AUTOMATION/RETAIL

The FUTURE of
RETAIL DISTRIBUTION
 AUTOMATION/RETAIL

THE FUTURE OF RETAIL DISTRIBUTION

welcome
contents
The future of retail distribution 10 A collection to inspire
Distributed order management, autonomous robots, blockchain and The retail supply
warehousing software are all working together to help retailers more chain is a complex
effectively manage their end-to-end supply chains. animal that has
been affected by
Conveyors & Sortation: Carrying the e-commerce burden 14 everything from
In a case-quantity world, conveyor was king. E-commerce, poly bags the uptick in
and the need for incredible flexibility posed a brief challenge, but e-commerce to
convey and sort technologies have reclaimed the crown. the move to omni-
channel distribu-
Rocky Brands sees the light 20 tion to the so-called “Amazon effect,”
Confronting an aging materials handling system and new channels just to name a few.
of business with new customer expectations, Rocky Brands installed Highly dynamic and customer-
a put-to-light and sortation system to ramp up fulfillment. focused, these end-to-end supply chains
require a high degree of synchronization
Pouch sorter powers Stage 28 and collaboration—both of which are
How a hometown department store chain transformed its being made easier by technology.
e-fulfillment processes with pouch sortation technology. In this Special Digital Issue, the
editors of Modern Materials Handling
Thrive Market’s startup disribution network 36 have curated several feature stories that
How does a fast-growing, e-commerce startup company build out neatly encapsulate the software, auto-
order fulfillment capabilities? Thrive Market answered that question mation, equipment and processes that
with its new facility in Indiana. are helping today’s retail distribution
operations exceed customer demands.
Sign, seal, deliver on customer promises 44 The editorial team of Modern hopes
Packing and shipping—as the final step of fulfillment—are the that this collection will not only give
last chance for an operation to ensure the job is well done. you the clearest snapshot possible of
the innovation and technology that’s
We’re gonna need to see some identification… 50 currently in use, but work to inspire you
To address the AIDC challenges of e-commerce and omni-channel, on your transformational journey.
labeling and marking suppliers are ensuring the information contained
within each printed bar code is read with 100% accuracy every time.

Automation & robotics lead robust outlook 54

Our annual survey reveals a bullish outlook for continued
material handling investments, with enthusiasm extending into
Michael A. Levans, Group Editorial Director
newer technologies such as robotics as well as warehouse control Comments? E-mail me at
system software and the closely related category of warehouse mlevans@peerlessmedia.com
execution systems. Follow me on Twitter: @MikeLeva

Editorial Staff Peerless Media, LLC

Brian Ceraolo
Michael Levans Sara Pearson Specter Wendy DelCampo
President and Group Publisher
Group Editorial Director Editor at Large Art Director MATERIALS
LS HA
HANDLING
LIN
LING
Kenneth Moyes
Bob Trebilcock Roberto Michel Polly Chevalier President and CEO
Executive Editor Editor at Large Art Director EH Publishing, Inc.

Noël P. Bodenburg Bridget McCrea Kelly Jones Editorial Office

Executive Managing Editor Editor at Large Print/Online Production 111 Speen Street, Suite 200
Manager Framingham, MA 01701-2000
Josh Bond Jeff Berman 1-800-375-8015
Senior Editor Group News Editor

CMYK GRAYSCALE mmh.com B/W

2 AUTOMATION/RETAIL
 Warehouse execution. Simplified.

Your warehouse fulfillment As the industry’s only clean-sheet approach to WES

software, Momentum™ is built on a unified platform
requirements are complex. to greatly simplify e-commerce fulfillment, store

Your warehouse execution replenishment and wholesale distribution center operations.

Momentum is the backbone of Honeywell Intelligrated’s
system shouldn’t be. Connected Distribution Center, an end-to-end,
holistic platform designed to help you make the digital
transformation needed to increase reliability, improve
utilization and maximize productivity.
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flexibility, future-proof scalability and the intelligence to
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For more information, please visit www.Intelligrated.com

© 2018 Honeywell Intelligrated. All rights reserved. or call 1.866.936.7300.
The Future of Retail Distribution
Future of
THE
Retail
DISTRIBUTION
BY BRIDGET MCCREA, EDITOR AT LARGE
T
he retail supply chain is a complex animal
that has been affected by everything from
the uptick in e-commerce to the move
to omni-channel distribution to the so-called
“Amazon effect,” to name a few. Highly dynamic
and customer-focused, these end-to-end supply
chains require a high degree of synchronization
and collaboration—both of which are being made
easier by technology.
“As more people made their purchases online
versus going to a store, the need for highly flexible
supply chains has grown exponentially,” says Dinesh
Dongre, vice president of strategy at Softeon. No
longer restricted to holding inventory meant for their
end users, for example, retailers are procuring goods
from multiple global sources and often turning to their
suppliers to drop ship orders to their customers. This
strategy helps companies better accommodate their
customers’ changing wants and needs. “Consumers
are fickle. They want their orders to arrive within the
next hour, if possible,” says Dongre. “Because of this,
the traditional approach no longer works effectively
for retailers that either want to sustain or improve
their market share.”
4 AUTOMATION/RETAIL
Distributed order
management, autonomous
robots, blockchain and
warehousing software are
all working together to help
retailers more effectively
manage their end-to-end
supply chains.
In lieu of that “traditional approach,” a grow-
ing number of retailers are turning to technolo-
gies like distributed order management (DOM),
warehouse management software, robots and
even blockchain to run their supply chains more
effectively and efficiently. Here are five technolo-
gies that will shape the retail distribution land-
scape in 2018 and beyond.
1
Distributed order
management (DOM)
Facing challenges like the
proliferation of customer
choice, to demands for
same-day and next-day delivery, to the Amazon
effect, more retailers are using DOM to manage
their omni- and multi-channel operations. As a
system that brokers orders across various systems
and processes that multiple parties use to fulfill
demand, DOM usage “continues to grow,” accord-
ing to Dwight Klappich, research vice president
at Gartner, with such systems now being tied into
store point-of-sale (POS) systems. “Manhattan
has certainly been talking about this tie-in,” says
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 Klappich, “and other vendors are trying to take POS
and move it up into the DOM layer.”
Defining DOM as the “ability to orchestrate an
order lifecycle,” Dongre says these solutions have his-
torically focused on filling orders across multiple dis-
tribution centers. Fast-forward to 2018 and retailers
are using a combination of store, vendor-based and
DC fulfillment—all of which come together to create
one big, multi-node facility.
To support this evolution, Dongre says DOM
must evolve into a more comprehensive solution that
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incorporates high levels of visibility across the entire
network, including the activities of the various vendors
that drop-ship orders to end users. The solutions will
also need to handle inventory rebalancing, or the move-
ment of inventory to the right locations and according
to demand; dynamic orchestration (which answers
the question: Where is the best place for us to fulfill
from?); collaborate across suppliers; and optimize
inbound freight. “The next generation of DOM will
incorporate these various elements and positively affect
total delivered cost for retailers,” says Dongre.
AUTOMATION/RETAIL 5
The Future of Retail Distribution
2 Warehouse management
and execution systems
A workhorse of the typical DC
or warehouse, a warehouse man-
agement system (WMS) controls
the movement and storage of
materials within those facilities. Warehouse execution
systems (WES) manage inventory records and materi-
als handling equipment within the facility. Together,
these two software platforms continue to play a signifi-
cant role in the typical retail supply chain.
“WMS is important to the retail sector, which is
working with myriad different ways with going to mar-
ket with e-fulfillment, omni-channel, multi-channel,
or another method,” says Dongre. “Each requires dif-
ferent types of market reach and different behavioral
expectations.” And while WMS hasn’t historically
been able to manage co-mingled inventory, Dongre
says next-generation solutions can perform functions
like the dynamic repositioning of inventory (e.g., item
availability for each channel and how much inventory
is available at each point of the fulfillment network).
Luke Nuber, Fortna’s emerging technology specialist,
points to WES as the “subsystem” that ties distribution
technology together and sees these solutions playing an
important role in the retail supply chain during the year
ahead. “There are a lot of efficiencies and productiv-
ity that can be gained by tying and fully integrating an
entire facility together,” Nuber says. “WES really enables
that by putting people, processes, technology and assets
into a single control system that has end-to-end visibility
throughout an entire facility. This allows retailers to pri-
oritize tasks and optimize those tasks on the fly.”
For retailers, WES also provides insurance for tech-
nology purchased from vendors that either get acquired
by another company or go out of business. “A good WES
system provides a lot of flexibility to swap out different
systems—or the components—should they become no
longer available,” Nuber adds. “This provides a definite
plus for the retailer that’s looking for long-term solutions
to their key distribution challenges.”
6 AUTOMATION/RETAIL
3 Autonomous robots
The image of the autono-
mous warehouse is coming into
clearer focus as more hardware
and software manufactur-
ers develop innovations that
remove much of the “human”
component from the distribution process. According
to Peerless Research Group’s most recent automation
survey, 45% of companies surveyed want to invest in
robotics (palletizing, picking or other solutions) and
43% are interested in conveyor and sortation systems,
automated storage, and automatic guided vehicles.
Other warehouse and DC automation that companies
are interested in includes shuttle systems, goods-to-
person picking solutions, and weighing/cubing/dimen-
sioning equipment.
From his vantage point at Gartner, Klappich says
he’s seeing a “marked increase” in the number of
retailers that want to invest in various forms of auto-
mation. On many of those “must-have” lists right now
are autonomous mobile robots. For example, Deutsche
Post AG’s DHL is testing “swarming” robots at one of
its facilities, and Quiet Logistics, which fulfills online
orders for retailers like Bonobos and Inditex SA’s Zara,
is using the same type of mobile robots in one of its
warehouses, according to The Wall Street Journal.
Expect to see more retailers jumping on the auton-
omous robot bandwagon in 2018, says Klappich, as
vendors like Fetch, Otto, IAM Robotics and Locus
find ways to build affordable robots that meet the
needs of small to mid-sized retailers. “These firms may
not be able to afford a $50 million or $100 million
automated warehouse,” Klappich says, “but they can
buy robots to supplement their labor forces. As that
technology continues to evolve, I think we’ll see even
more interest in robots for this use case and certainly
more large-scale deployments of this technology.”
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 4 Augmented reality
With applications that
range from simple text notifica-
tions to instructions on how to
perform a life-threatening surgi-
cal procedure—and everything
in between—augmented reality (AR) is coming into
focus in the retail supply chain. Using an existing,
natural environment, AR basically overlays virtual
information on top of that environment to help users
experience a new and improved world where virtual
information is used as a tool to provide assistance in
everyday activities.
“In distribution, AR basically translated into the
specialized headsets or glasses that place a glass in
front of the wearer’s eyes to project data on top of
what he or she is looking at,” says Nuber, who notes
that in most cases AR can be divided into two catego-
ries: smart glass, which projects some type of data into
the corner of the headset or glasses, and the type of
AR that projects a full-view display across the user’s
full field of vision.
“There are a couple of interesting applica-
tions for this that we see on the near-term
horizon, including those that will facilitate Companies
DC picking, which tends to consume the mentioned in the cold chain integrity of that product was from
most labor in an operation,” says Nuber. this article
Using AR, for example, supervisors will be
able to project visual cues and instructions to
• Fortna
workers as they are performing their picking
• Gartner
tasks, such as an arrow pointing to the next • SensorThink
location or the next pick, or a specific quan- • Softeon
tity to pick at a certain location.
“Some of these technologies can even show a veri-
fication image so that users can do comparisons to
the item they have in their cases versus what those
items are supposed to be,” says Nuber, noting that the
same concept can extend into a DC’s receiving and
put-away operations. “This is a user-friendly technol-
ogy that allows retailers to get seasonal workers up to
speed quickly, troubleshoot in far-flung corners of the
facility and even perform remote maintenance.”
mmh.com
5 Blockchain
The hoopla over blockchain
isn’t limited to investors that
want to get their piece of the
Bitcoin pie. Blockchain, which is
the underpinning technology that
maintains the Bitcoin transaction
ledger, could play a key role in the retail supply chain in
the near future. Eric Peters, CEO at SensorThink, sees
this trend developing over the next three years to four
years. “Particularly on the retail grocery side, blockchain
is going to accelerate from something nobody knew
about nine months ago to being in every conversation
you have about supply chain by late 2018,” says Peters.
For example, a domestic company that buys blueber-
ries from a farmer in Chile, and then sells them to a
U.S. wholesaler or distributor, will likely ship the fruit
from Santiago to Atlanta. From there, the blueberries
will be sent to a DC for eventual sale to a grocer like
Walmart. Between the time that the fruit is picked and
when a consumer takes it home and puts it in their
refrigerator, the blueberries will have passed through
multiple countries, changed ownership seven or eight
times and have been handled by a variety of
supply chains.
The retailer that wants to understand what
start to finish (including handling times, days
in transit, etc.) can use blockchain as a single
ledger of activity for every single thing that hap-
pened to those blueberries between the original
farmer and the point of sale at Walmart.
“As an unbreakable, shared ledger that
everyone agrees to, blockchain provides all of
the information in one, secure place that everyone can
access and utilize,” says Peters, who expects more retail-
ers to incorporate blockchain into their supply chain
strategies in the future. “Walmart is already testing it
with food safety; it’s definitely one of the most exciting
transformational things that’s going to happen in the
retail supply chain in the near future.” •
AUTOMATION/RETAIL 7
Equipment Report

Conveyors & sortation:

Carrying the
e-commerce
burden BY JOSH BOND,
SENIOR EDITOR

In a case-quantity world, conveyor was king.

E-commerce, poly bags and the need for incredible
flexibility posed a brief challenge, but convey and
sort technologies have reclaimed the crown.

