The Big Move

Emirates Motor Company explains how it moved more than 45,000 pieces of inventory worth around US $1 million from its old warehouse to a new facility.

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By  Neil Denslow Published  December 1, 2005

The Big Move|~|bigmove2.jpg|~|The Movers: EMC’s Arsen Simonyan (left) and Werner Schiessl.|~|Moving to a new warehouse is never a simple task, especially when you have 7000 SKUs and over 45,000 different items worth around US $1 million to be re-located. However, this was the challenge faced by Emirates Motor Company (EMC) when the Abu Dhabi-based automotive trader moved its commercial vehicle operations to a new facility in September. EMC, which is the Mercedes-Benz distributor for the southern emirates of the UAE, made the move because it needed a bigger facility to support its growing business. The company previously had its main facility in Abu Dhabi, another one in nearby Mussafa and a third in Al Ain. However, these were at the limits of their capacity, particularly after the company won a contract to service all of the UAE armed forces’ vehicles two years ago. “The old facility was too small,” states Arsen Simonyan, logistics manager, parts department, EMC. “Then, when the contract with [the UAE’s] GHQ started, that caused even bigger volumes.” To create the extra capacity it needed, the company opted to build a dedicated commercial vehicles workshop and parts warehouse in Mussafa. This area, which is the main industrial centre in Abu Dhabi, was an obvious choice for the company, as it offers good roads links with the rest of the UAE. It is also close to many of EMC’s customers, who range in size from large dealers and fleet departments receiving hundreds of parts a week to one-off customers walking in off the street. The parts warehouse also holds stocks for EMC’s own commercial vehicles workshop, which has a capacity of 50 tucks per day. Previously, these vehicles were serviced in the Abu Dhabi facility alongside the passenger cars. However, there was no room to expand this centre, so it was decided to move the truck business to Mussafa, which then cleared room to expand the passenger car business in the old facility. EMC made the decision to move in 2003 and construction began before the end of the year. The work was completed early this year, and the company began to make the move in May, when the truck workshop moved in along with some fast moving stock. The rest of the stock did not make the move until September, which was during Ramadan. Obviously, this was not ideal, but the move needed to be done then in order to meet the deadline. “Even though it was during Ramadan, we had to do it, as the date for the opening was approaching,” says Werner Schiessl, EMC’s general parts manager. The actual move took place over a single weekend with both warehouse shifts, about 30 people, working on a Thursday and Friday. The company was also able to use its own fleet of three trucks for the move, as it is only a few minutes’ drive between the old and new facility. As such, there was no need to hire any extra vehicles. The new facility is kitted out with a two-storey shelving structure from Span, which can have another level added on top. In total, there are 16,500 bins. Of these, 13,819 have an eight-digit location number, but ‘only’ around 7000 are currently active. During the move, the key challenge was to ensure that each part was put in the right one of these 7000 bins, while also ensuring that similar-looking parts were not mixed up with each other. Avoiding mix-ups was eased by the ‘chaotic’ location system that the company uses across its warehouses. A chaotic system means that parts are not assigned to a fixed location on the shelving system. Instead, positions are allocated as the goods come in, so that the bin for a particular part can change in line with the rise and fall in demand. “The main link in this system is the location controller, as he is the person who positions the part,” explains Simonyan. “He knows the piece size, and the type of container, and then the computer will tell him the locations that are of the right bin size and that are empty. He will then assign that part to that bin.” “At the beginning [of the part’s lifecycle], it may only be one piece,” Simonyan adds. “But, over time, the demand will go up, and the location controller will look at it again. He will then take it from the smaller bin size and locate it in a larger bin instead… We cannot give a location to a part for 10 years, as the demand will go up and then down.” However, aside from choosing the right bin size, the location controller also has to be aware of the items surrounding the empty bin so as to ensure that a part is not placed near to another with a similar part number, for instance. “There is a lot of things that the inventory controller is doing so that the stock-keeper will not be confused when he is picking the part,” notes Simonyan. This eases the day-to-day operation of the warehouse and it also simplified the move, as there were no similar parts in the same area of the shelving. As such, the movers could pick all of the parts in one area and then put them all in one box for transportation. Once the box arrived at the new facility, the parts could be easily identified and then quickly placed in the right bins. “When they took the parts to the new warehouse, they would take it to the new location and there a location controller would change the location [in the system] from the old one to the new one,” says Simonyan. “The bin sizes [in the new warehouse] were the same as the locations in the original facility.” To tell the movers which parts to pick in the old warehouse and where to put them in the new facility, EMC’s IT department printed off two different picklists. On one, the inventory was listed by location number, while on the second they were listed by part number. The movers primarily relied on the first list, but the second one provided a back-up. “The warehouse team started to move the parts by location numbers,” says Simonyan. “However, if there was a problem and they needed to check, we had the second list that was in part number sequence. They could then check the part number and see the location if they could not find it,” he continues. To speed up the move, EMC also decided against doing a stock count alongside the relocation process. This was deemed unnecessary, as the company has a dedicated two-man team that does a perpetual inventory count all year round. They are therefore able to count all of the parts in the warehouse three times a year, but without interrupting the daily operations. “To make a complete [wall-to-wall] count in our warehouse, you would need to close it for at least a week,” notes Simonyan. Despite moving to a new facility, EMC has made few changes to its daily operations. In the main, this was because the existing processes were already of a high standard. As such, the new facility and shelving structure, which was largely designed inhouse, was planned with the existing procedures in mind. “In the standard operations there are no differences [in the new facility]… aside from some small changes to the procedures because the volume has increased,” says Simonyan. It was also difficult for the company to make any major changes, as it runs all of its different facilities using the same back end system. This obviously provides better stock visibility across the company, but it also means that the new commercial vehicle facility has to rely on paper-based processes rather than handhelds and barcodes. The exiting IT system, a 10-year-old package from DaimlerChrysler, has had numerous updates over the years, but it is still not sophisticated enough to support barcoding. This is one reason why the company is now implementing an Automotive-focused ERP system from Kerridge to run its operations. Once this is completed, it will then begin to look at implementing handhelds in its warehouses as well. “We need to change [our IT system] for a more modern one, which has the capacity to use barcodes,” says Simonyan. “Once we have that in place, we will then go for barcoding as a second step.” LME||**||

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