distribution centre is 14 m high and 7456 m2, with 7000 m2 of this given over to the warehouse, which has a total storage volume of around 9000m3. The facility is used to distribute three different ranges of products, totalling 20,000+ SKUs, across 32 countries. The three ranges, which comprise Black & Decker domestic power tools, DeWalt professional power tools and Black & Decker home appliances, are held in separate areas of the warehouse, along with a range of spares and accessories. The centre also houses offices and a value-add area for re-packaging and promotional activities. The capacity of the warehouse was decided upon following a five-year business development forecast. Growth within and beyond this timeframe was also planned for and the company has taken two plots of land next to and behind the distribution centre to allow for further expansion in the future. In designing the wide-aisle warehouse, the company was able to draw upon its experience in Europe and it worked with ILS, the same consultancy used there. However, the distribution centre had to reflect a number of differences to Black & Decker’s European operations, notably the fact that the company offers a much wider range of home appliances in the Middle East and Indian subcontinent markets. “In Europe, we have fully automated or palletised warehouses, but here we have a different configuration… [as] we do some products specifically into this market,” explains Philip. “We therefore had to look at the product mix… and we had to take a lot of local conditions and parameters into account.” The most notable result of this was a large mezzanine structure for spare parts, which, like the racking in the warehouse, was built and designed by SSI-Schaefer. This structure is required in the Jebel Ali warehouse, as — unlike in Europe — there is a high demand for spare parts in this region. Elsewhere in the distribution centre there is selective pallet racking, as well as specialised bins for storage. For the fast-moving home products, there is a special bulk store for block stacking close to the door. This comprises 40 blocks, which each one holding two containers of 30 pallets. “We decided to accommodate at least two containers of each line in this area… so that the 80 fastest-moving products would be located closest to the pick face,” explains Philip. The bulk store is also designed so that the stock can be accessed from either side, which then means that two people can pick from it at once. “We limited [each container] to a single product for faster picking as well,” adds Philip. The other product lines in the warehouse — Black & Decker domestic power tools and DeWalt professional tools, as well as accessories — are held in selective pallet racking. “We found that we needed 540 pick faces [either pallet locations or bins] for fast-moving products in these two ranges,” says Philip. The fast-moving goods in these ranges are held on the lower levels of the selective pallet racking, so that the workforce can most quickly access them. A minimum stocking quantity is held at these levels with more stock held higher up in the racks for re-furnishment and larger orders. “If you have 20 pallets of a particular product going out it will be picked from a higher level in block,” notes Philip. ||**|||~||~||~|The loads picked at the distribution centre vary widely in size and content, reflecting the variety of operations in the different markets it serves. Most of the loads combine goods from two or more of the three product ranges, and they can be heading to either a distributor or to the retailer directly. “We have individualised as well as mixed types of pickings,” says Philip. “We have to have different configurations, as the market we cater to is vast. Each customer and each region requires a different approach.” “In the UAE, the products go directly to the dealers. Some goods in some markets do go to a distributor as well, but the core of our supply chain strength is that we supply directly to the dealer,” he adds. The company opted to do its own distribution in the UAE, using a combination of its own trucks and third-party vehicles, as this means it can respond more quickly to orders. “From a supply chain perspective, you can supply faster [in-house],” says Philip. “You do not have an intermediary distributor, so any order that arrives in the morning will go to the user within the next two to three hours.” Black & Decker aims to fulfil any order it receives before 09:00 from within the Dubai and Sharjah market before 13:00 that day. For the rest of the country, its target is the following day at the latest. “This speed is achievable because we are serving directly to the customer. In other cases, it would go to a distributor and then they would distribute it into these places,” notes Philip. The company uses a mix of its own and third party vehicles for deliveries, as this gives it more flexibility and lower fixed costs. The same mix is found in the labour force. Black & Decker only has nine of its own employees running the warehouse, with the rest of the labour force comprising temporary workers hired through Jebel Ali Manpower Service. “All of the key operations are run by Black & Decker people, but the rest of the manpower — for the value-add services and packing, for instance — is all temporary workers,” says Philip. The fact that Black & Decker does its own distribution created one of the major challenges it faced when moving from its old facility to its new one. The actual move was conducted in two phases, with larger items and pallets moved in the first phase followed by spare parts in the second phase. The first phase took five days, and during this time normal distribution operations had to be suspended. And, as Black & Decker has no distributors that could hold bulk stock, the company had to rely on its numerous retailers to pre-order and then hold the items they would need during this period. “We had to prepare dealers for the shutdown,” says Philip. “We told them about it every month beforehand and asked them to keep extra inventory for the duration. We also had some stock on hand at our service centre in Dubai in case of emergency orders,” he adds. “In general though, the dealers were prepared for the move.” The design process for the new distribution centre and the planning for the move was led by a project team of ten Black & Decker staff from a range of departments, including commercial, supply chain, customer service and IT. This team held weekly conference calls with experts from around the world, as well as having monthly meetings in person, and it tracked all aspects of the project from construction to alerting dealers. The team also selected the various suppliers, basing its decision on a range of factors, including the vendors’ local experience and advice from Black & Decker’s central purchasing unit in Europe. “They had just completed two warehouses in Belgium, so they could help us get the best international suppliers and help us find the right products,” says Philip. The equipment in the warehouse includes three forklift trucks and three reach trucks from Still. The racking was designed and installed by SSI-Schaefer, which also created a two-tier mezzanine structure for spare parts storage. This structure has a variety of storage containers for small parts, and as in the bulk storage area, the most picked items are located on the lower level to ease access. In terms of IT, Black & Decker’s Middle East operations are currently run on an Oracle-based system. However, the organisation is gearing up to migrate onto SAP in the coming months, so that it will be in line with the rest of Black & Decker’s operations around the world. “We have SAP everywhere else, and we are moving towards having global integration using the same system,” says Philip. Once SAP is installed, the company will use it to enhance inventory management by tracing products using a barcoding system and possibly RFID as well. “It maybe a barcode or it maybe more than a barcode…. There are different options relating to that,” says Philip. “However, we have already put the barcodes up [in the warehouse] looking to the future.” The company is also already beginning working on expanding the facility, having brought forward phase 2 of its plans because of growth in the local market. The distribution centre is to be expanded by a further 5000 m2, including a training centre. The warehousing will follow the same design as the current set-up with more wide-aisle racking. A bigger change is expected to happen after the 5-6000m2 phase 3 expansion, which is expected to occur in three-to five years’ time, as the company will then switch to a cross-docking layout. At present, all inbound and outbound deliveries come in the same side of the warehouse, but the company will change this once it expands the warehouse to its full size, so that goods will come in one side of the building and leave through the other. “Cross-docking will allow us to separate inbound and outbound deliveries, and to more easily segregate different products, which will be vital when we have the amount of stock we will have then,” says Philip. ||**||

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