8 AUTOMATION/RETAIL mmh.com
 T
he growth of e-commerce is driving pro-
found changes in the way warehouses and
distribution centers operate, and the effect is
particularly pronounced in the world of convey-
ors and sortation systems. Historically, these systems
were designed around fulfilling retail, brick-and-mortar
stores with full cases on a conveyor or line sorter.
Operating in a singulated flow, these systems
ferry one large case after another. This design
becomes much more difficult in e-commerce, where
equipment is expected to handle each individual
item. From small adjustments to wholesale replace-
ment, there is no shortage of options to address the
issue. Certainty of what the future will bring and
how best to design solutions accordingly is in much
shorter supply.
“I think of it as a journey,” says Tim Kraus, direc-
tor of product management for Honeywell Intel-
ligrated. “The entire industry is trying to find better
solutions as it shifts to handling individual items.
The most critical element right now is that convey-
ors and sorters must be able to adapt.”
Adaptability is not a feature for which con-
veyors and sortation systems are known. Brad
Radcliffe, vice president of sales, sortation and
distribution for Beumer Corp., says that thinking
has already changed.
“High end sortation, loop sorters and fixed con-
veyors have always been seen as a fixed solution to
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a moving target, so they carry that stigma to some
extent,” Radcliffe says. “The technology now lends
itself to more flexibility since it now incorporates the
next evolution of communication. In the past, when
you wanted to modify a sorter, you had to go put
physical things on it to tell it to take a certain action
at a certain point. Now, there’s constant communi-
cation throughout, and so you can systemically make
changes to the sorter on the fly. This is a game-
changer, and customers are coming to understand
that’s a huge piece of the puzzle.”
Modifications, modules and
maintenance
Materials handling calls for highly configurable
equipment as no two applications are the same. In fact,
Kraus says, a single standard conveyor product could
be configured in millions of different ways depending
on length, speed, motor size, controls and more. But,
what if you would like to transform the conveyor you
have into one of its millions of other forms?
According to Ken Ruehrdanz, manager of the dis-
tribution systems market for Dematic North Amer-
ica, the technology has to be designed, engineered
and implemented so it can be easily reconfigured.
“A lot of professionals might think of convey and
sort as old technology from the 1990s for case con-
veying, but it has a foundational place in the new,
modern DC,” Ruehrdanz says. “Methods that are
AUTOMATION/RETAIL 9
 Equipment Report
The growth of
e-commerce has
driven adoption of
goods-to-person
(and goods-to-
robot) systems,
which rely heavily
on intelligent
conveyance
to pickers.
more automated, more space-saving and
more productive need to be connected
somehow, and that’s with conveyor.
Because the new supply chain is so
variable, the mechanization also has to
be able to change with ease. Ten years
ago, the distribution environment didn’t
change as much as it does today, but if it
did have to change, the legacy of convey
and sort products was that each divert
point, curve or incline is a separate piece
of equipment hooked together, a ribbon
of conveyor. Now, we can reset the com-
ponents in the side channel to reconfig-
ure one to the other.”
For example, an operation might want
to turn conveyor from a transportation
function to accumulation or vice versa.
Or, it might be beneficial to make a roller
conveyor into a belt conveyor. Instead
of removing the conveyor and installing
different machinery, modular compo-
10 AUTOMATION/RETAIL
nents allow the “Lots of customers want to phase
application of in automation,” Ruehrdanz says. “First
a belt over the they want to get the process right, then
rollers to better use some semi-automation, then phase
handle bags and in more and more automation. A simple
envelopes. These example is an embedded inline scale,
sorts of changes or automated document insertion,
can occur swiftly or label print and apply. Modular
on a weekend or conveyor products make these additions
off shift. so much easier.”
Benjamin Motor-driven roller (MDR) technol-
Thumm, head ogy allows individual conveyor seg-
of product man- ments to operate independently, further
agement for enhancing flexibility. Whereas conven-
Dambach Lager- tional line shaft conveyors run all the
systeme, says time, MDR will only move when a load
customers justify is present. This conserves energy to
modular features the point that solar-powered conveyor
not just in finan- is viable, according to Chris Castaldi,
cial terms, but to vice president of sales for DMW&H.
sustain competi- By changing acceleration rates, stop-
tiveness. “Cus- ping points and other factors, MDR also
tomers require offers opportunities for creativity.
tailor-made “Say a customer has a 90-degree divert:
solutions, while What if they want an early out?” Castaldi
simultaneously expecting an adaptable asks. “You can do a right or left since you
and sustainable system,” Thumm says. can program the conveyor to roll either
“Modular architecture means upgrades way. For other conveyors there’s an arrow
or expansions can be achieved rapidly.” on the side indicating the one direction of
Quicker maintenance is another ben- travel. With these options, you don’t build
efit, he says, and is further supported by yourself into a box.”
efforts to increase the number of identi- Modern conveyor and sorter compo-
cal parts within each product family. nents are adaptive and flexible, but they
The “same spare part” concept is based are just pieces of the puzzle. With enough
on working toward a larger proportion of foresight and planning, it is possible to
interchangeable components. As a conse- design a system so the pieces can be rear-
quence, maintenance and service is more ranged to create whatever picture the
efficient for operators, Thumm says, and customer wants.
spare parts inventory is minimized. “We can engineer a solution that will fill
Modular features offer benefits even retail wholesale orders four days a week,
before the system goes live. Pre-installation then shift and flex its muscles for e-com-
and decentralized controls are increasingly merce direct-to-consumer type orders,”
important for conveyors, Thumm says. Radcliffe says. “That’s something that has
Installation time and the commissioning changed over the last five to 10 years.”
phase can be dramatically shortened and Of course, the hardest part
subsequent changes of the material flow remains convincing customers to
are a matter of “plug and play.” pay for that flexibility.
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 “They have a problem in front of them
now, and if I tell them X amount of dol-
lars will solve today’s problem precisely,
they’re happy,” Radcliffe says. “But
they can be ready for business change
by spending X+Y. They might not use
it for the first five years, but they real-
ize their world changes every nine to
12 months. About 90% of the solutions
we’ve installed in the last three years are
expandable, modular, and have capacity
that is not used. They have ‘white space,’
so to speak. There is a carrying cost for
white space, but most companies have
stopped being so shortsighted.”
Kinda sorter
Not everyone is working with a blank
slate, and many are instead saddled with
legacy systems struggling under changing
demands. Kraus says many facilities that
automated in the 1980s with a conveyor
or a sliding shoe sorter are now trying to
figure out what makes sense: completely
replace or rebuild?
“It comes down to whether they
can withstand the downtime required
to replace,” Kraus says. “It’s a little more
expensive to replace, and there are a whole
lot of benefits to throughput and re-opti-
mizing a system, but most often it’s about
that one or two weeks of downtime. A lot
of times that answer is no.”
There are some workarounds, like
conveying in totes instead of installing
a conveyor capable of handling both a
sweater and a mini-fridge.
“Other times you get more bang for
your buck by investing in one part of
your system, like a stand-alone zone skip
sortation system, for example,” Kraus
says. “An e-commerce shipping sorter
can sort down to a smaller set of desti-
nations before you hand off to a parcel
carrier. Instead of all UPS orders for a
day, you can sort out UPS orders for just
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Texas or New York and get a better rate.” For example, say six items of a certain
Those prepared for a more comprehen- stock-keeping unit (SKU) just arrived at
sive project can look forward to reaping the the put wall, but there are eight orders
benefits of advances in software that help waiting for that SKU. If the system
harmonize the flow of goods throughout a knows three of those orders have been
facility. Consider the example of a sorter in the put wall longer and should be pri-
destination capable of accumulating 15 oritized to meet service levels, the sorter
cubic feet of goods bound for a retail store. will disregard what the WMS told it and
The same space might be dynamically marry the SKU to the optimal order.
reconfigured to process ten 1.5-cubic-foot, “Then it gets even smarter and directs
e-commerce orders. items to chutes where labor is readily
“The question is how to reuse the available so workers don’t have to walk as
space from a process perspective,” far to complete orders,” Radcliffe says.
Radcliffe says. “You still use 15 cube, “Finally, the smart sorter knows it’s still
but there’s a primary sort to a number short two pieces, so it will make sure
of orders that are then distributed into they are immediately picked. It has now
a movable put wall. The thing that’s fulfilled its top requirements and rules
changed in recent
years is the software is
smarter. The same soft-
ware that does the pri-
mary sort is also going
to do the secondary sort
to put walls.”
In such a setup, the
sort engine will con-
sider factors like how
to maximize accumula-
tion, minimize labor
to complete an order
and minimize order
completion time. In
the past, or when the
two sort engines are not
managed together, the A less expensive take on the traditional tilt-tray
sorter can manage as many as 150 sub-diverts
warehouse management to optimize parcel rates.
system (WMS) pre-
allocates a pick to an order. From that on utilization of equipment and labor. It’s
moment forward, the item has only one always thinking upstream and down-
possible path through the sorter to its stream. Ten years ago, software was just
destination. not flexible enough to do this.”
“Here’s what a smart sorter will do In addition to ultra-nimble software,
for you,” Radcliffe explains. “It can look sortation hardware has also developed
ahead and behind, take that item and solutions to the e-commerce need for
make some business decisions based on targeted sorting and sub-sorting. Castaldi
the rules you have established.” describes a modern alternative to a tra-
AUTOMATION/RETAIL 11
 Equipment Report

Sorters and sense goal, like minimizing system downtime.

Once a state-of-the-art
system is up and running,
the next challenge is to
keep it that way. Kraus
says maintenance prac-
tices have evolved around
more connected systems
with more sensors, more
data and more predictive
recommendations on
Modular and adaptable components mean the same
what to do to maintain
system can fulfill retail orders in case quantities one day,
then bagged e-commerce orders the next. stable operations.
“It’s more cost-effec-
ditional tilt-tray shipping sorter. Capable tive to collect data, but then it’s about
of sorting to more than 150 destinations making data actionable,” Kraus says. “This
and often costing less than $1 million, is a learning experience for the entire
the tilt-tray system moves at a more industry, since there are not many estab-
deliberate pace to enable flexibility. lished rules for how to respond to some of
“Optimizing those different shipping this comprehensive, detailed equipment
rates makes a big difference,” Castaldi condition data.”
says, “and with this sort of solution, Instead, Kraus recommends adding sen-
you are free to slice and dice it any way sors and visibility only around those pieces
you like.” of data that are most relevant to a given
“A big contributor can be information
flow. It’s not always a mechanical failure
that will stop a system,” Kraus says. “It
could be that you are losing a connection
with some source of data somewhere, so
you want to find out how to react faster
or prevent those gaps. Can we monitor
the speed of the connection and take
action if it slows? Should we monitor the
memory capacity of an operation that
stores information and is filling up?”
This “super-connectivity,” Ruehrdanz
says, further unifies operational intelligence
and maintenance intelligence. It is possible
to prevent wear and tear with something
as simple as allowing the system to slow a
sorter when volume is lighter, for example.
The same sensors that monitor the condition
of equipment can alert a warehouse execu-
tion system (WES) to reallocate material
flow from an overactive area to one that still
has capacity.
Learning how to best configure and inter-
act with an intelligent, proactive system is a
dramatic departure from the steadily hum-

D ematic’s Ken Ruehrdanz outlines four key trends impacting the design
and usage of conveyor and sortation equipment.
Trend #1: Increasing use of goods-to-person workstations. Modular
ming conveyors and sorters of the past, and
Castaldi says success in the e-commerce
conveyor is the foundation of goods-to-person workstations. Modular con- world is a matter of sink or swim.
veyor is the structure that indexes the load into a precise position where it’s “We never knew how deep the water was,
accessed by a worker. Modular conveyor can sequence cartons and totes so some stuck their toes in. Others dove in,”
into and out of the goods-to-person workstation and conveyor configura- he says. “At this point you can try to wait
tion accommodates worker ergonomics. and see, but you will be left way behind.
Trend #2: Robotic piece picking for order fulfillment. Modular con- Almost everyone is in the e-commerce world
veyor is the foundation of robotic piece picking cells. The robot is the
now, and if you’re not swimming you’re in a
centerpiece of the cell, but the robot requires a conveyor module that can
tough position now.” •
sequence and position inventory containers and order containers. Modular
conveyor indexes the load into a precise location where it is accessed by
the robot. Companies mentioned
Trend #3: Change creates need to reconfigure. The accelerating rate
of change in operational requirements is driving the need to implement
in this article
conveyor systems that can be reconfigured, and modular conveyor accom-
• Beumer Corp.
modates that need. For example, a steerable wheel sorter module can be
relocated in the existing side frame.
• Dambach Lagersysteme
Trend #4: E-fulfillment centers ship orders in bags. Conveyor systems GmbH & Co. KG
with all-belt conveying surfaces accommodate poly bags for e-fulfillment • Dematic
operations. This trend has increased the application of segmented belt sur- • DMW&H
face conveyor with accumulation zones. • Honeywell Intelligrated

12 AUTOMATION/RETAIL mmh.com
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Rocky Brands

Rocky Brands
Confronting an aging materials handling system and new channels
of business with new customer expectations, Rocky Brands
installed a put-to-light and sortation system to ramp up fulfillment.

BY BOB TREBILCOCK, EXECUTIVE EDITOR

“WE’RE DEALING WITH SMALLER ORDERS.

Kevin Koster, director of distribution services
E-commerce is becoming a bigger part of our
business. Turnaround times have to be quicker.
We need more throughput. Order fulfillment
is too labor intensive. It’s a challenge just to
get replacement parts for our aging materials
handling system, let alone keep it running.”
Those challenges will sound familiar to anyone managing
a distribution center today. Rocky Brands, a manufacturer
and distributor of work, western and outdoor footwear and
apparel brands such as Rocky, Durango, Michelin, Georgia
Boot and Mossy Oak, was dealing with all of them at its more
than 200,000-square-foot facility in Logan, Ohio, southeast
of Columbus. Modern Materials Handling featured the facil-
ity in the summer of 2011, following a project to upgrade the
warehouse management and control systems. Then, Rocky
Brands was focused on improving its case-handling capabili-
ties, since most orders were wholesale shipments to retailers.
In the ensuing years, that model changed. “We’re doing
more just-in-time shipments from customers who are
ordering more often and in smaller quantities,” says Kevin
Chris Cone/Verbatim

Koster, director of distribution services. “Instead of send-

ing three or four thousand pairs of shoes to a distribution
center, we’re doing more for the stores and everything
needs to be shipped in a day or two.”

