Choosing a Warehouse Management System

Catherine Bastista da SilvaBryan BindleyOnochie Fan-OsualaLynn FrancoisMuhammad Karim

Simone KingYanru LaiOctavia LloydAriadna LoboNirmal Mikani

Caspers Company

1958 1976 1996 2005 2015Fritz Casper

buys first storeJoe Casper

buys companyBlake, Allison,

and Robby join the

company

53 locationsBlake becomes CEO &

Chairman

Caspers Company has owned and operated McDonald’s stores in Florida for nearly 60 years.

Franchising & Food Industry Franchising is a business model where the owner

(franchisor) of any successful product or service or method provides other business owners (franchisees) the right to use his business model and brand under certain conditions in exchange of fees and royalties.

In addition to an established and renowned brand name, franchisees benefit from the use of a proven operation system developed by the Franchisor.

They enjoy economies of scale in purchasing materials, supplies and services like marketing and other promotional activities, because of being under larger chain of operation.

Franchising & Food Industry As per the Consumer Expenditure update from

BLS for Jul-12 to Jul-13, the average household spending on away-from-home food was same as of 2008.

According to the NRA, there are about 990,000 restaurants in 2014.

NRA projected the industry sale to be a total of $683.4 billion in 2014 which will equal 4% of the US GDP.

The industry is also projected to employ 13.5 million people in 2014 — about 10% working Americans

The restaurant industry has shown a tremendous growth within the last century

Food franchises are considered to be the foundation of franchising.

An approximate 57% of franchise industry employees work in food industry.

Food accounts for 13% of American households’ budgets, as per USDA on 12-16-2014

Fast Food Industry The fast food industry saw an annual

growth of 1.4% from 2009-14 and a projected annual growth of 2.0% from 2014-19

There are 150,841 businesses in the United States

Market Leaders Share

McDonald’s Corporation 17.8%

Yum! Brands Inc. 11.1%

Subway 6.7%

Wendy’s 4.5%

Standardizing processes and equipment allowed for cheaper labor, faster cooking times, and consistency throughout franchises.

The success of the fast food industry can be attributed to increasing efficiency in logistics operations

Franchising at McDonald’s McDonald’s has over 3,000

franchisees (owners/operators) in US

Globally, McDonald’s operates in 119 countries

Through more than 35,429 restaurants

Either owned by McDonald’s or its franchisees

Serving 70 million people every day.

Over 80% of its’ restaurants were franchised in 2013

US sales are expected to grow an annualized 2.7% over the five years

McDonald’s Menu Historically, McDonald’s menu

has consisted of burgers, fries, desserts and beverages

In the last decade, the restaurant has introduced salads and other healthier options to cater to newer consumer preferences.

McDonald’s has recently promoted heavily its “Dollar Menu & More”

It has been making a bigger push into the breakfast segment by emphasizing its McCafe coffee.

McDonald’s Supply Chain The food supply chain starts from the farms

and involves processors, packers, distributors, transporters, and retail outlets

The McDonald’s supply chain is 100-percent outsourced

The company owns no factories and no distribution centers

McDonald’s has 16 major suppliers.

The most important KPI is ‘no item may ever be out of stock’.

In order to achieve this, the company works with several supply chain planning principles.

McDonald’s focus on strong relationships with suppliers has made them the leader in food supply

The FDA Food Safety Modernization Act In order to ensure safe food supply and reduce

the foodborne diseases the government signed into law the FSMA on 01-04-2011

The FSMA has four major themes:

Prevention Inspection, Compliance and Response Import Safety Enhanced Partnership.

Food Traceability FSMA requires that the FDA

establish record keeping requirements for high-risk foods to help in tracing products

As of now, the issue of traceability is still under development

Problem StatementThe selection of suitable Warehouse Management System (WMS) for Caspers Company’s new distribution center with specific emphasis for the unique requirement of food industry and consideration to the following capabilities:

WMS Functional FeaturesReceiving ProcessingQuality Control

Put-Away Procedures

Picking Procedures including Voice PickingReports and QueriesOrder processingLot or batch tracking

Storage optimizationProduct/Material TraceabilityCompatible with Caspers’ present data storing and management systemCloud and Mobile Compatibility

Caspers DC

• Current location is in Tampa, with a size of 30,000 square feet.

• New regional DC in Tampa under construction, with a size of 75,000 square feet.

Layout

• RDC is U-shaped warehouse, with receiving & shipping functions carried out on either side.

• 5 bays: 3 in ambient zone, 2 in cool dock.• Ambient zone has 3 aisles of racks that are 4

levels high. • Each aisle 12 feet wide for easy maneuvering. • Additional area w/o racks that hold stacked

products & completed orders while waiting for delivery.

Storage

• Currently at 128% capacity-not enough space.• Products sorted/stored based on where they

have been traditionally.• New/Promotional products received, they end

up being stored wherever there is space.

Storage

• 4 temperature zones.• Ambient zone doesn’t require temperature

regulation. Ex- paper goods, soda syrups.• Kept at room temperature, but varies due to

outside temperatures.• Cooler kept at 35-40 degrees F.

Storage

• Freezer kept 0 to -10 degrees F. • Items must remain frozen until prepared for

consumption.• Frozen items received or delivered, held in cool

dock at below 45 degrees F before transferred to freezer or temperature controlled truck.

