Global Logistics and Supply Chain Strategies - June 2008 - (Page 44) The entire project approached $8m, says Maas. Return on investment? “It’s terribly hard to put a number like that on paper, but it’s probably 12 to 14 years.” Becoming a sort of 3PL is one way J.T.M. Food Group is recouping some of that money outlay. The new freezer is so large that JTM rents space to another client. “I ended up building a much larger facility than I anticipated for my needs,” Maas says. “But the business strategy and justification for this freezer was in renting a part of it out and trying to make it a profit center in itself.” Of course, that client, an ice-cube manufacturer, uses the ASRS also, says Mike Khodl, director of supply chain services for Dematic North America. JTM simply has to take care that its warehouse management system bills that client properly, Khodl says. “For us, it’s just another lot and pallet that we’re tracking through the system. All we’re doing is tracking SKU ID numbers and inventory.” As long as a facility has enough physical space to accommodate other clients, the ASRS system can meet their needs as well, says Khodl. He says he can point to other Dematic customers who are “co-oped” and may have five or six companies using the same storage and retrieval system. For all the attention paid to energy loss through doors, two other areas are equally critical: moisture infiltration and roofs. The former is important because power is consumed in defrosting the refrigeration system, the latter because energy is lost directly through roofs. The new ASRS system has minimized moisture infiltration, Maas says, but eliminating it entirely isn’t possible. Nevertheless, where daily defrosting was the norm with manual warehouse systems, that’s no longer the case now. “Because you have 8-foot by 10-footwide doors for forklifts to go in and out all day, you have a lot of moisture,” Maas says. “And my people aren’t always perfect at keeping doors shut, so moisture gets in and vapor pressure builds up. Moisture freezes on the coils, especially in the summer months, and that’s not free to get rid of. You have to produce the heat to get rid of it, and secondly, now you’re fanning heat into a freezer, so that’s never good.” The ASRS doors are much smaller and only open when product comes through, then immediately close. “You just don’t get the moisture infiltration that you would get with a standard set-up.” With manual systems, operators generally have to refrigerate their docks to combat moisture buildup. Maas says he finds that no longer necessary. As for the roof, size is critical. The smaller, the better in terms of energy savings. “You want the smallest square footage of roof per cubic foot possible,” Maas says, “and you’re definitely getting that with an ASRS simply because you can build tall. The ratio you J.T.M. Food Group at a Glance The company: J.T.M. Food Group is a family-owned specialty processor producing such products as meat balls, sausage links, pork chorizo, steak ranchero, beef stroganoff, chili verde, turkey a la king, cream of broccoli soup and Angus beef chili. All of the company’s products are frozen, and are cooked, packaged and distributed from its own plant. Headquarters: Harrison, Ohio, near Cincinnati. Financial results: Sales exceeded $72m in 2007. Operations: Since 1960, when the company first operated as a modest retail meat shop in downtown Cincinnati, it has grown into a food-processing company that runs a kettle cooking line, a grind-and-form line and a bakery line within its facility. It distributes more than 1,000 items in 42 states. Half of its product line goes to school lunch programs. It also sells to restaurants, supermarkets and the military. Supply chain challenge: Its manual cold storage warehouse was inefficient and costly to operate. Supply chain partner: Dematic North America. want is minimal roof per cubic foot.” JTM’s new freezer is 85 feet in height now versus 24 feet formerly. The old configuration would have required three and a half times the footprint of the new warehouse. In that standard freezer configura- tion, two or more aisles 12 feet in width were needed to accommodate forklifts or other wheeled vehicles. That’s compared to one 5-foot aisle in the new set-up. Aisles, of course, are dead but costly space: they contain no product, but you pay to cool them anyway. Deep-lane storage makes the single aisle possible. “Now, my entire freezer is the width of what would be the width of just the aisles alone if you went with the standard technology,” Maas says. In addition, since no humans enter the warehouse, the retrieval system ensures that first-in product is first to be pulled off shelves for shipment. Dematic breaks the food industry into two segments: food and beverage, which deals with finished goods, like what J.T.M. Food Group distributes, and the grocery industry, which involves retailers. The former group may store many products, but they move multiple pallets of the same SKU, says Khodl, whereas retailers move pallets with multiple products on them. It’s a distinction with a major difference because those elements drive completely different levels of automation and the type of systems implemented. In its business, Dematic is quite familiar with the needs and challenges of companies in the food and beverage sector, and the systems required to meet them. Speaking of labor generally, Khodl says it’s not uncommon for employees to spend 20 minutes of every hour outside freezers. Often this is because of state laws, but the result is a loss in productivity. He can speak to other issues raised by Maas as well, such as order accuracy and property damage. “Order accuracy is a key driver because in a manual system you tend not to pick as accurately as you need, especially in a freezer environment. “Also, if I produce 20 pallets of patties and store them, I can’t guarantee that someone will pick the first produced in a manual environment. With an automatic system I can ensure that. I bring out the first pallet I produced, pick off that first, and then work myself back from that.” Damage? “When you have lots of highlow traffic and motorized hand trucks driving around every day, you’re often hitting the rack structure and making it less efficient. Joe eliminated 100 percent of that traffic. He now has no rack and equipment damage. He also pulled out of all his battery equipment. Bat- 44 JUNE 2008
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