The sale of electronics over the internet is booming, especially for Elgiganten, Scandinavia’s leading electronics retailer, and part of DSG International, one of Europe’s leading electronics retailers. The company is experiencing growth rates of 50% annually in their e-retail business, and in response, the company has implemented a new pick and pack solution from Dematic at its central Nordic warehouse in Jönköbing, Sweden. The system enables the central warehouse to gain close to 100 % pick accuracy and meet increasingly rigorous demands for picking efficiency and quality.
Elgiganten’s central warehouse in Jönköbing is currently experiencing a marked increase in the number of product codes as well as its pick and pack volume. The e-business boom in electronics has meant that many picks are single customer orders rather than entire shop orders, posing new challenges. The new system has been implemented to address the growth in e-business and Elgiganten’s business strategy, which is to offer its customers a very wide range of well-known brands at low prices.
Explosive growth poses challenge to picking system
In order to supply a huge range of well-known brands at low prices, Elgiganten must ensure that:
it delivers cost-efficient operations
uses good purchasing systems
employs an aggressive marketing strategy
and not least maintains efficient and responsive logistics
At the heart of Elgiganten’s logistics lies their 100,000 square metre central warehouse in Jönköbing, Sweden, supplying the group’s 247 warehouses in Norway, Sweden, Denmark, Finland, Iceland, Greenland and the Faroe Islands. Elgiganten’s parent company, Elkjøb, expects to significantly increase the number of outlets in the Nordic region in the coming years, which will only put greater demands on the central warehouse’s ability to pick quickly, correctly and more efficiently.
Elgiganten currently stocks approx. 3,500 products and expects to reach over 4,100 by the end of 2009.
New flexible pick and pack solution
"Our e-business channel is currently growing at a rate of 50% per annum, just as our product range is also rapidly expanding. In 2007 we contacted Dematic with a view to developing a so-called Split Case Module, which can split smaller orders into pick to cartons," explains development manager Andreas Thimour.
The system enables the central warehouse to efficiently:
handle the 15 % annual increase in product volume
handle the increase in pick and pack volume
handle the 50 % annual increase in e-business order volume
enhance picking efficiency for small orders
attain almost 100 % pick accuracy
Professional project and positive results
"In 2006 we carried out an initial needs analysis for a new picking system. In 2007 we entered into collaboration with Dematic and conducted the first tests. In February 2008 we tested the system together with our WMS and in May 2008 we became fully operational. Since then we have continued to optimise the system to improve its efficiency," says project manager Daniel Lundby, who goes on to say: "The areas Dematic is responsible for work perfectly. They have been extremely professional, delivered high quality and have been quick to respond to challenges as they have arisen".
Products divided into picking zones
The system is a so-called ‘island of automation’ located within the 100,000 square metre central warehouse, which handles split case order picking for e-business customers and the chain’s 247 Nordic outlets. It is a ‘zone-routing system’ where order cartons are conveyed to the relevant picking zones where the products for the order are located. Zones that do not have product required for the order are skipped. The division into picking zones allows the warehouse to improve the speed, efficiency and responsiveness of order fulfillment.
Fast and slow movers are picked in separate sections so that the system and organisation can be geared differently to optimise productivity.
Warehouse staff pick mobile phones, MP3 players, curling irons and digital cameras by Voice Picking. The pickers wear a small belt-mounted voice terminal and headset with microphone. They receive directions verbally and confirm tasks verbally to the Voice terminal. Warehouse staff have their hands and eyes free at all times so they can pick the right products in the right order and concentrate on actual product handling. Gone are the physical picking lists or the terminal with its picking list, which constantly requires using hands and eyes to navigate or sign for the completed task.
The voice terminals – supplied by Vocollect – maintain wireless real time contact with the voice-control system and Warehouse Management Software (WMS). The Voice terminal reads out pick location and quantity instructions to the picker, who confirms the completed picking assignment by reading out the last three numbers of the product’s EAN code. This ensures the right product is picked.
"The last detail is important because many products are valuable and in some cases will be dispatched directly to the end customer," explains Andreas Thimour.
Voice picking has delivered clear benefits such as:
improved productivity by up to 35% over paper or RF picking
almost 100% picking accuracy
reduction in the time spent training new staff
reduction in staff turnover
Flexible use of manpower
The pickers can easily assume other duties in other parts of the warehouse, such as picking pallets when there is less of a need for pickers in the zone route system.
"Conversely, we can also increase the number of pickers in the zone routing system during peak periods such as at Christmas," explains Daniel Lundby.
It is far easier to scale the number of pickers in each zone with Voice Picking compared to more conventional picking systems such as Pick to Light.
The system automatically ensures that all cartons at all times are upright and ready to be packed, just as the closing of cartons also takes place automatically.
Five good tips for implementing the picking system
Daniel Lundby and Andreas Thimour highlight five important points to consider when implementing new warehouse solutions:
1. Chart and analyse the product structure beforehand
2. Be especially aware of system integration between the PLC and WMS interfaces. Establish early dialogue and aim for the simplest interfaces possible
3. Be clear about what you want to achieve and the stability of the work situation
4. Be sure to communicate relevant information to operators. This can be done by training superusers on all shifts and by ensuring that they are actively involved in the project from start to finish
5. Establish as clear a transition as possible from the implementation project to daily operation by involving the operational organisation