Ocean Spray Cranberries was thirsty for a solution to its inventory-tracking troubles. The company was having such difficulty locating inventory within its five massive U.S. facilities that it frequently sent customers the wrong shipments. Another critical problem for the company was that it was sometimes so slow in locating merchandise within its own storage areas that the stock spoiled before it could be shipped. Since implementing a bar code-based system that relies on radio frequency data communications (RF/DC), however, the organization's warehousing activities are smoother and inventory accuracy has improved to more than 99%.
Perishable Stock Introduces A "Juicy" Challenge
Established in 1932, Ocean Spray, a leading producer of canned and bottled juices and juice drinks in North America, is a marketing cooperative owned by nearly 900 cranberry and citrus fruit growers in the United States and Canada. Products fall into three basic categories: juices and juice drinks, sauces, and fresh and dried fruits. Annual sales total $1.45 billion.
"One of our big problems involves getting proper rotation of our inventory," says Bobby Maas, Midwestern logistics manager at Ocean Spray's Kenosha, WI, plant. The plant, which incorporates more than 450,000 square feet of manufacturing and warehouse space, was the first site to implement the new system. "When dealing with food products, obviously you need to ship the oldest first," Maas explains. This wasn't easy when workers trying to load a shipment didn't know where to find the necessary products.
Likewise, employees who were responsible for putting away finished goods inventory in a warehouse location had to drive their forklifts up and down the storage aisles to find an empty row. Less common, but more dramatic, were the company's struggles in halting shipments or issuing recalls of merchandise due to potential quality problems. "When we did a code trace, we'd have to go back and manually review the bills of lading which had handwritten code dates of when products were shipped to customers," Maas says. This process used to take four to five hours to complete. Now, detailed system records and an abundance of online information allow the organization to perform this function in two minutes.
Bar Codes Plant Seeds
The warehouse management system (WMS) starts off in the putaway area. Code-128 bar codes, representing both the flavor and the SKU number of a case of finished goods inventory, are used to generate similar bar codes for each pallet that is about to be stored. Pallet labels originate in one of two ways: for merchandise that has come off a single-product production line (one that is used to produce the same product for an entire day or shift) or a multiple-product line.
In the case of the latter, the company uses a CiMatrix 7500 fixed-position scanner to read case labels as they are loaded onto a pallet. This information is sent via hard-wired communication lines to a Hewlett-Packard 486 PC that functions as a label-printer server. It generates the necessary bar code format and sends it directly to a combination Zebra Technologies model P105 laser printer and Imtec 3500 series automatic applicator. The applicator, which is run by a CiMatrix ScanStar controller residing on the 486 PC, affixes the label to the pallet once its contents have been stretch-wrapped.
Single-product lines, on the other hand, do not rely on the scanning of case-level bar codes at the end of the production process to initiate the pallet-label printing process. Rather, the setup process for each of the single-product lines automatically generates a Code-128 bar code (using the same kind of Zebra equipment) that will be applied to the first pallet of materials as it comes off the line. When a forklift driver scans the putaway location tag that the system has assigned to this pallet, a label is automatically generated for the next one. "That way, they always have a pallet label waiting for them for the next pallet," says Fred Smith, vice president of software development with Applied Tactical Systems (ATS), of Fairfield, NJ. ATS was the project's systems integrator.
RF/DC Becomes Integral To The Putaway Process
During the putaway process, the system's RF/DC capabilities come into play. In this area, it doesn't matter whether a forklift driver is working off of a single- or multiple-product line. Either way, the driver begins in the pallet pickup area by scanning a pallet's bar code with a long-range scanner attached to a vehicle-mounted wireless computer. The wireless computer communicates with an omnidirectional antenna wired to a local area network (LAN).
Also on the network are two additional Hewlett-Packard 486 PCs, one of which houses communications programs specific to each of the wireless computers and acts as an RF server. These programs are used to interrogate files contained in the other PC, which functions as the LAN's file server, as well as to send replies back to the terminal that requested it. Within seconds, this information shows up on the wireless computer's screen, indicating exactly where to store the merchandise whose bar code the driver just scanned. Upon reaching that location, the driver scans a Code-128 bar code (printed on standard adhesive stock with the Zebra printers), thereby confirming the materials are in the proper place before picking up the next pallet.
