Global Logistics and Supply Chain Strategies - June 2008 - (Page 43) for more warehousing stemmed from terrific sales. “My company has enjoyed double-digit growth, remarkable growth years,” Maas says. “So every three or four years, I was building a new freezer, but it’s terribly expensive to build and operate.” Maas compares his world to that of businesses that use ambient warehousing and is acutely aware of the cost difference. “With ambient, you can build 100,000 square feet of storage and it doesn’t really cost you that much more than a 30,000-square-foot facility because it’s just light, maybe some ventilation fans. Freezers are a different story.” Labor is one of the big differences, he says, “People really don’t like working in freezers all day long. I don’t know that I had a tremendous amount of turnover, but all in all people just don’t like going in the freezer. So, whenever possible, they tended to not be in there. “With that in mind, when they were working in there, they may have been a bit rushed. And working with forklifts, that lends itself to damage in that kind of environment.” Still another problem with manual systems was the amount of “lost” product. Items simply got placed out of sight because JTM used push-back racking, Maas says. Ideally, the oldest pallet should be picked when fulfilling an order, and that’s what occurs now with the Dematic ASRS. But under the old system, employees working in extreme-temperature environments often picked the pallet that was in front of them rather than the one on top and in the back. Maas says he understands that process all too well, “human nature being what it is.” The same phenomenon was partly responsible for order fulfillment inaccuracies. A person might go into the warehouse to get a certain SKU, but hurriedly grabs the wrong item. Unfortunately, that’s what got shipped—and that’s what got returned. “I know these things happen in ambient as well,” Maas says, “because there are certain human limitations that exist everywhere. But these were our challenges: We had FIFO [first-in, first out] issues, order fulfillment issues, inventory issues, and people issues--finding people willing to work in the environment.” In making the switch, the $3m that JTM probably would have spent on another manual warehouse went toward the Dematic system. Maas says the automatic set-up cost approximately $3.25m. There was never a question of retrofitting another building, Maas notes. Number one, there was no existing structure next to his processing plant that could used; secondly, the automated systems are too specialized for such a building. “That just doesn’t happen,” says Maas. GLOBAL LOGISTICS & SUPPLY CHAIN STRATEGIES 43
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