14 AUTOMATION/RETAIL mmh.com
 With a growing e-commerce business, Rocky Brands added a light-
directed putwall (above) to optimize packing. Items are sorted down
chutes, where an associate loads them into the putwall (left).

Add to that list a growing e-commerce business with orders that

need to be turned around even quicker than wholesale orders—
including drop shipments to fulfill some its retail customers’ Web
orders, and an aging conveyor and sortation system that had been
designed for 10 years and was entering its 15th year of service.
The solution was DC 2020. Designed to take the facility into
the next phase of business, the project included a new conveyor
and sortation system, and new order picking and packing capa-
bilities. Both were intended to enable quicker turnarounds while
controlling the cost of labor associated with piece picking for
e-commerce orders. A key technology: A putwall enabled by put-
to-light technology (Lightning Pick, lightningpick.com) in the sort-
ing and packing area. Along with putwalls and lights, the redesign
also included:

mmh.com AUTOMATION/RETAIL 15
 Rocky Brands

• a sliding shoe sorter that sorts pick

totes to the putwall area for multi-line
orders using 17 chutes,
• a new shipping sorter, and
• a heat shrink tunnel that automatically
seals single line orders as they travel
from induction to shipping.
The new system has delivered a num-
ber of measurable results. By speeding
up the conveyor and by swapping out
a pop-up divert sortation system for a
sliding shoe sorter, the facility was able
to simultaneously reduce the amount of
conveyor required for its operations and
increase throughput. “Our max for an
eight-hour shift used to be 8,000 units
per shift,” says Koster. “Today, we can do
more than 14,000 units in the same eight
hours.” What’s more, the facility freed up
8,000 square feet of floor space by relo- In addition to lights and a putwall, Rocky Brands upgraded its conveyor and sortation
cating the sortation system from the floor system, including a new sliding shoe sorter.
to the mezzanine.
The old system used 19 packing not running all 17 chutes,” Koster says. New design for new opportunities
chutes, each handling three cartons at a “We can handle all of our volume and Headquartered in Nelsonville, Ohio, pub-
time; in the new system, the 17 chutes have room for future growth.” What’s licly traded Rocky Brands Inc. designs,
that feed the putwall use carton flow more, the facility is realizing a 37% develops, manufactures and markets
rack to handle 16 cartons at a time. “I’m increase in packing capabilities. premium-quality rugged outdoor, occu-
pational and casual footwear, as well as
branded apparel and accessories.
Originally founded in 1932 as the
Wm. Brooks Shoe Company by the
grandfather of Rocky’s current chair-
man, Mike Brooks, the Rocky name was
established in 1975. With manufacturing
operations in Puerto Rico, the Domini-
can Republic and sourcing in Asia, to
name a few, the company’s footwear,
apparel and accessories are marketed
through multiple distribution channels
under a number of brands, including
Rocky, Georgia Boot, Lehigh, Durango
and the licensed brand Michelin.
Rocky has also been focused on
growing its business. In early 2005, the
company acquired one of its major com-
Inventory is stored on shelving at the case, rather than pallet, level in the SKU reserve
petitors, EJ Footwear, an acquisition that
area. Full cases are also picked from this area. added a number of brands and more than

16 AUTOMATION/RETAIL mmh.com

An associate picks items to
a cart. Once the picks are
complete, the cart is wheeled
to an induction area.
doubled its size. That acquisition led
the company to rethink its distribution
strategy as well as the technology that
supports its order fulfillment operations.
One of the first steps was to consolidate
distribution processes into the Logan DC.
Back then, the company redesigned its
processes to accommodate all of the new
business and provide one face to a cus-
tomer that might be ordering from mul-
tiple brands. The central Ohio location
also had geography on its side: Back then,
the facility could service 50% of the U.S.
population within five days.
Those were good numbers at the time.
Of course, in the years since, the com-
pany has continued to grow organically
and through acquisition, as have customer
expectations and requirements. In 2014,
Rocky acquired Creative Recreation, the
company’s foray into a casual, lifestyle
brand. Today, Rocky’s brands are available
in some 10,000 retail locations, includ-
ing major accounts such as Bass Pro
Shops, Cabela’s, Dick’s Sporting Goods,
Tractor Supply Company and Gander
Mountain; military products are sold on
base exchanges; and safety shoes are sold
mmh.com
from kiosks installed system designed to handle growth and
in industrial and work requirements over the next five years—a
facilities to name three. typical retail horizon. “We looked at our
Rocky also provides changing order profile and knew that we
third-party distribution had to be quicker and that we had to keep
for other manufacturer’s our labor costs down,” Koster says. “We
footwear. Finally, but did not consider an automated goods-to-
perhaps most impor- person solution, but stuck with what we
tant, is the growing knew would work, which was improving
e-commerce business. our sortation system and adding to our
In retrospect, Koster packing capabilities. Lights were pretty
says the push for much always on the table.”
e-commerce began in
2011, after Modern’s Bring in lights
last look at Rocky. By According to Koster, the new design
2014, the combina- had to accomplish several things to
tion of a changing take Rocky into the next phase of
business model and a its business. They could be summed
mechanical system that up as: throughput volume, accuracy,
was past its sell-by date required a new quality and ease of use. They were
approach. “Our old sortation system had inter-related: “Accuracy was important
pop-up wheel diverts and actuator arms,” because it doesn’t do any good to do
Koster says. “Over time, the system had twice the throughput volume if half of
Picked items are inducted onto the conveyor system. Some will be conveyed directly
to shipping, while others will be sorted to the putwall area.
slowed down and obtaining parts like the the orders are wrong,” he says. “That
right photo eyes was a challenge.” What’s was a primary reason it had to be easy
more, customer service expectations had to learn, since we supplement our staff
changed. “In e-commerce, getting orders for peak season, and we don’t have the
out the door quickly is the difference luxury of a month to get temporary help
between success and failure,” he says. up to speed.”
Enter DC 2020, which included a The new sortation system accom-
AUTOMATION/RETAIL 17
 Rocky Brands
Lights identify the put location (above).
Single line orders pass through a shrink
tunnel (right) before traveling to shipping.
plished at least two things. First, by
replacing the old pop-up and actuator
arm diverts with a sliding shoe sorter,
Rocky would no longer have an issue
with replacement parts. Second was
speed: The new conveyor operates
at 140 feet per minute, compared to
65 feet per minute in the old system,
and the sortation runs at 302 feet per
minute. The faster speeds not only
contribute to better throughput, they
also fit in a smaller footprint than the
old system. “The old sorter was on
the shipping floor,” says Koster. “We
re-organized the flow of material by
putting the sorter on the mezzanine,
which freed up 8,000 square feet of
warehouse space.”
The redesign also alleviated a bottle-
neck at packing. In the old system,
the packing area was fed by 19 chutes.
Each station had room for three cartons,
or 57 cartons at a time. That worked
well when a full carton had an average
of six items to an order. But with the
change in order profiles, Rocky’s aver-
age order is now about three and a half
items to a carton. “I needed room for
more cartons at packing and with our
old equipment, we just didn’t have the
capacity,” Koster says.
While the new design has only 17
18 AUTOMATION/RETAIL
chutes, each station can accommo-
date 16 cartons at a time, for a total
of 272 cartons at a time, a nearly five-
fold increase in packing capacity. All
those extra cartons have delivered a
37% increase in throughput at packing
because associates are no longer wait-
ing for cartons to come down to the
pack station. Last, but not least, was
the implementation of an automated
heat shrink tunnel to handle single line
Lift trucks and pallet jacks move
palletized material through the facility.
orders. In the past, those orders went
down the chutes to packing stations,
just like multi-line orders. Now, single
line orders are touched when they’re
picked and inducted onto the conveyor
line and are then automatically sorted to
the shrink tunnel, eliminating any fur-
ther touches until they get to shipping.
The put-to-light and putwall system
ties it all together and checks off at least
three of the priority boxes: It is faster
than the old system; more accurate; and
easy to use. When the warehouse man-
agement system (WMS) creates a batch
or wave of orders, it determines what
items can go directly to shipping; which
items can go to the heat shrink tunnel;
and which will go through the sorter to
the packing chutes.
The put-to-light system receives
information about the customer, the
items in the order and the shipping
carton in advance for multi-line orders.
Once those items are inducted onto
the conveyor, the system knows which
chute and which carton at the station it
needs to go in.
mmh.com
 When items arrive at the putwall, an
associate on one side scans the UPS
code of each. A light indicates the right
slot in the putwall for the put. Once
all the items for a slot are complete,
the system prints out the shipping
documentation. The associate scans a
bar code on the documentation, which
alerts a packer on the other side of the
Orders ready for shipping pass through the
print-and-apply station for shipping labels.
wall that the order is complete. The
documentation also tells the packer
what size box to use. Once the item
has been packed and sealed, a take-
away conveyor delivers it to the ship-
ping sorter.
All told, Koster says, the new
equipment and new design have led to
a reduction in footsteps and touches
that has delivered an overall
productivity gain of 10% across
picking, replenishment and put- Narrow aisle storage optimizes floor
away. More importantly, it has and storage space in the facility.
positioned Rocky Brands for
the future. we’ve been able to do this without
“For one, we no longer worry adding to our permanent head count
about potential downtime and reducing our temporary labor
because we can’t get a part,” requirements at peak.”
Koster says. “For another, we are For a shoe distribution company,
positioned for the growth, and that’s a perfect fit. •

Upgrade with lights

Putaway: Product is stored in the
high-bay, narrow-aisle reserve and active
storage area (2) on shelving at the case
level, rather than on pallets. The lower
Put-to-light, a putwall and sortation is taking Rocky area of the storage area is designated
Brands to the next level. for active picking. Storage areas above 7
feet are used for reserve storage. Pallets

Rocky Brands Inc.
Logan, Ohio
SIZE: 200,000 square feet, plus a
35,000-square-foot mezzanine
PRODUCTS: Footwear and apparel
STOCK KEEPING UNITS: 43,000
THROUGHPUT: From 18,000 to
20,000 units per shift
SHIFTS: 2 shifts per day; 5 days a
week
EMPLOYEES: 54 full-time
employees plus seasonal
fluctuations.
T
he combination of put-to-light tech-
nology and new conveyor and sorta-
tion has allowed Rocky Brands to
increase throughput and meet new customer
service requirements as it expands its e-com-
merce business.
Receiving: In 2012, the facility was
designated a Foreign Trade Zone, which
allows Rocky Brands to delay paying duties
until product is shipped out of the facility.
Inbound trailers arriving at receiving (1) are
floor-loaded to maximize the cube of the
trailer or container. Once receivers verify
the load against an advance ship notification
(ASN), pre-labeled cartons are manually
unloaded and scanned to pallets. Once a pal-
let is complete, it’s staged and a license plate
bar code label is applied. The product is now
ready for putaway into the high-bay reserve
and active storage area (2).
are delivered to a cherry picker servicing
the aisle selected for storage. Cartons
are scanned, then putaway, updating the
warehouse management system (WMS).
In addition to the reserve and active stor-
age area, some slow-moving items are
stored in the mezzanine area (3), where a
new sortation system is also located (4).
Picking: The facility manages several
different picking processes that are system
directed by the WMS.
Full case to shipping: The system
directs an associate to a storage location
(2), where a full case of product is picked
to a pallet. Once all of the items assigned
to that associate have been picked, the
pallet is delivered straight to a staging area
(5) for shipping (6).
Case to sortation: This process is
designed for processing a large batch of

mmh.com AUTOMATION/RETAIL 19
 Rocky Brands
4 Packing sorter
Putwall 9
stations
8 Conveyor
7
Induction
conveyor
orders. Full cases are pulled from reserve
storage (2) and delivered to the induc-
tion area (7), either on pallets or carts.
Processing a wave at a time, the WMS
identifies the carts and pallets it needs to
fulfill that wave. The cases are inducted
(7) on to the conveyor (8) and then
sorted to a chute (4) that leads to one
of the putwalls (9). Once in that area,
the associate on one side of the putwall
scans a bar code label on a carton, and
the put-to-light system tells the associate
how many items to pull from the carton
and then indicates the area for the put.
Cartons are then returned to storage (2).
Pick to cart: This is similar to case
to sortation, except that it is designed for
individual picks. The system directs an
associate to a location in the active pick
zone. Once there, the associate is directed
to pick a specific number of items to a
location on the cart. When all of the picks
are complete, the associate stages the totes
at the induction line (7), where they’ll be
placed on the conveyor (8) and sorted to a
chute to be delivered to packing (4).
SKU reserve pick: Shoe and apparel
sizes that are ordered in lower volumes,
20 AUTOMATION/RETAIL
3 Mezzanine
1 Receiving
12 Shipping sorter
6 Shipping
11 Shrink wrap tunnel
5 Staging for shipping
2
Reserve and
active storage
10
SKU
reserve
like size 7 or 15 men’s shoes, are stored in
a separate area of the warehouse referred
to as SKU reserve (10). These are picked
System supplier
to a cart, just like the process described PUT-TO-LIGHT SYSTEM: Lightning Pick
above, and taken to the induction area (7). CONSULTING: Exceed Consulting
They are then sorted (4) to the putwall area SYSTEM DESIGN, INTEGRATION AND
WAREHOUSE CONTROL SYSTEM:
(9) for processing. KMH Equipment & Services
Packing/shipping: Single line orders WMS: Manhattan Associates
can be conveyed directly to a shrink wrap CONVEYOR/SORTATION: Hytrol
tunnel (11), where they are wrapped and RACKING: Unarco Material Handling
then conveyed to the shipping sorter (12). PUTWALL: Unex
From there, they are delivered to the right LIFT TRUCKS: Crown
shipping lane (6) for that order. Multiple BAR CODE SCANNING AND
line orders are processed at the putwall PRINTING: Zebra Technologies
DOCUMENT PRINTING: Brother
(9). As described earlier, the system directs
STRETCH WRAP: Lantech; Wulftec;
associates on one side of the wall to put
Robopac
items into a location representing an order.
SHRINK WRAP TUNNEL: Conflex
Once all of the items for that order are in a
PRINT AND APPLY: Fox IV Technologies
location, a packer on the other side of the
wall is directed to pack the items for ship-
ping. Once packed, orders are conveyed to
the shipping sorter (12), and sorted to the
right lane (6) for shipment. Depending on
the size of the order, product will be pallet-
ized and staged (5) until it is loaded onto a
truck. Or, it will be automatically conveyed
into a truck for delivery. •
mmh.com
 Problem solved.