Staff Alerted To Carrier Arrival
A similar process ensures that Ocean Spray fills and ships orders quickly and accurately. Customer orders are downloaded from an IBM 9673 mainframe. This step is accomplished through a separate Hewlett-Packard 486 PC running Microsoft's SNA (system network architecture) Server gateway software, with data being fed into the WMS LAN's file server. When a freight carrier arrives at one of the dock doors to pick up an order, an employee there will use a Hewlett-Packard or a Gateway 2000 PC to check it into the system by typing in the order number. The procedure calls up a quantity and other information regarding the order. At the same time, the system will automatically look for a forklift driver who has signed on to the network. This is a function accomplished by keying the employee ID number and password into a wireless terminal. This function is contingent upon the worker's not currently being busy or performing a task of lower priority, such as stock replenishment. Though a message printed on the unit's screen, the system will instruct the driver to begin the shipping process.
Assuming the customer has been defined as a first-in, first-out (or FIFO) customer, the system will then select the oldest product available and direct the driver to its location. Upon arriving at the assigned row, the driver simply scans the label of the pallet located there. If it's the appropriate label, the driver will be directed to take the product to the shipping door where another driver is waiting before s/he can begin the next pick. If the label scanned during the order filling process is not the one the system is expecting, the system has the ability to help a forklift driver find the right merchandise. "When the forklift driver scans a label, the software makes sure the inventory is indeed shippable or that its not on hold because there may be something wrong with it or that it hasn't expired," adds ATS' Smith. "You get an instant edit at the time of scanning."
Likewise, if a driver notices a picked pallet includes a damaged case, s/he can press a function key on the RF/DC unit to notify the system and receive directions to the appropriate reclamation area. When the merchandise is dropped in this spot and the location label posted there scanned, the driver will be sent to pick up another pallet. Finally, the company will print no bill of lading until the order associated with it has actually been filled (at this stage, the company also issues advanced shipping notices (ASNs) to it's EDI customers). So rather than sending out a preprinted bill that has been modified with a pencil or pen, the true bill is sent. This is done to reflect the fact that the manufacturer may have made substitutions or decided to ship fewer cases than were actually required. "We always have an accurate bill of lading," states Ed Mahoney, lead systems analyst at the Lakeville, MA plant.
Putting The Squeeze On Shortages And Shipping Functions
Ocean Spray now can compare its incoming orders to inventory levels kept by the system to anticipate and attempt to head off seldom-occurring shortages of particular items. "The system also gives us good dock control," adds Maas. "At any point, anybody in the plant can look on a screen to know which customer order is being loaded, what percentage of the load is on the truck, what exact products have been put on the truck and which are left to be put on the truck," he explains. "Any time a customer wants to know where his order is, that kind of information is readily available [via phone call to a customer-service representative]."
By the same token, the system provides the company with tighter control of its shipping activities. In this area, Mahoney explains, "Not only do we have the visibility of what carrier trucks are at individual shipping doors, but we also know how many trucks have been checked in and are sitting out in the yard waiting for an available door." Rather than relying on a worker's memory to keep track of activity at as many as 16 different doors, the installation allows for better man power scheduling and the ability to book appointments with carriers in advance. Thus, the scheduling of the company's shipping flow is improved.
Order Errors Dry Up
Equally important, bar codes have all but eliminated incorrect shipments. In the past, Maas notes that because workers relied on there eye balls instead of scanners, "it was quite common that people would get the wrong product because somebody read a piece of paper wrong, went to the wrong row, or took the wrong merchandise to the truck." But since installing the system, he adds, "we obviously get the right products on the truck, so our customers are happy."
Other system advantages include better stock rotation, reduced labor cost, lower scrap rates, quicker payment though earlier invoicing and an inventory accuracy rate of 99.8%. At Kenosha, this figure used to fluctuate between 96% and 98%. "That doesn't sound like much of an improvement," Maas allows, "But when you're working with many millions of cases, it's a lot." Perhaps the systems most impressive figure is the fact that, although Kenosha's payback period was expected to be five years, the aforementioned improvements allowed the company to recoup its investments there in less than three years.
