New national DC to meet growing DVD demand

Roadshow Entertainment's new national distribution centre at Prestons, Sydney.

Faced with the explosive demand for DVDs over the past few years, Village Roadshow, which manages physical warehousing and distribution for Paramount, Warner Home Video and Roadshow Entertainment, recently opened a new state-of-the-art national distribution centre at Prestons, in Sydney’s outer western suburbs.

The Prestons DC is Village Roadshow’s single national distribution centre, supplying 8,000 to 10,000 retail outlets throughout Australia. It is strategically located in Sydney’s outer western suburbs, very close to the M5 and M7 motorway links.

Opened in October 2006, it is a complete distribution solution incorporating full-case and split-case picking, a variety of pick modules, conveyor routing and sorting, as well as the latest software and information technologies to enable efficient order management and material flow.

The facility features an array of sophisticated information technologies including the latest order fulfilment technology, Dematic pick-to-light, voice and radio frequency technologies, as well as Dematic PickDIRECTOR, plus an integrated conveyor and automatic sortation – all tightly integrated with a Manhattan warehouse management system and Village Roadshow’s SAP ERP system. It also includes 11,400 bulk reserve locations, 7,200 binning locations, 480 carton-live-storage locations and 64 ground-level pallet picking locations.

Background

Growth in the DVD market has been extremely dynamic and rapid, and as prices have decreased, demand has increased.

As Chris Carroll, Roadshow Entertainment’s general manager, warehousing and distribution, points out, DVDs are now regarded as a mainstream purchase.

“These days, box sets of popular TV series and the release of blockbuster movies add to the demands on suppliers, especially if they are part of a sequel to movies,” said Carroll. “The release of the latest Harry Potter movie, for example, will prompt demand for the earlier releases on DVD.

“As a result of the phenomenal growth in the market, in mid-2005 we began examining our operations as we became aware our existing systems would not cope with the predicted growth,” he said.

For 12 years, the company had been operating from a DC in Bonds Road, Punchbowl – initially from one building and later expanding into an adjoining facility.

“However, this building was in a residential area, which forced restrictions on hours of operation and it wasn’t possible for us to work at weekends,” said Carroll. “By mid 2005, it was clear that new infrastructure would be required and we actually examined the possibility of expanding capacity at the existing facility by putting in a two-tier mezzanine and applying the latest technologies such as voice and pick-to-light.

“However, ultimately we realised that this would only prove to be a short-term solution and that the best business decision would be to move to a new facility.”

Requirements of the system

According to Carroll, there were four key objectives in developing a new solution for Village Roadshow.

They were to:

• Increase throughput.

• Reduce labour costs.

• Measurably improve customer service levels.

• Provide full management and customer visibility.

Village Roadshow provides a door-to-door service, with its DC operating on a pick, pack and ship basis, delivering to up to 10,000 retail outlets nationally. These can vary from the major retailers and major rental organisations to ‘mum and dad’ corner shop operations.

“The profile of orders is also wide and varied,” said Carroll. “Major retailers can order up to 100,000 DVDs in one particular order, while older items on the backlist catalogue are ordered less frequently and in much smaller quantities – making the picking task considerably complex”.

Seasonality is another factor affecting demand and causes volumes to vary widely. Most months, the DC processes around four million units, but in periods leading up to Christmas Day, Mothers Day and Fathers Day the number of units shipped can reach peaks in excess of five million.

“Typically, orders from major retailers include 60 titles, with the top 12 titles accounting for 80% of the volume. These fast-moving items are picked directly from pallets, while those titles required in smaller numbers are picked from carton live storage (CLS) and binning areas,” said Carroll.

Improved customer service

“The combination of this modern, state-of-the-art DC and its strategic location have enabled customer service levels to be substantially improved across a range of areas,” he said. “With the new DC and the implementation of Dematic PickDIRECTOR, SAP and the Manhattan Associates warehouse management system, we can now offer a far more transparent service with clear visibility,” he said.

“In addition, delivery lead times have been reduced, from an average of a two-day turnaround from the previous Punchbowl DC, to an average of one-day, or same-day turnaround with the new facility.

“This allows retail outlets to plan more accurately demand for titles, to hold fewer stock items on site, and to more quickly respond to requests from retail customers for their own out-of-stock titles.”

The distribution of DVDs is largely driven by release dates and promotional activity. Generally speaking, Paramount, Warner Brothers and Roadshow require new releases in stores early in the month to coincide with marketing strategies.

In order to balance the workload, Village Roadshow has developed a sophisticated forecasting system that enables pre-picking, storing and packing, and holding of orders for up to five weeks in advance of release.

“We have a planning manager who is in constant contact with Warner Home Video, Paramount and Roadshow, to understand what titles are in the pipeline and what volumes to expect.

“With this new facility, we are far outstripping the performance of our previous DC,” he said. “For example in July 2007, four million units were shipped, compared with 2.9 million units for the same month last year.