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System Report

James Grundy (left), vice

president of distribution,
and James Deal, director
of e-commerce fulfillment.

22 AUTOMATION/RETAIL mmh.com
 POWERS
STAGE
How a hometown department store chain
transformed its e-fulfillment processes with
pouch sortation technology.

Stage, a department store chain

serving small town America,
found itself in an all-too-familiar situation. Its conventional
piece picking and packing operations were being overwhelmed
by the growth of e-commerce, especially the growth of multi-
line orders. The solution: pouch sortation technology, as the
technology is referred to by the system integrator (SDI Systems,
sdi.systems) that designed and implemented the project.
“As our e-commerce business increased, we added more SKUs to our site
which led to more multi-line orders,” explains Steven Hunter, executive vice
president and chief operating officer. “We needed to replace our manual pick-
ing process with a solution that would automatically bring together all the
items in a multi-line order at the packing station.”
The pouch sorter, he adds, not only made an efficient use of space in the
warehouse since it was installed overhead in an area that was otherwise inac-
cessible to automation, it has “given us a material decrease in the time it takes
to get merchandise picked and packed inside the four walls of the DC.” Con-
PHOTO: Brandon Wade/Verbatim

versely, it also allows Stage to increase the number of units picked and packed
in the same amount of time.
What’s more, he adds, the system requires little maintenance and was
designed with room to add more buffer space as e-commerce continues to grow.

BY BOB TREBILCOCK, EXECUTIVE EDITOR

mmh.com AUTOMATION/RETAIL 23
 System Report
Big stores, small towns
Stage began operations in the 1920s
with the founding of the family-
owned Palais Royal and Bealls depart-
ment stores in Texas. Fast forward
more than 60 years, and in 1988 the
two chains merged to form Specialty
Retailers Inc. (SRI), a privately held
company based in Houston.
The merger also set in motion
nearly 30 years of acquisitions and
expansion, as SRI acquired other retail
chains outside its home turf. In 1996,
it went public under the name Stage,
and by 2004 had exceeded $1 billion
in sales, reaching $1.4 billion in sales
in 2016.
Today, the company operates six
brands in 42 states with approximately
800 specialty Bealls, Goody’s, Palais
Royal, Peebles and Stage specialty
department stores and 58 Gordmans
off-price stores. The company brings
to market department stores that aver-
age 18,200 square feet and off-price
stores of 55,000 square feet.
That, of course, is a brick-and-
mortar distribution strategy. To that
end, the Jacksonville, Texas, distribu-
24 AUTOMATION/RETAIL
Associates load items into the pouch sorter for
multi-line e-commerce orders. There are a total
of 10 induction stations.
tion center, which services most of From the induction stations, pouches are staged
overhead in primary and secondary buffer areas
the stores, was originally designed as before being released to a pack station.
a crossdock and flow-through facil-
ity, according to James Grundy, vice
president of distribution, and James
Deal, the director of e-commerce
fulfillment.
Up until about 2010, when the
company launched its e-commerce
site, most of the activity in the
437,000-square-foot facility involved
either crossdocking upon receipt or
sending items ordered and received
in bulk to a value-added processing
center, where items were ticketed,
put on hangers and prepared for the
store, and then built into mixed car-
ton shipments that flowed through
the facility. Warehousing was an
afterthought.
“We had a small replenishment
storage area where we held basic
stock items that turned over quickly,”
says Deal. “Beyond that, there was
very little warehousing inside the
building and no outside storage.”
To make that happen, the facil-
At one of the 25 packing stations, an associate
ity used a combination of automated removes items from the pouch and is system
equipment, including tilt tray sorters, directed on how to pack orders for delivery.
mmh.com

Stage’s conveyor system crossdocks cartons from receiving to shipping and also
handles flow through items from the value-add or reserve storage areas.
bomb bay sorters, a hang sorter and a
conventional conveyor and shipping
sorter system.
That all began to change in 2010,
when Stage stuck its toes into the
e-fulfillment space during the holiday
season. Orders from its new Website
were filled manually from stock in the
replenishment area. Associates wheeled
carts through the area to pick to totes.
“After the first year, it became evident
that if we were going to compete, we
had to have a lot more stock on hand
and more storage space,” says Deal.
The strategy, according to Hunter,
was to add more SKUs online so that
e-commerce was essentially Stage’s
largest store, with the kind of selection
and variety that a shopper would find
in a big, urban department store. After
all, if a customer couldn’t find what
they wanted on a Stage site, they would
just go to another site. That led to the
addition of what are now three annex
facilities located about half a mile from
the DC totaling 170,000 square feet
and the addition of a 48,000-square-
foot, e-commerce mezzanine inside the
four walls. All told, the facility was now
offering as many as 133,000 SKUs.
The result was a complex DC envi-
mmh.com
ronment. “We handle brick-and-mortar
stores; e-commerce fulfillment; and
we’re storing our fastest movers in the
main facility while using a system with
trucks to bring slower movers from the
auxiliary buildings,” Hunter explains.
When it came to e-commerce fulfill-
ment, order selectors picked in batches
to pallet baskets that were brought on
rolling carts to a putwall for packing.
“If you had a five-item order, the items
might get picked by five different peo-
ple, some of whom were operating in
an annex building, before we brought
Associates pick from shelves to fill store replenishment orders.
them together at the putwall,” says
Grundy. All of that took time.
By Christmas 2015, the manual
process had reached its limit. “You
get more multi-line orders during the
holiday season than at other times of
the year,” says Hunter. “No matter how
many people we hired for the season,
we still couldn’t fill all of the orders
efficiently.”
Something had to change by the
2016 holiday season. “Our goal was to
increase our fulfillment capacity with-
out expanding our physical footprint
and to do so in a cost-effective manner
that also allowed us to add capacity for
future growth,” says Deal.
It was a big order, and the question was:
What technology can make that happen?
In the pouch
By all accounts, pouch sortation, which
is more common in Europe, was not the
first choice, and probably wasn’t on the
initial list of potential technologies to
solve the problem.
Instead, the team looked at more
conventional automation used to aggre-
gate multi-line orders, like tilt tray
sortation and goods-to-person solutions.
The problem, according to Grundy, is
that all of those technologies required
floor space and that just wasn’t an
AUTOMATION/RETAIL 25
System Report

option in a facility that was already

maxed out. What the facility did have
was air. They wondered: Maybe there’s
a solution that could take advantage of
overhead space?
“We have a 38-foot clear height in
the facility, and there is an area above
the cafeteria and control room with
nothing there at all,” says Grundy. “It
was the only clear air space left in the
facility. When we walked through the
facility, our system integrator told us
about the pouch sortation technology
he had seen in Europe.”
Cases are processed on a tilt tray sortation system.
Expandability was engineered into
the design. “He thought we could hang
the pouch sorter from the ceiling up Going live a primary and secondary buffer. Pouches
there, and wind it in a way that was Operation of the basic pouch sortation wait in the primary buffer area until the
expandable if we needed more capacity system is straightforward. It consists of 10 system has determined that all of the items
and space in the future,” Grundy adds. induction stations and 25 packing stations, required for a multi-line order are present
As they familiarized themselves and is capable of handling 1,000 order and available for packing, from wherever
with how the technology worked, the sorts per hour. they were picked—including slow-movers
pouch sorter also was more flexible When items are delivered to one of the from one of the annex buildings. At that
than some of the competing technolo- induction stations, an associate scans an point, the warehouse execution system
gies under consideration. “We carry item with a camera-based imaging system, (WES) releases complete orders to the
a broad selection of merchandise, places it in a pouch and scans the license secondary buffer area. Once those pouches
everything from towels and sheets to plate bar code on the pouch, marrying the are in the secondary area, the WES
fine jewelry,” says Hunter. “The pouch item to the pouch just like marrying an looks for pack stations that are ready for
sorter is so flexible that it allows us to item to a storage location during a putaway work and releases up to 25 pouches in a
handle merchandise of all different process. The pouch is then taken overhead single line to a packer. The packer is then
sizes. Competing technologies were on a powered track to the sortation area. directed by the system on how to pack the
more costly and took up too much That consists of two sortation buffers: orders for delivery.
space that we just didn’t have.”
The final criteria: They wanted it up
and running in time for the 2016 holi-
day season, which called for a rapid
implementation time.
If there was a concern beyond
implementation time, it was that
Stage would be an early adopter of
the technology in the United States.
“Our system integrator has been a
good partner for us for a long time, so
there was already a trust factor,” says
Hunter. “We went to see the technol-
ogy in operation at a DC in Canada
and left there cautiously optimistic.
We decided to go ahead.” On the upper level, items are managed by a hanging garment sortation system.

26 AUTOMATION/RETAIL mmh.com
 One of the ways the system integra-
tor adapted a new technology to a facil-
ity that was already up and running was
to mimic the existing processes where
it made sense. “In the old process, we
batch picked to pallet baskets that we
brought to a putwall,” says Grundy. “We
integrated that into the pouch sortation
system. We still pick to the baskets and
roll them over to the induction area.”
If the overall project faced any hurdles it
was time. Implementation and go live was
scheduled to take nine months and to have
gone through all of the dry runs prior to
November 2016 so it was ready for the hol-
iday season. As is often the case for early
adopters of new technology, implementa-
tion took longer than anticipated.
“Our intent was to have completely
phased out manual fulfillment before the
start of the holiday season,” says Deal.
“Because we didn’t finish implementa-
tion until November, we took a phased
approach to training and going live.” The
system didn’t reach full capacity until after
last year’s holiday season.
That said, nine months later, Deal,
Grundy and Hunter agree that pouch
sortation has been an effective solution to
Stage
Jacksonville, Texas
SIZE: 437,000 square feet, with a
48,000-square-foot, e-commerce
mezzanine. The retailer also operates
three nearby annex facilities totaling
170,000 square feet.
BRANDS: The facility services five of
Stage’s six retail brands.
PRODUCTS: Everything from jewelry to
shoes to home goods.
THROUGHPUT: Receives 5.1 million
cartons and ships out 2.5 million cartons
per year.
SKUs: 133,000 SKUs at peak for
e-commerce.
SHIFTS PER DAY/DAYS PER WEEK:
Two shifts per day/five days per week;
one shift for replenishment.
EMPLOYEES: 450 to 550.
mmh.com
Stage’s e-commerce fulfillment challenges.
The system is easy to operate and easy to
maintain and has delivered a significant
improvement in efficiency.
“We’re meeting the needs of our
e-commerce business, and we have the
capability to expand as our business
grows,” adds Deal.
Hunter takes a higher level view. “Cus-
Meeting the e-fulfillment challenge
As Web sales continue to grow, department store operator
Stage turned to pouch sortation technology to optimize its
picking processes.
U
ntil recently, crossdocking and
flow-through store fulfillment
were at the heart of Stage’s
437,000-square-foot distribution center
in east Texas. Following the 2015 holi-
day season, the department store opera-
tor turned to pouch sortation to expand
its e-commerce fulfillment capabilities.
Receiving: Advanced ship notices
(ASNs) representing about 97% of
inbound shipments are sent electroni-
cally to Stage’s transportation manage-
ment system (TMS). That allows the
facility to prepare for most receipts.
Product is unloaded in receiving (1),
where bar codes are automatically
printed and applied as needed, and
scanned into the warehouse manage-
ment system (WMS). About 70% of
inbound receipts are already allocated
to stores and can be crossdocked using
the conveyor system (2) to shipping
(3). The remaining inventory is sent to
one of three processing areas: A tilt-
tray sortation area (4) is designated for
items that can go into mixed cartons; a
hanging garment sortation area (5) on
the second level is designated for items
that are handled on hangers; cartons are
opened in a hanging garment processing
area (6) and sent to a staging area (7) for
tomer expectation today is low-cost or free
shipping, and they want all of the items
for an order shipped together. That has
forced retailers to do things quicker, faster
and cheaper,” he says. “The pouch sorter
solution enables us to fill multi-line orders
quickly and get them shipped in most
cases all in one package to minimize our
shipping costs. It’s been a huge win.” •
the hanging garment sorter (5). Items
that are fragile or too large for the con-
veyor and sortation system are sent to a
manual put-to-store area (8) for process-
ing. Other product may be processed in
a floor-level, pallet flow through area (9)
or in a value-added work area (11).
Storage: Inventory that isn’t cross-
docked or flow-through to stores will
be put away into retail reserve storage
(10). Some of that inventory will be sent
to one of the three nearby annex facili-
ties that provide an additional 170,000
square feet of storage. If there is enough
of an item to build a pallet of uniform
product, it is palletized and labeled with
a license plate bar code. Smaller quanti-
ties are placed into a carton, which is
put away onto a partial pallet or on shelf
storage. The inventory is now available
for order fulfillment.
Picking: There are two distinct pick-
ing processes in the facility.
Store replenishment: Once a week,
the WMS creates an automatic replen-
ishment order for each of the stores.
Before orders are picked, merchandis-
ers have an opportunity to review the
order and add items they would like to
add to the store order. Replenishment
orders are batched. Order selectors
AUTOMATION/RETAIL 27
System Report
SECOND LEVEL