• Products can’t have sudden change in temperature.

Storage

• Current DC-47% dedicated to cold storage.• New DC-72% dedicated to cold storage.• Once completed, Casper’s plans to offer cold

storage to other Tampa businesses, as cold storage is in high demand.

Equipment

• Pallet- Products arrive from suppliers with cases stacked on pallets.

• Pallets then unloaded from truck & placed on racks in correct temperature zone.

• Slip Sheet-sometimes used in place of a pallet.• Flat, and takes up less space than a pallet.• Allows more product to be part of 1 shipment.

Equipment

• Forklift- used to unload pallets from truck.• Used within warehouse to place or retrieve

items on upper racks.• Can be operated by 1 person.• Pallet jack- used to lift & transport pallets in

warehouse.• Can be operated by 1 person, used when a

pallet doesn’t need to be lifted high.

Equipment

• Carts- used to simplify deliveries to stores.• Store orders are picked and placed on carts. • Carts then loaded on truck and unloaded at

destination.• Empty carts returned to DC after unloaded.• 3 can fit on truck side-by-side vertically, but

only 2 horizontally.

Materials Handling Stages: Receiving

• HAVI Logistics – Deliveries 3x week - 1 day safety stock– Receiving 4 am until 12 pm (able to receive up

until 5 pm)• 99% shipments shipped to Caspers DC by truck– Full trailer loads preferred

Materials Handling Stages: Put-Away

• 3-4 Workers; Forklifts used to unload trucks • Surface labels checked to place similar packages together• Items do not have fixed location• All warehouse personnel have worked there a long time and

know where everything is– Slow items are placed on top shelves– Faster items are placed on bottom shelves– Plastics placed with plastics– Buns, patties, and vegetables placed in cold storage area– Coke syrup containers with respective cables placed in stack area of

warehouse• Counts are manually verified against receiving documents

Picking and Packing

Picking and Packing

• Picking sticker sheet• Cartons are moved on carts • Shrink wrapped and staged on dock before

being sent out• Pick sheet attached to unit load• Destination marked in unit load

Shipping

• Unit loads are staged at the dock• Temperature sensitive product staged in

ambient room• Carts are loaded onto the trucks• Pick sheet is included in unit load• Drivers deliver to branches• Trucks are not at branches long

• WMS: software used to control and monitor the movement and storage of materials within a warehouse and to process the associated transactions, including shipping, receiving, put-away and picking

• Key objective of WMS is to provide a set of computerized procedures for the management of warehouse inventory, space, equipment and people with the goal of minimizing cost and fulfillment times.– In the food industry, the WMS should offer

quality control and traceability functionalities

Warehouse Management Systems (WMS)

Vendor/WMS Evaluation Criteria

• Vendor related criteria– Vendor History– Vendor Financial Status– Vendor Future Plans– Vendor Customer Base

• System related criteria– System Support and Maintenance– System Pricing/Total Cost of Ownership– System Implementation Time– System Security– System Integration– Support for New platforms (e.g. mobile)

• Warehouse Management Functionalities– Voice Directed Technology– Design Usability– Warehouse Processes Supported

Vormittag Associates, Inc. (VAI)

120 Comac Street Ronkonkoma, NY 11779 – USA Tel: 1.800.VAI.7776 Support:

1.888.824.4435 Fax: 1.631.588.9772 Email: sales@vai.net

Web site: www.vai.netOffices also located in Florida, California and Illinois.

• Customers – 39 in the food industry and hundreds in a variety of other industries

• Size – 143 employees• Software functionality/Solutions – VAI’s S2K Enterprise Software

Dematic Corporation (1939) 507 Plymouth Ave. NEGrand Rapids, MI 49505Phone: 877-725-7500 Fax: 616-913-7701 Website: www.dematic.com Email:usinfo@dematic.com

• Number of Employees: 4,700+ (Small/Medium size)• Number of Customers: 55+ (Such as Adidas, Hanes, Vitamin Shoppe, and

Coca-Cola)• Founded in 1939 and is a global leader that provides a comprehensive

range of intelligent intralogistics and materials handling solutions that are reliable, flexible, and cost effective.

• They design, build, and life cycle supports logistics solutions that optimize material & information flow – from receiving to shipping, within the four

walls of the factory, warehouse, or distribution center.

Dematic Corporation (cont.)Software: Dematic iQ

Costs: Dependent on which features of software are desired.Strengths: Easy to manage. Continuous, real time improvement. Fast.

Reliable. Space Saver.Weakness: Learning Curve.

Made4net LLC (2005)

• Value Customers- Sprouts Farmers Market & Crest Fresh Market• Software functionality- WarehouseExpert Enterprise Edition• Cost- License + Service + Maintenance

Datex Corporation (1978)

• Offices in the US (Clearwater) and Canada• Microsoft Gold Partner• Inbound Logistics Top 100 winner• Top customers: Motorola, Honeywell, LXE,

Intermec, Del Norte, Colony Brands, Eskimo Cold Storage

Recommendations

• Warehouse Management System• Vendors

-Vormittag-Dematic-Made4net-Datex

Next Steps

• Vendor contact—demo• Define vendor selection criteria• Contact current customers• System setup prior to new DC completion• Implementation and training• Measure and control

Questions?

Thank you for your time!