Global Logistics and Supply Chain Strategies - June 2008 - (Page 42) CASE STUDY Extreme Freezer Environments Breed Extreme Cash Loss BY RUSSELL W. GOODMAN A specialty-foods processor finds that an automated system can mitigate or eliminate some of the challenges of manually operated cold storage warehousing, such as low productivity among personnel, higher rates of damage to equipment and product, and costly energy loss. I f anyone should be able to identify with J.T.M. Food Group’s concerns about cold storage warehouses, it’s parents of young children. For generations now they’ve told kids to close the kitchen refrigerator door with a cry something like, “You’re letting the cold air out!” In the case of JTM, a specialty-foods processor based in Harrison, Ohio, energy transfer in its freezer warehouses—or, letting the cold air out—was a very big deal. Energy loss actually occurred several ways, but one of the main culprits was the extrawide doors needed to allow operators to move forklifts into and out of freezer facilities. With every passage, not only did pallets of product flow out but so did cash in the form of lost energy. The money hemorrhage didn’t stop there, however. Compared to ambient warehouses, cold storage facilities record higher rates of damage to racks and prod- uct from forklifts, trucks and other humanoperated devices. Maintenance costs of equipment, often battery operated, can be higher in below-zero environments. Worker productivity may lag given the breaks from the cold that employees need. And, of course, inventory and order fulfillment may suffer as humans rush to complete a given task. J.T.M. Food Group, which has a vast array of frozen-food products, had used manually operated freezers since its inception in 1960 as a butcher shop in Cincinnati. Its focus eventually evolved into food processing, and as business grew, so did its need for additional cold storage. Such buildings are very costly to put up, according to Joe Maas Sr., vice president of operations. But that was the model JTM followed until a business associate suggested that Maas consider an automated storage and retrieval system. There was a certain irony there, given that the tip came from a manufacturer of mezzanines and stairways rather than someone in the food business. But Maas took his advice, looked into the computercontrolled systems for depositing, inventorying and retrieving loads, and ultimately struck a deal with Grand Rapids, Mich.based Dematic North America. The greenfield project, built on the parking lot of the JTM manufacturing plant, rises 85 feet, and Maas says the benefits are just as impressive. Inventory and order fulfillment accuracy are nearly100 percent, warehouse labor has been reduced by 75 percent, product and warehouse damage are bad memories from the past, and energy usage has been cut drastically—anywhere from 50 percent to 66 percent, depending on a number of factors. That’s the “after” picture. “Before” wasn’t so rosy except to the extent that the need 42 JUNE 2008
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