are directed to a storage location (10),

12
where they pick a full carton or pick the e-commerce
storage 5
number of items required for a batch of
Hanging garment
orders. Full cartons are inducted onto 14 sortation
the conveyor system (2) and are sent to Pouch
sorter
shipping (3), like a crossdocked carton. induction 7
Individual items are inducted onto one 15 Staging for
6 hanging garment
of the tilt-tray sorters (4) or flat sorter Pouch
sorter Hanging sortation
(16) and consolidated by store. When a garment
mixed carton is complete, it is put onto processing
a conveyor (2) and sorted into an out- Tilt-tray sortation 4
4
bound truck in shipping (3).
E-commerce fulfillment: E-com-
16 Flat sorter
merce orders are picked five days a
9 Put-to-store and
week during non-peak times. First thing 8
Pallet flow- non-conveyables
in the morning, the system creates a through 10
wave of all orders received since the last Reserve
wave was run the day before. The pick- 12 e-commerce storage
storage retail
ing process begins when order selectors 13
Value-add
log onto their RF scanning devices. e-commerce
11 work area
packing
They begin by picking the next available
pick in their zone in the e-commerce 2
Conveyor
storage area (12) and placing that system
item into a tub that then goes into a
15
basket. Once all the items are picked, 3
Pouch 1 Receiving
single line orders are sent directly to Shipping sorter
a packing station (13), where they are
FIRST LEVEL
packed, placed on a conveyor (2) and
sent to shipping (3).
Multi-line orders are System Suppliers
SYSTEM DESIGN, IMPLEMENTATION AND POUCH
brought to the induc- the next order should have a specific
SORTATION INTEGRATION, WCS, TILT-TRAY, BOMB BAY &
tion station (14) for the HANGING GARMENT SORTATION: SDI Systems number of pieces—the average order
pouch sorter (15). Items POUCH SORTATION: WRH Global Americas is four pieces. The packer removes
WMS: Oracle
are scanned and then the items from the pouches and adds
CONVEYOR AND CASE SORTATION: Intelligrated
placed into the next LIFT TRUCKS: Raymond and Toyota a packing slip that was automatically
available pouch. The WRIST-MOUNTED MOBILE COMPUTING & RING printed to the box or bag for shipping.
SCANNERS: Zebra Technologies (Motorola)
system joins two pieces The packed order is then conveyed (2)
MEZZANINE: Conveyor Solutions
of information—the to the shipping area (3).
product information Shipping: Once a package
and the license plate bar code—on the buffer. From there, the system marries arrives in shipping (3), an associate
pouch. Once a pouch leaves the induc- up the individual items for an order and scans a bar code label on the packing
tion area (14) and travels into a primary sends them to an available pack station slip. That information is used to
buffer holding area, it waits until all of (13). In all, there are 10 induction sta- create a shipping label that is applied
the items for that order are ready. Once tions and 24 pack stations. to the bag or carton. The shipping
all of the items for the order have been Pouch sorter packing: At the pack container is then sealed and sorted
picked, they move into an intermediate station, a display tells the operator that to the right shipper. •

28 AUTOMATION/RETAIL mmh.com
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 Matthew Terry,
Thrive Market’s
director of
fulfillment

30 AUTOMATION/RETAIL mmh.com
 Thrive Market’s Start Up Distribution Network

THRIVE
MARKET’S
STARTUP
DISTRIBUTION
NETWORK
How does a fast-
growing, e-commerce
startup company build
out order fulfillment
capabilities? Thrive
Market answered that
question with its new
facility in Indiana.

he typical facility in Modern Materials Handling

was put up by a large, brand-name company doing
hundreds of millions—if not billions—of dollars in
sales each year from that location. But there’s
another category of facility out there, designed by
rapidly growing startups that are bulging at the seams. In these
facilities, orders are filled using rudimentary processes and equip-
ment from Staples. This is especially the case for young e-com-
merce companies faced with the decision to outsource fulfillment
to a third-party logistics (3PL) provider or go all in on their own
Tim Webb/Verbatim

distribution network.

By Bob Trebilcock, Executive Editor

mmh.com AUTOMATION/RETAIL 31
 Thrive Market’s Start Up Distribution Network
That was the dilemma confronting
Thrive Market, a membership-based
online platform focused on mak-
ing healthy living easy and affordable.
Launched at the end of 2014, Thrive
Market now has more than 400,000
members who pay $60 a year.
As recently as 2015, orders were being
picked by hand from pallets stored on
shelves in a 12,000-square-foot building
in Los Angeles. With sales growing at
25% to 50% per month, Thrive Market
made the decision to forgo the 3PL route,
hire experienced supply chain executives,
and build out its own distribution net-
work, starting with a 361,000-square-foot
facility in Batesville, Ind., near Cincin-
nati. Working with a system integrator
(Swisslog, swisslog.com), Thrive Market
32 AUTOMATION/RETAIL
designed a building that accomplished at
least three goals, according to Matthew
Terry, director of fulfillment.
First, using a warehouse manage-
ment system (WMS), wrist-mounted
mobile computers and ring scanners,
conveyor and sortation, and automated
packaging, launched the company on a
journey from completely manual opera-
tions to automation.
Second, Thrive Market’s social mis-
sion drives every decision. Packaging
materials are sustainably sourced; the
company’s carbon footprint from a ship-
ping standpoint was a factor in the loca-
tion selection; and Thrive Market offers
full-time employment and benefits to its
Thrivers, as associates are known, rather
than use temporary labor. “Not only is
our core business helping Americans
live a healthier lifestyle, we’re trying
to choose suppliers and solutions in a
sustainable way,” Terry says.
Finally, the solution needed to be
scalable to accommodate growth that
was projected to continue at up to
100% a year. “We needed to fill orders
and start building out for the future
all at the same time,” Terry says.
The mission
Thrive Market was the brainchild of
Gunnar Lovelace, a California native
who grew up on a communal farm
where people pooled their resources
to purchase the seeds and equip-
ment they needed to grow food. He
wondered why a community of people
To keep up with
exponential growth,
Thrive converted a
former pallet and
case handling facility
into an e-commerce
fulfillment center.
mmh.com

Items are picked in one of four pick modules, soon to expand to six.
couldn’t pool together their resources
to bring down the cost of organic foods,
health and wellness. Lovelace attracted
three other founding partners—Nick
Green, Kate Mulling and Sasha Sid-
dhartha—and the company launched in
November 2014.
“The founders were trying to tackle
two problems that put American diets
and lifestyles out of whack, which were
cost and geography,” says Terry, who
joined the company from Target in 2015.
“Unless you live in a city or urban area
with access to a health food store or a
farmers’ market, you don’t have access
to a lot of wholesome foods. And, the
second is the cost: It’s just cheaper to
purchase processed rather than whole-
some items.”
mmh.com
The company tackled those problems
in two ways: Thrive Market is a member-
ship company, like Costco, with a $60
annual membership fee. Membership
provides access to natural and organic
food products at prices 25% to 50% lower
than retail. In addition, for every paid
membership, the company donates a
free membership to a low-income family,
teacher, veteran or student in the United
States. Second, as an e-commerce com-
pany, Thrive Market addresses the geogra-
phy issue by shipping products nationally
for free. Last, in an effort to keep prices
down, it offers a curated, but limited,
assortment of about 4,000 SKUs.
“A normal grocery store has 26
ketchups; we carry two brands that
meet our values and standards in the
best way,” says Terry. What’s more, he
adds, Thrive Market organizes selec-
tions that meet various dietary and life-
style needs. “If you’re on a paleo diet,
you’re diabetic, or have a child who is
gluten free, we do the homework for
our members,” he says.
The company resonated with consum-
ers and investors. By 2016, according to
reports, Thrive Market had raised $141
million across three rounds of funding.
Meanwhile, sales increased 500% from
March 2015 through March 2016.
While many might be envious of that
kind of growth, filling all those orders
creates its own set of problems. Initially,
orders were filled out of a 12,000-square-
foot space in Los Angeles; the plan
was to stay there for two years. It soon
became apparent that wasn’t going to
work. Plan B was to bring in John Win-
kels, an experienced supply chain execu-
tive from Kroger, to build out a distribu-
tion network.
“Most young growing companies
would have gone with a 3PL,” says Terry.
“Our founders wanted to control the cus-
tomer experience.” The original goal was
to open a long-term distribution facility
in 2016. “That timetable was moved up
to September 2015,” says Terry, who
interviewed with the company over a
weekend and started working in Bates-
ville a week and a half later.
Asked what brought him to a startup
from one of the country’s best-known
retailers, Terry says it was Thrive Mar-
ket’s mission. “Touring the company, I
saw passion, growth and what they were
trying to accomplish,” Terry says. “I
think John and I were both drawn to the
opportunity to build something from the
ground up.”
Building out a network
One of Winkels’ first tasks when he
came onboard was to pick a location for
a long-term distribution facility. “The
AUTOMATION/RETAIL 33
 Thrive Market’s Start Up Distribution Network
down the street. In short order, however, a system integrator
was on site to offer initial suggestions and begin working on a
permanent solution.
“They helped us secure the contractor who put up some
of that initial shelving,” Terry says. “And they were literally
doing back-of-the-napkin drawings—on a napkin—about
where they would put things.”
In addition to the goals outlined earlier, the design was
driven by three critical factors:

1 They had to get up and running quickly just to keep up

with the volume of orders.

2 The solution had to be scalable and modular so it could be

installed in phases. “We started with four pick modules and
the ability to insert two more in the next phase,” says Terry. “That
allowed us to continue to operate while the solution was being
installed.”

3 Finally, the system needed to be efficient and safe over the

long term. “We have a limited number of SKUs, but there is a
significant variability from order to order,” Terry says. “We needed
a system that would allow us to deal with that from an efficiency,
quality and safety standpoint.”

Phased automation
The ultimate design in operation today includes a high-
velocity area known as the Fast 50. This is a pallet storage
area reserved for the 50 fastest moving SKUs that show
up in almost every order. In that area, boxes are created
Picking areas are tied together by a conveyor and
sortation system. and labeled manually—and while it was not in the original
drawing, it was added in the first phase.
problem facing all e-commerce companies is where do you Next up was four perpendicular pick modules for mid-
ship from,” says Terry. “If you’re only going to have one facil- velocity SKUs, where associates pick from pallets and case
ity, Los Angeles is probably the worst from time in transit to flow rack. In addition, there is a separate bin shelving area
the customer and our carbon footprint.” for the slowest-moving SKUs.
Like many other e-commerce companies,
Thrive Market began looking for space within
the inverted triangle between Columbus, Lou-
isville and Indianapolis. Located near Cincin-
nati, the Batesville facility that Terry was hired
to setup and run had until recently been used
by GE to ship full trailer loads of pallets to big
box retailers, but not for piece picking and par-
cels shipped direct to consumers. “It was a big
empty space ready to be filled, and there was
a local community with a population that had
experience in manufacturing and distribution,”
Terry says.
To get started, pallets were stored on the floor;
there was limited bin storage for cartons and all
picking was manual. Pack stations were created
at desks that had been donated by a closed office Extra effort goes into the packing area to create a unique customer experience.

34 AUTOMATION/RETAIL mmh.com
 we want to get through packing,” says Terry.
“We flipped that on its head and asked: Given
the customer experience we want to provide
through packaging, how many minutes do we
need per container.”
Packages include branded printing on the
inside of the box, 100% recyclable packaging
and sustainably sourced packaging material
and hand-written thank you notes, to name a
few touches.
The facility also takes a different approach
to software. The WMS system is a true man-
Picks are confirmed by
agement system in this facility, managing
ring scanners and wrist-
mounted mobile computers. inventory control, communication with the
host order management system and order

In the final phase of the facility, which will come later,

Thrive Market will add two more pick modules and reconfig-
ure and relocate the bin shelving for a smoother flow through
the facility. There are additional plans for a cold storage area;
the company does not sell perishables, but it does offer some
products that are sensitive to heat.
Work process areas are tied together by a conveyor and
sortation system that routes cartons through the various pick-
ing areas on a pick-and-pass basis. Once an order is com-
plete, it is conveyed to a packing area, where a lot of effort
is expended. “When we first started talking to our systems Shelf storage is used in an area reserved for slow-
moving items.
integrator, they asked us how many containers per minute did
batching. A warehouse execution system
(WES) receives a batch of orders from the
Thriving with automation WMS and orchestrates the flow of goods

O f the many changes that occurred in the first two phases of operation, per-
haps the biggest was the transition from conventional warehouse processes
to automation. In a company that values its “Thrivers,” that required careful plan-
through the facility.
Terry says the facility hit on all of its
goals. Thanks to its location and automa-
ning. Culture, for instance, is introduced at orientation, reinforced in meetings tion, it improved Thrive Market’s carbon
and taught during training. footprint, increased capacity and reduced
“Talk to anyone in distribution, and they’ll tell you that change is the reason time in transit on orders. “We can move
leaders exist,” says Matthew Terry, director of fulfillment. “Our first year was like more product than we could with a
one big Kaizen event, in that we changed processes about five times, and each manual process and do it efficiently and
time we’d scrap what we had been doing before to do something different.” safely,” he says.
The biggest change from manual to automation was how the building was But the fast-growing e-commerce
staffed. “In a manual operation, the question is how many people do you throw company is not done. Last June, it took
at a problem,” Terry says. “With automation, you’re managing your uptime.”
over a 350,000-square-foot e-commerce
facility in Sparks, Nev., to serve the
Since the company was growing rapidly, employees were not replaced by
west and northwest United States. “Our
automation. Rather, Terry says that the leadership team explained to the Thrivers
growth means that we had to move
that they were building staffing levels to meet customer service requirements and
faster than we anticipated,” Terry says.
right sizing automation to the building. “Once the automation came in, we had a
“We believe we now have the capacity to
different world from a safety standpoint, and the staff realized that,” he says.
meet our projected growth over the next
two years.”•

mmh.com AUTOMATION/RETAIL 35
Thrive Market’s Start Up Distribution Network

Keeping up with growth

Thrive Market’s new Indiana DC was designed to meet the needs of a fast-growing
e-commerce startup today and tomorrow.
Receiving