Careful Planning Underlies System
Much of the project's success stems from the fact that Ocean Spray has taken a measured approach to all stages of its implementation. The project was born in 1992 when Maas, then project manager at the Kenosha location first had the idea that bar coded, RFDC-assisted WMS could help the plant keep pace with its 15% increase in case volume and 10% rise in SKU count.
After spending about five months establishing detailed system requirements and specifications, the company selected ATS. The firm supplied all the necessary hardware and software, as well as implementation expertise during system building and testing phases, which at the Kenosha plant lasted approximately six months. More recently, this process has been further shortened-it now takes approximately 60 days from the point when a plant's board of directors approves the necessary investments to complete an installation. The system is up and running at five sites; an additional New Jersey facility joined the network in October. Mahoney recommends implementing this type of project in phases because it would be too much for most companies to swallow at once.
Local Support Helps With Acceptance
Strategically speaking, Mahoney adds that, while many large corporations tend to force such projects downward from corporate headquarters to their satellite offices, "These kinds of projects really need to have locally-based champions within the company," because it is often these people who are the most effective at enlisting the support of their coworkers. Similarly, he notes that in selecting an integrator, "You're really looking for a partner with flexibility," a quality that can be assessed through the negotiation process and by checking a company's customer references.
As for the future, Ocean Spray is always interested in refining its software and operations. The most recent example of this approach occurred this summer when the Kenosha plant changed form being one that could support only single-product production lines to one that now handles multiple-product lines as well. "No business is static," says Maas. "And when our manufacturing processes change, the system needs to be flexible enough to fit our continually changing needs."
Fortunately, the fact that the system will soon be in place at all five Ocean Spray plants is helping the company to fine tune itself faster than ever. "It's almost like a common bond now," Mahoney states, a bond that allows the company's facilities and headquarters to get together for monthly conference calls and discuss improvements in its shipping and other operations. "If somebody in Sulphur Springs, TX, has a good idea, we now have a way of communicating it to our other plant locations, and we can almost standardize that within the system so that everyone gets the benefit of it," he says. With such arrangements in place, Ocean Spray's future for its inventory management and control looks "sweet."
What We Would Do Differently
Despite Ocean Spray's caution, Ed Mahoney, lead systems analysts at the Lakeville, MA headquarters admits, "We got some stubbed toes in some areas." Ocean Spray learned from experience what works and what doesn't when installing a new Automatic ID system. For instance, the company initially conducted all user training in a classroom setting before discovering that hands-on sessions delivered as close as possible to a location's start-up date are far more effective. Similarly, the Kenosha plant's experience has convinced the company to schedule fewer delivery trucks than usual for the first day that any site goes live. As with any new system, caution and moderation go a long way towards achieving success.
Squeezing Out Downtime
Designing applications on the order of Ocean Spray's WMS is never easy. According to Russ McCabe, Applied Tactical Systems (ATS) CEO, his company's largest challenge involved satisfying the request for 100% uptime. To meet this demand, ATS supplied a duel RF/DC backbone that eliminates the potential for the network to be crippled by a single point of failure, even momentarily. "If you take a look at the forklifts, half of the terminals mounted on them will be set for channel three, the other half for channel five," McCabe explains. "Accordingly every router/repeater location used throughout a given facility will actually contain two sets of this equipment, one communicating on each channel. "So, if by chance any one of those devices goes down," McCabe says, "its forklifts will switch to the other channel" which possesses enough capacity to handle the additional traffic with ease.
Similarly, the application's file server and RF server are configured identically so that one can instantly take over for the other in the event of a server hardware failure. These tactics have resulted in the network's uptime efficiency actually exceeding Ocean Spray's expectations. Rather than calculating downtime in terms of days or weeks, McCabe states, "It's measured in hours per year," and usually is the result of an extraordinary occurrence such as the heavy storm which recently knocked down a portion of the Kenosha facility's roof. After all, even the most robust RF/DC network sometimes is no match for Mother Nature.