“Simultaneous delivery of new titles to retail outlets throughout Australia ensures that one retail outlet is not disadvantaged compared with another, and that availability of titles in stores precisely coincides with marketing campaigns.

“In addition, the new DC offers a far more transparent service under which studios can view the progress of orders in real time, with accurate activity reports on a daily basis – allowing them to track progress, plan in-store campaigns or advise retail customers of when a title will be in stock,” said Carroll.

Roadshow's Chris Carroll (right) with Soeren Schauki from Dematic.

Roadshow’s Chris Carroll (right) with Soeren Schauki from Dematic.

Making the move

Managing the shift from the old distribution centre to the new facility at Prestons was a carefully planned process.

The company began the shift in July 2006, initially moving small proportions of its in-house Roadshow business across so that any bugs could be ironed out before the Warner and Paramount products were transferred. All the business was moved into the new facility by October 9, 2006.

“Our new national DC has delivered substantial benefits to Roadshow and its customers,” said Carroll. “We have seen a significant improvement in productivity, with throughput volumes increased by up to 70% since we moved to the new DC, while staffing levels have remained constant.

“And in November 2007, the new DC processed 5.3 million units – the biggest month on record,” he said. “The explosive growth in DVDs was not predicted and as they have now become mainstream consumables demand is set to continue for some time,” said Carroll.

“The new distribution centre has enabled Roadshow to provide our customers with a significantly improved service, one that will cope with future organic growth of the business and new business opportunities that may arise,” he said.

The solution

In developing the new DC, Village Roadshow and systems supplier, Dematic, collaborated to design and install a fully integrated operation.

The system features innovative order fulfilment technology, material flow and order fulfilment software, warehouse management software and an integrated ERP system.

All incoming stock is checked on receipt and allocated either to the bulk reserve storage area or, in many cases, directly to one of the four main picking areas. As orders are received, they are allocated to

either full-case or split-case picking areas.

Village Roadshow uses Dematic’s sophisticated PickDIRECTOR software package for order induction and processing. PickDIRECTOR’s Graphical User Interface (GUI) provides staff a flexible workflow control and workload analysis tool that gives staff great visibility of the order fulfilment and picking process.

Three different shipper sizes can be chosen depending on the cube requirements of each order. Labels are placed onto each order shipper as it is inducted into the system, with the label serving as an identifier for picking requirements as the order travels from zone to zone.

As each order arrives in a zone it is scanned. The scan enables the activation of a variety of picking technologies including pick-to-light, voice and RF data terminals – all supplied by Dematic.

There are two separate points of order induction, one located at the start of the fast-moving split-case picking area and the other at the beginning of the medium- and low-moving pick zones.

The picking task divides into two main categories: full-case and split-case picking.

Full cases are picked from high-level order pickers using labels and RF terminals.

Labels are printed as picking batches, including start and end-of-batch labels, with location, SKU and the actual pick are all confirmed via RF.

The split-case picking function has three separate modules designed to cater for varying movement rates:

• fast-moving

• fast-to-medium-moving

• slow-moving.

Fast-moving split-case items, which primarily consist of new releases or high volume ‘re-promotes’, are picked directly from pallets using pick-to-light technology. Lights are located on pallet beams above each pallet location and are activated as orders are scanned.

Reserve storage is available above the fast-moving split-case area, ensuring optimal efficiency when replenishment is required. Older catalogue stock represents the majority of medium-moving and slow-moving lines. Fast-to-medium movers are located in five zones, with each zone consisting of CLS bays. The CLS zones are fitted with pick-to-light technology, activated by scanning the barcode on the order shipper. Use of pick- to-light in these zones speeds the picking operation and increases accuracy.

Slow-moving catalogue items are stored in shelving locations in a central zone, with orders picked using a flexible combination of voice and RF terminals.

The system has a special functionality designed to offer additional picking flexibility in meeting peak demand by allowing voice and RF terminals to be used in all zones concurrently with pick-to-light.

Management of material flow through the split-case picking areas is a complex task.

Smart software coordinates order management and material flow using a zone-routing conveyor system.

Orders can flow through all zones as necessary or skip those zones where picks are not required (zone skipping and early order exit functionality), helping to avoid bottlenecks in the conveyor system. The system also provides recirculation capability for orders that cannot be diverted to a specific zone. This functionality keeps the systems operational when a particular zone is full.

Once orders have passed through each of the required picking zones, they are checkweighed before void filling, sealing and then sorting to one of ten dynamic sort destinations, which are allocated based on geographical groupings and/or dynamic ship dates, and are designed to simplify truck loading and shipping.

These sort destinations enhance the process of workload balancing and simultaneous delivery to various locations throughout Australia.

For more information contact Soeren Schauki at Dematic on (02) 9486 5555.

*Excerpt from MHD Supply Chain Solutions March/April 2008, pp.22-5.

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