S
calability is the key attribute of
Thrive Market’s new facility with
software, automatic data collec-
tion, and conveyor and sortation designed
to grow with the company’s sales.
Receiving: The facility receives full
truckload, LTL and parcel shipments
in receiving (1). Inbound inventory is
inspected and scanned into the ware-
house management system (WMS).
Most inventory will be palletized and
staged for putaway in a Fast 50 storage
area (2) for fast-moving items; reserve
storage (3): or a shelving area for slow-
moving, low-velocity picks (4).
Storage: The WMS directs a lift truck
operator to a location in one of the storage
Thrive Market
Batesville, Indiana
SIZE: 361,000 square feet
PRODUCTS: Focused on health and
wellness, including food, beauty, pet and
items for the home
SKUS: 4,000+
THROUGHPUT: 4,000 orders and 48,000
units per day
EMPLOYEES: 150
SHIFTS PER DAY/DAYS PER WEEK: 2
shifts, Sunday through Thursday; one
shift Friday and Saturday.
areas (2, 3, 4), and a pallet or carton is
scanned to complete the putaway process.
Picking: The facility is managed
through a combination of WMS and ware-
house execution software (WES). The
WMS is a true management system: It is
responsible for inventory control; tracks
individual productivity; and is tied directly
to the online ordering system and batches
1
5
Shipping
Pick module 7
5
5 Final pack area 6
Pick module 4
5 Slow
Slo
low
ow
w moving
movi
m
movin
movin
ng bin
b shelving
ing
ng
4
2
Fast 50
0 stora
storag
storage
stora
Reserve storage
3
orders. Once orders drop, the WES man-
ages the flow of work through the facility.
Items can be picked from several areas. process to create a branded experience
Fast 50: In this area (2), the 50 fastest- for the customer. The inside of the box
moving SKUs—items that are included in is printed as is special water tape. All
almost every order—are stored. The system packaging material is sustainably sourced,
prints out an order, boxes are created man- including tissue liner and the dividers
ually and labeled and items are scanned and material used to hand wrap breakable
into the box using a wrist-mounted com- material. Packers include a hand-written
puter and ring scanner. thank you note. The invoice is added,
Pick modules: Cartons are conveyed along with a topper to provide a clean and
from the Fast 50 area to one of four pick neat sealed look. Once the box is taped, it
modules (5). Cartons are sorted to the first is conveyed to the shipping area (7). •
pick location for that order. Once the pick
is complete, the carton is placed back on to
System suppliers
the conveyor and is passed to the next pick SYSTEM INTEGRATION AND WARE-
location until all of the picks from the pick HOUSE EXECUTION SYSTEM: Swisslog
WMS: HighJump
module for that order are complete.
Caption
CONVEYOR AND SORTATION: TGW
Slow-moving items: From the pick PALLET RACK: SpaceRak
modules, cartons are diverted to a bin SHELVING: Tri-Boro Storage Products
MOBILE COMPUTING AND WRIST-
shelving area (4) for slow-moving items to MOUNTED SCANNER: Zebra
complete the order. Technologies (Motorola)
Packing: Once all of the items for LIFT TRUCKS: Crown
PACKAGING MATERIAL: Ranpak and
an order have been picked, the carton is Storopak
sent to packing (6), which is an intensive

36 AUTOMATION/RETAIL mmh.com
Warehouse Basics

Sign,
PA R T F I V E

Welcome to Warehouse
Basics, a five-part series

seal &
in which Modern will
unpack the essential
elements of functional
areas in the warehouse.
Informed by industry

deliver
experts, these articles
are intended to capture
a snapshot of the cur-
rent state of materials
handling practices.

on customer
We’ve moved from
receiving through put-
away, storage, replen-

promises
ishment and picking.
Now, we turn to pack-
ing and shipping func-
tions before orders leave
Packing and shipping—as the final step of the four walls.
fulfillment—are the last chance for an operation
to ensure the job is well done.

I
BY JOSH BOND, SENIOR EDITOR

N THE PREVIOUS INSTALLMENT of this series, we
explored a range of solutions and processes to
perform picking in your facility. The story was split
into case picking and each picking, and we now
follow the less-than-case stream into the pack and
ship operations. After all, less-than-case are the
orders that usually require packing.
Having picked the eaches for an e-commerce
order, the container into which they were picked is
now transported to a pack station. The container
might be a tote or bin, or a corrugated box that will
also serve as the shipping carton.
First, the pack station should be designed for
optimum worker comfort. As recently as 10 years
ago, the mere presence of an adjustable-height
table was considered “best in class” from an ergo-
nomic standpoint. Now, everything in the pack
station is carefully arranged to limit reaching,
stretching, repetitive motion and strain of any
kind. Especially in seasonally sensitive e-com-
merce environments, it is common to install
enough pack stations for peak seasons, even if
that leaves several unoccupied for the remainder
of the year.
If items arrive at the pack station in anything
other than the shipping carton, there are several

38 AUTOMATION/RETAIL mmh.com
Ample and disciplined dock space is essential to efficient and accurate shipping.

mmh.com AUTOMATION/RETAIL 39
 Warehouse Basics
steps to prepare the order for ship-
ment. At the most basic level, the item
or items are placed into a poly bag or a
corrugated box. “Autobaggers” are popu-
lar automated solutions that create bags,
insert items, automatically seal the
bags, and deposit them onto a sorter.
In these setups, the last time a worker
touches an item is when it is inducted
to the autobagger.
Dunnage and void fill made of paper,
plastic air bags, custom foam or other
materials must be available to secure the
product in the shipping carton. The role
of such packing materials is to protect the
product from damage or, as in the case of
a garment that could be crumpled in tran-
sit, to ensure the product arrives at the
consumer in a presentable manner.
Modern packing stations
prioritize ergonomics to
ensure productivity and
minimize strain.
40 AUTOMATION/RETAIL
Adding in automation
Automation can also create corru-
gated boxes on demand and reduce or
eliminate the reliance on predetermined
carton sizes for shipping, which can pro-
duce wasted space and increase shipping
costs. Saving just a few pennies per box
can quickly add up when multiplied by
the millions of boxes shipped each year.
On-demand auto-boxing solutions cre-
ate a corrugated box customized to the
dimensions of the order and then build
the shipping carton around the items
that comprise the order.
These types of solutions are becom-
ing more commonplace as e-commerce
volume grows. Dimensional weight rates
such as those instituted by FedEx and
UPS have created steep penalties for any
company shipping cartons with unused
space. The demand for efficient alterna-
tives has driven investment and innova-
tion in on-demand box creation or auto-
boxing solutions that were previously not
cost-effective.
Once the order is packed into a
shippable container, the container
must include a manifest, packing list
or invoice of some sort, which might
be manually or automatically inserted
into the container at the pack station,
or can be affixed to the outside of the
container. At the pack station or shortly
downstream, each container must also
be marked with a shipping label. Some
solutions create a packet with both the
invoice and shipping label and automati-
cally affix it to the container. In cases
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where orders are picked directly into the
shipping container, the shipping label
might be attached before the first item
for the order is even picked.
The original business case for cubing
and weighing systems was to optimize
the use of storage space in the ware-
house, but solutions have now evolved
to provide additional value for distribu-
tion functions like cartonization and
accurate manifesting.
The warehouse or DC might round
up dimensional information on receipt
to coordinate putaway and optimize
order fulfillment decisions, pre-pack and
then shipment manifesting. A vendor
might even supply some of the details
in advance of receipt, and if the data is
detailed enough it might be possible to
pre-manifest a shipment—right down to
void fill weight—and eliminate the labor
to cube and weigh again downstream.
Once collected, the dimensions of a new
product can be put into the warehouse
management system and supplied to any
automated packing equipment.
Insertion of value-added documents
and materials like custom marketing
for a familiar customer, for instance,
has dwindled in recent years. Instead
of manually or automatically inserting
an assortment of additional coupons
or catalogs, a significant portion of this
function has been moved to the digital
space, where such consumer-specific
outreach is sent by e-mail or is pre-
sented directly to a customer on the
retailer’s Website.
Sorting it out
Once packed and labeled, outbound
parcels are sorted. The design of the
sortation process is informed by the facil-
ity’s volume, location and position in the
overall company network. For example,
a single e-commerce facility servicing
the entire United States may sort by zip
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Dimensioning equipment helps
minimize costs for shipping,
consumables and labor.
code zone or parcel carrier
zone to allow “zone skipping.”
By contrast, if a facility is one
of 10 in a network, you might
configure sortation lanes by car-
rier instead of zip code. Sorta-
tion might also reflect varying
service levels, with diverts and
dock doors for next-day air,
standard ground or somewhere
in between.
The sortation will be more
or less complex based on the
options provided to the con-
sumer; some retailers offer car-
rier options, some offer various delivery
speeds, and others give no options at
all. In any case, sortation for outbound
parcels in an e-commerce facility is not
nearly as complex as the shipping sorta-
tion required for a distribution center
serving, say, 300 stores. A facility that
is designed for store deliveries of hard
goods, but also fulfills e-commerce
orders, might leverage their existing ship-
ping sorter. By adding outbound diverts
to doors assigned to parcel carriers, the
sorter can also effectively handle parcels.
Poly bags, however, are not compatible
with all carton sorters.
Parcels might be sorted into Gaylords,
stacked on pallets, or floor-loaded into
trucks. In cases where a facility does
enough volume, the parcel carrier might
staff the building with a driver who is
responsible for loading the product,
perhaps from an extendable conveyor in
the trailer.
Setting the stage
As compared to parcel shipping, the
staging and loading of case and pal-
let quantities requires more ample and
disciplined dock space. Staging pallets
before loading is especially important
when route-stop sequencing is needed.
To avoid confusion and ensure proper
sequencing, it is best to dedicate a sin-
gle forklift to the loading of each trailer,
a practice called single-thread loading.
A dock should offer about 60 feet of
space to stage a trailer’s worth of pal-
lets two abreast and verify orders before
goods leave the facility.
The need for a clear and open stag-
ing bay has influenced the design
of modern large-capacity buildings,
nearly all of which will allow for 60
feet between the dock door and the
first column line. In existing facilities
where the first column line is, say, 40
feet from the dock doors, that does not
mean the dock staging area should end
at that point and racking begin.
The full 60 feet is still essential, even
if the staging area now includes an obsta-
cle in the form of a column. In fact, the
placing of racks and aisles beyond the
first row of columns is also an important
consideration, since cramped pathways
can be a recipe for congestion or colli-
sions. In such cases it might be best to
allow for 70 feet to ensure ample space.
AUTOMATION/RETAIL 41
 Warehouse Basics

Cube utilization soft-

ware can help configure
loads to optimize space
utilization in each trailer.
Such solutions also help
ensure compliance with
weight distribution and
axle loading regulations.
If load sequencing is
not an issue, multiple
forklifts are free to load
a truck, and less staging
space is required. The
warehouse management
system (WMS) and load
labeling will need to sup-
port a scan destination,
in which the loads are
scanned next to the door
to ensure they are being
loaded onto the correct Packout is the last opportunity to confirm the accuracy of an order before it leaves the building.
truck. Some captive fleets
have confirmation bar codes located than-truckload (LTL) shipments and affixed with a shipping label or bill of
inside the trailer. mixed-case pallets. Such pallets might lading. They must also be labeled to
Between the two extremes of full be built during the picking process or ensure proper handling, such as warn-
pallet loading and parcel shipping, after automatic sortation, but must ings to avoid stacking pallets.
there are operations including less- be wrapped for stability in transit and Because LTL trailers are sometimes
used infrequently, the items to be
loaded might be staged inside the dock
before a trailer arrives. Or, if an opera-
tion has significant LTL volume with a
single carrier, a dedicated trailer might
occupy a dock until it is removed daily,
or perhaps twice daily if volumes justify
it. Again, organized staging areas are
critical to keep loads accurate,
segregated and properly sequenced.
This story was created with generous
support from Bryan Jensen, who has 34
years of experience in retail and whole-
sale distribution, transportation and
Automated carton-building
logistics and is a principal with St. Onge
solutions provide custom Co. in York, Pa. (www.stonge.com).
boxes on demand to
optimize shipping costs.
Contact Bryan at bjensen@stonge.com. •

42 AUTOMATION/RETAIL mmh.com
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 Identification

We’re gonna need to see

To address the AIDC challenges of e-commerce and
omni-channel, labeling and marking suppliers are
ensuring the information contained within each printed
bar code is read with 100% accuracy every time.
BY SARA PEARSON SPECTER, EDITOR AT LARGE

A s documented over the past few years in Peerless Research Group’s “Annual
Warehouse and Distribution Center (DC) Operations Survey,” more operations
are dealing with the unrelenting expansion and demands of e-commerce and omni-
channel retail order fulfillment. In response, investments in larger facilities to hold
more stock keeping units (SKUs) in inventory have consistently been on the rise, with
companies reporting plans to spend an average of more than $378,000 on information
system (IS) solutions alone, according to the 2017 survey (p. 50).

Among that intended IS spend are investments in technologies for

identification of inventory, both for locating it in the warehouse and
labeling it after it’s packaged for direct-to-consumer shipping. To address
the automatic identification and data capture (AIDC) challenges of
e-commerce and omni-channel retail fulfillment DCs, labeling and
marking suppliers have added new features to their solutions to ensure
the information contained within each printed bar code, regardless of its
form or purpose, is read with 100% accuracy every time.
Over the next few pages, Modern takes a look at some of the latest
developments in label printers and applicators, direct carton marking
print engines and storage location identification labels that help opera-
tions keep better track of inventory within the four walls as well as
deliver clear destination information on outbound shipments.

Label printers/applicators engineered to minimize waste,

Portable printer use is increasing in warehouses
and by parcel carriers, as it allows workers to
quickly generate a new, scan-readable label to
affix over an unreadable one.
ensure adhesion
To help shippers keep pace with the exponential increase in labeling
individual parcels while still minimizing costs and consumables waste,
Toshiba America Business Solutions has developed several new features
for its thermal bar code printers, explains Theresa Lee, product manager.
“We just introduced the industrial, high-speed B-EX6T, capable
of printing 6-inch wide labels in lengths up to nearly 60 inches,” Lee
explains. “What makes it unique is its integrated ‘ribbon save’ technol-
ogy, meaning the printer pre-scans the incoming imprint data to ensure
that the ribbon only advances when printing is required.”

44 AUTOMATION/RETAIL mmh.com
some identification…
Caption
Doing so enables the printer to save ribbon with each print,
maximizing ribbon use and minimizing waste. This also applies
for pre-printed or flexographic labels, which often contain stan-
dard information when only variable information is required to
print. Further, the unit’s print head is warrantied for 3 million
inches—three times longer than competitive models. It also
accommodates large ribbon capacity of up to 2,625 feet.
“Print heads also get wear and tear and must be replaced
periodically to ensure print quality,” continues Lee. “These new
features save users cost and downtime, as the ribbon and print
head don’t have to be replaced as often.”
Lee also notes a tremendous uptick in portable printer use within
warehouses and by parcel carriers. “If the bar code on a shipment
label is not scan-readable due to a smeared imprint or low toner, an
operator or driver can create and print a new label on the spot and
place it directly over top of the unreadable one,” she says. “That
ensures the package is properly routed and delivered on time.”
The jump in individual parcel shipments means it’s not only
imperative that a label be readable, but that it also adheres to the
package itself.
“As more companies move to automated print-and-apply tech-
nologies, we’ve heard concerns from some carriers that not every
label sticks to every box or envelope,” says Rick Fox, president
and CEO of FOX IV Technologies. “They’re issuing charge backs
for missing labels, and the customer doesn’t receive the package
mmh.com
For identification of stored product, rack labels can be specified
with repositionable adhesive, allowing them to be easily removed
and relocated.
when expected.”
Several factors can negatively impact label adhesion, says
Fox. “If a label applicator is equipped with a blow-on applicator,
the air pressure may not be strong enough to ensure the label
sticks. For that reason, we use a tamp method,” Fox says.
Other reasons for adhesion failure include the type of adhe-
sive used. If the initial tack isn’t high enough the label won’t
stick and, generally speaking, the cheaper the label the weaker
the initial tack, Fox says.
“Likewise, during certain periods of the year—particularly
the colder months—low humidity conditions can generate a
static charge that literally pops the label off the box surface,” he
adds. “To solve that, a pre-heating section can be added to the
labeling line that warms up the label or the side of the box; or a
blow-on applicator can be switched to a tamp.”
Another trend Fox sees is the transition to dual-sided labels
that print the shipping information on the top side, and the
packing slip on the other.
“Our Quick Slip system prints the packing slip on the label
liner, repurposing it and keeping the contents confidential,” he
explains. “The top side has a pre-printed message indicating
that the recipient can peel back the label to reveal the packing
slip. The advantage for shippers who feel they must include a
packing slip is that they no longer have to open the box, insert
the paper then seal. It’s much faster.”
AUTOMATION/RETAIL 45
Parcel handlers can
replace bar code labels
with high-resolution
piezo inkjet printers that
mark images, text and
bar codes directly on
blank corrugated boxes.
Direct carton marking offered as
alternative to print-and-apply
Parcel handlers seeking to reduce use of
bar code labels can consider direct carton
marking with high-resolution piezo inkjet
printers, says Raymond Fortuna, technical
product manager at Matthews Marking
Systems. The system automatically marks
images, text and bar codes across blank
boxes for custom logo placement or private
branding, eliminating storage of pre-printed
cartons and labels.
“Our new VIAjet T-Series Enhanced
printer’s print engine delivers on-demand
marking that is fast, accurate and costs
one-tenth of label expenses,” Fortuna
explains. “For maximum mark clarity and
readability, the previous T-Series had to
be positioned 1 to 3 millimeters (less than
1/8-inch) away from the box. The new
model allows us to increase that throw
distance to 6 millimeters (1/4-inch) with-
out loss of bar code quality.”
While a 3 to 5 millimeter spacing
difference may not sound like much,
Fortuna says it prevents dust build up in
the ink nozzles and lessens the chance of
a slightly bulging box side coming in con-
tact with the printer.
“It’s also 25% faster, so for a line running
at 260 feet per minute with ink coverage of
about 18% of the side of a white corrugate
box, line speed can be increased to 320 feet
per minute without causing shadowing or
ghosting of text or bar code, and the bar
codes are repeatedly scanned as A grades,”
he continues, adding that by grouping mul-
tiple print heads, messages larger than a 4 x
6-inch label can be achieved.
To validate bar code clarity and readabil-
46 AUTOMATION/RETAIL
Identification
ity, Matthews Marking’s MPERIA marking
and coding automation platform can be
connected to an in-line vision system that
automatically verifies that a mark meets the
pre-determined grade standard, he says.
“If a mark’s quality does not meet the
grade standard, MPERIA tells the produc-
tion line control system to divert the prod-
uct to a reject conveyor and prints the same
mark on a backup print-and-apply label
system for manual placement over the previ-
ous mark. This prevents waste, ensures no
poor marks leave a facility and avoids non-
compliance, lost revenue and fines.”
Storage location identification labels
support changing inventory
With the explosion of SKUs and inventory
volumes faced by e-commerce and omni-
channel fulfillment operations, warehouse
storage racking is more likely to need new
identification labels as items are shifted
around in response to changes
in item velocity and throughput.
Whether racks are being
reset to accommodate seasonal
inventory changes, a third-party
logistics fulfillment provider has
a customer change, bulk stor-
age bays are being converted
to picking bays, or a new or
upgraded warehouse manage-
ment system or inventory con-
trol software demands a new
identification scheme, rack relabeling is
becoming a more frequent activity within
these operations, says Neil Johnston, CEO
of ID Label.
“Unless they’re labeling a brand new
racking system, these facilities will have to
deal with existing bar code labels on the
beam faces, and often those are damaged,
partially missing or peeling off,” Johnston
notes. “But it’s very time consuming to
scrape off the old labels first before re-
applying new ones.”
That means warehouse associates often
apply a new adhesive-backed paper label
over the top of an old one. In addition to
being aesthetically unattractive, if there’s
any show-through or an uneven surface
beneath the new label, a scanning device
might not be able to read it accurately on
the first pass.
“Our Beam Renew product comes in
colors that match existing racking, allowing
it to be applied over any existing labels with-
out scraping, cleaning or painting,” Johnston
explains. “To prevent show-through, the
labels have a custom-engineered opaque
backing material. We also provide installa-
tion services, which includes first removing
any uneven surfaces beneath and preparing
the beams for relabeling.”
Further, ID Label offers a line of pre-
printed, removable identification labels,
marking bar codes and text as indicated in a
customer-provided spreadsheet.
“These Clean Release labels feature a
proprietary adhesive blend that attaches
securely to a painted beam or the Beam
Dual-sided labels enable printing
of shipping information on the
top side and packing slip on
the other, giving shippers who
feel they must include such
documentation a quicker way to
process outbound orders.
Renew surface, yet is easily removed and
re-positionable without leaving residue,”
Johnston continues. “The same label can be
moved to a different location multiple times
and still adhere.” •
Companies mentioned
in this article
• Fox IV Technologies
• ID Label
• Matthews Marking Systems
• Toshiba America Business
Solutions
mmh.com
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adapts to different production configurations in no time at all. As easy as that.
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2018 Warehouse/Distribution Center Equipment Survey

48 AUTOMATION/RETAIL mmh.com
 2018 Warehouse/DC Equipment Survey

AU T O M AT IO N &
ROBOTICS
LEAD ROBUST OUTLOOK
Our annual survey reveals a bullish outlook for continued material
handling investments, with enthusiasm extending into newer technologies
such as robotics as well as warehouse control system software and the
closely related category of warehouse execution systems.

BY ROBERTO MICHEL, CONTRIBUTING EDITOR

I
f there were one clear-cut conclusion to
be drawn from our “2018 Warehouse and
Distribution Center (DC) Equipment Sur-
vey,” it would be that the outlook for spend-
ing is bullish. The percentage of respondents
saying that they’re “proceeding with invest-
ments” reached its highest level in four years,
and the percent of respondents saying that
they’re “holding off” on material handling
solutions shrank by 7%.
However, the purse strings aren’t being
held wide open across the board. A few sub-
categories saw tepid or declining indications,
and generally, respondents seem more inter-
ested in specific types of material handling
equipment, rather than large scale informa-
tion systems (IS) spending. At the same
time, the survey revealed growing interest in
the use of relatively new types of technology,
P eerless Research Group’s (PRG) e-mail survey
questionnaire was sent to readers of Logistics
Management and Modern Materials Handling in Janu-
ary of 2018, yielding 315 qualified respondents. The
respondents were from sites whose primary activ-
ity is manufacturing (36%), corporate headquarters
(28%), warehousing and distribution (24%), as well
as warehousing supporting manufacturing and other.
The median revenue of responding companies is $67
million, while the average is $271.45 million. Qualified
respondents—managers and personnel involved in
the purchase decision process for materials handling
solutions—hold influence over an average of 131,2675
square feet of DC space. Respondents were spread
pretty evenly across multiple verticals, with a few of
the most common ones being food & beverage, indus-
trial machinery, retail trade, electronics, and transpor-
tation/warehousing services.

mmh.com AUTOMATION/RETAIL 49
2018 Warehouse/Distribution Center Equipment Survey

How is the present state of the economy making an impact your spending
on materials handling equipment technologies, services and solutions?
2015 2016 2017 2018
42%
35% 35% 35% 35%
31% 21% 20% 20%
29% 16% 28% 17%
14% 14%
9%

We are taking a "wait and see" We are We are The economy is having little
approach, and making only those holding off proceeding or no impact on our materials
purchases and investments that on investing with our handling spending
are critical to sustaining investments
our ongoing business
On what?
On what? 2015 2016 2017 2018
2015 2016 2017 2018 Material handling equipment 67% 64% 65% 64%
All major capital purchases 50% 51% 60% 61% Fork lifts and lift trucks 64% 53% 59% 56%
Capital equipment 30% 27% 26% 23% Technology information systems (WMS, ERP, etc.) 53% 49% 58% 49%
Technology/Software 17% 20% 14% 10% Conveyors and sortation equipment 42% 31% 39% 40%
Storage equipment 15% 17% 11% 16% Robotics 13% 9% 26% 25%
Fork lifts/Lift trucks 15% 17% 6% 20% AGVs 13% 7% 8% 14%

Source: Peerless Research Group (PRG)

including robotics, drones and smart
glasses. These new technologies have to
be supported and integrated into infor-
mation technology (IT) systems.
Peerless Research Group’s (PRG)
annual survey, conducted in January of
this year, found that 42% of respondents
were proceeding with investments given
the state of the economy, up from a 35%
response to the same question in early
2017. That’s the highest, most positive
measure for this question over the last
four years. Similarly, only 9% said they
were “holding off” on investments, well
under the 16% in 2017.
While the overall outlook is posi-
tive, there were some lagging categories,
though even these showed some resilience
when looked at across related questions.
The categories that exhibited strong
growth included jumps in investments for
automated storage & retrieval (AS/RS) sys-
tems, warehouse control system (WCS)
software, and the closely related category
of warehouse execution systems (WES)
software as well as robotics.
So, after years of the survey reflect-
ing growing investment in systems for
distribution centers (DCs), what’s dif-
ferent this year?
It may be that a rising stock market
and a continued strong economy, when
combined with unrelenting operational
pressures around e-commerce fulfill-
ment, have many industry participants
moving forward with focused invest-
ments in automation to help address the
challenges. Additionally, after a few years
of increasing investment indications for
IS solutions, many companies may feel
they have a solid IT foundation.
“Where the respondents appear to be
spending more is on automation such
as conveyors and specific applications
like vertical lift modules and put walls,”
says Norm Saenz, managing director
with St. Onge Company, a supply chain
engineering and consulting firm. “While
there are clear indications for growth
in the survey, I believe companies are
being tactical about investments. They
want investments that will bring them
quick improvements, while some are
thinking about outsourcing.”
Indeed, when it comes to new
purchases, areas with rising interest
not only included equipment such
as AS/RS, lift trucks, bins/totes, and
conveyors—a broad category that rose
from a 29% response last year to 34%
this year—but also outside services
such as third-party logistics providers
(3PLs). Interest in new 3PL services
rose by 2%, and when looking at areas
for investment over the next 18 months,
outsourcing to 3PLs is up by 5%.
The impact of e-commerce is likely
influencing spending priorities, as it has
for years. For example, 29% of respon-
dents say that in their operations, they
support a “buy online, ship to customer
from DC” process. Additionally, when
asked about “very important” industry
issues today as well as two years from
now, 29% deem multichannel fulfill-
ment very important today, and 34% see
it as very important in two years.
Overall outlook
High confidence in the economy
appears to have eased reluctance

50 AUTOMATION/RETAIL mmh.com
when it comes to investing in material
handling. This year, only 29% of respon-
dents said they are taking a “wait and
see” approach on spending given the
current state of the economy, down from
35% in early 2017—the lowest measure
for this question in four years.
However, some measures for spend-
ing outlook essentially stayed even with
last year, which was a strong year for
spending outlook. For instance, 52%
of respondents said they expect spend-
ing on material handling systems to
increase in the next two to three years,
which is down 2% from that ques-
tion last year. However, 43% expect to
spend the same amount in two/three
years, up from 38% from last year. And
this year, just 5% expect a decrease in
spending in the next two/three years,
compared to 8% in 2017.
Additionally, when asked how spend-
ing for the current year compared to
the previous year, this year 38% said
it increased, down 1% from last year’s
39%. Additionally, 51% said spending
stayed about the same, 3% higher than
How did your company’s spending
on materials handling solutions
in 2017 compare with 2016?
And, by what percentage?
Increased Stayed about the same
51%
48% 48%
38% 39%
32%
11% 13%
2016-2017 2015-2016 2014-2015
2016–2017 21%
increase 17%
2016–2017 36%
decrease 25%
mmh.com
last year’s 48%. When asked to look
forward to spending in the coming year,
40% anticipate an increase, which is the
same as last’s year’s 40% response for
this question.
When it comes to spending expecta-
tion in dollar ranges, average anticipated
spending over the next 12 months
is $350,000 for 2018, down from
$378,000 last year, while median comes
in at $68,750, down from $82,610 in
2017. Some of this may relate to a slight
decline in annual revenues for respon-
dents on average, and it also may tie into
the fact that 2017 saw steep increases
for this question over 2016, so 2018 fol-
lows a strong year.
Another factor worth noting with
anticipated spending is that 27% of
respondents indicate that they will spend
$250,000 or more, and of this segment,
6% will spend between $1 million and
$2.49 million, and another 6% will spend
$2.5 million or more.
Respondents with companies that
have a pre-approved budget for capital
spending on materials handling are set
How do you expect your company’s
spending on materials handling solutions
in 2018 to compare with 2017?
And, by what percentage?
Decreased Increasing
54%
51%
40%
35%
20% 11%
19%
2013-2014 2016-2017
2017–2018
Average projected increase
Median
2016–2017
projected decrease
to spend more significantly than other
respondents. This year, 35% said they
have a pre-approved budget, down
slightly as a percentage from last year,
but of these respondents, the average
budget is $457,640, up from $422,260
last year.
“Overall, the survey reflects enthusi-
asm for where things are going with the
economy in general, and with supply
chain activity in particular,” says Donald
Derewecki, a senior consultant with
St. Onge. “There are exceptions in that
some companies are perhaps smaller
or are not in a position to spend much,
but at the same time, there’s a signifi-
cant segment of respondents planning
to spend $250,000 or more—which
is when you start to get into some real
projects. The caution here is that if
you’re not investing in technology, espe-
cially in a growth economy, then your
competitors are going to eat your lunch.”
Some ups and downs
As highlighted earlier, growth categories
in the survey tended to be for various
Staying same as last year Decreasing
59%
49% 49%
40%
32% 32%
11%
19% 9%
2015-2016 2014-2015 2013-2014
27%
15% Average
Median
32%
20%
Source: Peerless Research Group (PRG)
AUTOMATION/RETAIL 51
2018 Warehouse/Distribution Center Equipment Survey
Overall, how do you expect your spending on
materials handling equipment and related information
systems to change in the next 2 to 3 years?
Increase Spend about the same
2014 45%
2015 49%
2016 41%
2017
2018
types of warehouse automation as well
as a boost in spending for WCS/WES
software, which is often used in automa-
tion projects to synchronize automated
equipment with material flow and
higher-level systems.
For example, when asked which type
of systems and equipment respondents
are considering during the next 12
months, growth categories included AS/
RS (up to 14% from 7% last year), order
picking and fulfillment systems (up to
17% from 13%), as well as mezzanines
(up by 4% this year versus last), and
conveyor/sortation (up by 3%).
When asked about current robot-
ics use and whether they will evaluate
robotics during the next 24 months,
16% said that they currently use robot-
ics, while 15% are evaluating robotics,
for a total of 31% now either using or
considering robotics. That’s up from last
year, when 9% said they use robotics
and 13% were considering robotics.
For applications, using or considering
robotics for pick and place or parts trans-
fer climbed by 8% to reach 41%, while
using or considering robotics for palletiz-
ing declined by 8%. Use or consideration
of robotics for pick to cart, order fulfill-
ment (picker to part), truck loading, and
transportation also were on the upswing.
52 AUTOMATION/RETAIL
Decrease
43% 12%
43% 8%
48% 11%
54% 38% 8%
52% 43% 5%
Source: Peerless Research Group (PRG)
“Greater functionality with robot-
ics, more flexibility of applications, and
lower costs are driving this spike in cur-
rent usage and evaluation of potential
use,” says Derewecki. “As labor avail-
ability becomes tighter and labor costs
increase, demand for this technology
will increase.”
Spending indications for automated
guided vehicles (AGVs) also were up.
For 2018, 7% use AGVs, up 1% from
last year, while 14% said that they’re
evaluating use of AGVs during the net 24
months, which is up 2% from last year.
Spending plans for IS didn’t grow as
strongly. When asked about new pur-
chases, plans for IT/IS systems were at
37% this year, down from 46% the two
previous years. However, when asked
about 12-month plans for specific types
of IS solutions, such as warehouse man-
agement system (WMS) and enterprise
resource planning (ERP) software, each of
these subcategories was up by 2%. Plans
for spending on transportation manage-
ment system (TMS) software over the
next 12 months also ticked up slightly.
The high growth subcategories within
IS were WCS, up to 18% in 2018 from
12% last year, and WES, up to 16% this
year from 6% in 2017, which was the
first year the survey asked about WES.
The WCS and WES categories are
closely related, with many WES solu-
tions having evolved from a WCS by
adding functions like wave manage-
ment, pick to light control, replenish-
ment, or voice picking. It may well be
that since investment in automated
equipment is up generally, WCS/WES
benefits from that.
“It’s not surprising to see growth in
WCS and WES, because these systems
have a control system aspect to them
that is needed for automation projects,”
says Saenz. “So, some companies are
looking not just to control the move-
ments of an automated system with one
of these systems, but to leverage more
of the higher-level functions that can be
deployed under a WES, like managing
waves, or managing some of the move-
ment of inventory and people.”
Also down were a few indications on
spending on mobile computing solu-
tions. In this section of the survey, 54%
are using or have plans for mobile tech-
nologies, which is down from 62% in
2017, though close to the 57% for this
question in 2016 and 2015. However,
when asked earlier in the survey about
bar coding and automated data capture,
48% have plans for these functions in
2018, up by 3% from 2017.
Under the mobile computing section,
respondents indicate growing interest
in some of the newer technologies. For
example, 8% said they use drones, and
in 12 months, 17% said they would
either be using drones or planning to
deploy them. Similarly, only 3% use
smart glasses today, but 7% said they
plan to use them or will be using them
in 12 months.
The e-commerce effect
When asked which is currently the most
common process for e-commerce fulfill-
ment in their operation, “buy online and
ship to customer from DC” is again the
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most common process, drawing a 29%
response, same as in 2017. This year, the
growth process was “buy online ship to
customer from vendor,” which stood at 8%
in 2017, but went up to 15% this year.
Other choices for the most common
process for e-commerce remained fairly
steady or grew just a bit, such as “buy
online, ship from store” (up 2% this
year) and “buy online, pick up in store”
(up 1% to 4% this year).
When asked which e-commerce pro-
cess will be the most common in two
years, both “buy online and ship to cus-
tomer from vendor” and “buy online ship
to customer from DC” are expected to
grow. Specifically, 20% said “buy online,
ship to customer from vendor” will be the
most common process for them in two
years, up from 10% last year, while 40%
foresee “buy online, ship to customer from
DC” as being the most common process
in two years, up from 35% last year.
The impact of e-commerce is likely
influencing change in issues respon-
dents see as very important. When
asked what issues are “very important”
today, 52% rated “cycle times,” while
56% see it as “very important” in two
years. E-commerce has many affects,
but “tighter cycle times” is certainly
one of them. Additionally, when asked
to rate the importance of multichannel
fulfillment, 29% see it as “very impor-
tant” today, and 34% said it will be “very
important in two years.”
Other issues seen as rising in impor-
tance in two years include company
growth, capital availability, and having a
presence in global markets. Overall, the
top answers for “very important” issues
remained fairly steady with previous
surveys. The top five issues this year
were safety, cost containment, company
growth, training and labor availability.
The only change from last year’s top
five was that labor availability rose to the
5th spot, and “throughput” fell to 6th.
mmh.com
This year, 65% see labor availability as
“very important,” and 63% said it will be
“very important in two years.”
Whether some respondents foresee an
increase in the labor pool or expect auto-
mation investments will ease labor require-
ments may be possible reasons for why the
Thinking about any new purchases, in which of the following
areas were any the first deployment of a new solution, or
a substantial change in processes or historical practices?
2015
46% 46%
40%
37%
9% 11% 9% 11%
Information technology Outside services
systems, applications a (3PLs)
and/or solutions
labor availability isn’t seen as accelerating
further in importance. Interestingly, how-
ever, when asked in which areas they will
invest over the next 18 months, “staffing/
labor” drew a 52% response, up from a
49% response last year.
When it comes to best practices
around measuring productivity, the survey
indicated interest in more tightly manag-
ing fulfillment processes, and moving
to a more automated means of doing so
in the next two years. For example, cur-
rently only 35% of respondents have an
automated means of tracking order cycle
times, 46% track them manually, and 19%
don’t track them. However, when asked
how they’ll be gauging cycle time per-
formance in two years, 57% expect they
will have an automated means of tracking
cycle times, 29% expect they’ll be tracked
manually, and those that don’t track cycle
time drops to 14%.
Other areas in which respondents
expect closer, more automated tracking
include “picking accuracy” (automated
jumps from 30% today to 54% in two
years), and “order fulfillment costs” (for
which automated jumps from 34% today
to 52% in two years). While the survey
doesn’t ask respondents to specify how
they plan to achieve automated mea-
sures, generally speaking, investments
in WCS/WES, WMS and labor man-
2016 2017 2018
35% 34% 34% 32% 32% 34%
28% 29%
Systems equipment None
(i.e automated retrieval,
lift trucks, bins/totes,
conveyors, etc.)
Source: Peerless Research Group (PRG)
agement, as well as certain automated
systems, can help an organization keep
track of various productivity measures in
an online, systematic way.
Best practices
The survey asked questions about utili-
zation/activity level for manufacturing,
warehousing supporting manufacturing,
and standalone DC facilities, as well as
best practices for manufacturing and
DC operators.
For manufacturing respondents, aver-
age percent capacity utilization came
in at 68%, equal to last year. However,
15% reported that they were at 100%
capacity, while 19% were at 81% to 99%
capacity. Looking forward for the next
two years, 53% expect increased utiliza-
tion, while only 5% expect a decrease.
Continuous improvement is the lead-
ing best practices among respondents
in manufacturing, followed by labor
productivity, lean manufacturing, build
to order, and just-in-time (JIT) methods.
Respondents were also asked to rate the
AUTOMATION/RETAIL 53
2018 Warehouse/Distribution Center Equipment Survey

In total, over the next 12 months, approximately how much some aren’t faring that well with utili-
do you expect to spend on materials handling equipment zation in this growth economy, there’s
and information systems solutions? 27%
a significant segment of respondents
8% 18%
whose growth and capacity limitation
6% 6% 7% 15% 13%
issues are going to have to be addressed
$2.5 million $1 million- $500,000- $250,000- $100,000- $50,000- $25,000- Less than soon if not immediately.”
or more $2.49 million $999,999 $499,999 $249,999 $99,999 $49,999 $25,000
Overall, the survey points to an
In which areas will you be investing over the next 18 months? industry that continues to invest to
keep up with economic growth and
66%
New equipment/ 68% operational challenges in this era when
Equipment upgrades 67%
64% e-commerce fulfillment and tighter
cycle times are common challenges for
46%
Staffing/labor 42% many companies, not just big e-tailers.
49%
52% Respondents appear to be most inter-
ested in specific types of automated
53%
Information technology 53% equipment to increase productivity and
hardware/software 57%
50% throughput in their DC operations, and
help lessen problems with labor avail-
38%
Maintenance services 33% ability, which has risen to become a
37%
34%
critical industry issue.
Although investment in IS is down
22%
Enterprise applications 23%
2015
in some responses, this comes after
(ERP, CRM, WMS, WCS, etc.) 25%
years of growing investments in IS and
24% 2016
2017 software systems under the IS banner.
14%
Outside services 11% 2018 Additionally, when asked about specific
(3PLs) 17%
types of IS investments, some catego-
15%
ries of software show continued invest-
7%
Outsourcing/3PL services 9% ment interest or modest growth, with
8%
13%
WES/WCS, a category directly tied to
control of automated equipment, mak-
2014 2015 2016 2017 2018 ing strong gains.
Average As Saenz notes, the survey does
anticipated spending $348,600 $345,550 $327,340 $378,130 $350,000
reflect confidence in the economy and
Median
anticipated spending
$67,860 $72,035 $64,520 $82,610 $68,750 willingness to move forward on projects,
but many are being selective, or con-
Source: Peerless Research Group (PRG) sidering more 3PL services to quickly
address needs. “I think many companies
importance of best practices to their 100% capacity, and another 15% are in are being smart about investing in some
operations two years from now. Prac- the 81% to 99% range. Looking forward targeted types of automation,” he says.
tices rated as growing in importance in to the next two years, 38% of respon- “E-commerce pressures are likely push-
two years are labor productivity (up 4%), dents with standalone DCs expect an ing the overall direction. Companies are
lean (up 4%), and JIT (up 5%). Though increased utilization level, 58% expect looking for systems that will help them
not among the top best practices today, it to stay about the same, 4% expect a compete and be effective as more get
3D printing, seen as important by 10% decreased level. involved in e-commerce or are getting
today, but 17% say it will be important While these capacity measures trend pulled into fulfillment for big online
in two years. relatively low overall given the strong marketplaces.” •
For standalone DCs, activity/capac- economy, Derewecki points out the
ity level averaged 66%, down 1% from significant chunk of respondents run- Roberto Michel, is a contributing
2017. However, 21% said they were at ning at full capacity or over 80%. “While editor to Logistics Management

54 AUTOMATION/RETAIL mmh.com