Automated distribution systems provide bakers with many advantages, from
improved accuracy and efficiency to reduce costs.
The baking industry is in constant flux with new trends, customer demands and changing market conditions. In an environment of constant change, it is difficult to keep all aspects of an organization synchronized. How do baking managers know their distribution methods are still optimized to meet the needs of their customers and bakery?
A myriad of distribution technologies are available, which include, but are not limited to, paper pick lists, bar code scanners, pick by voice, pick by light, radio frequency identification tags (RFID) and even lights-out automation. As baking managers deal with production, formulation, human resource issues and other challenges, not much time is left to evaluate different methods of distribution.
As a matter of fact, if you were to ask bakers about their latest investment or efficiency improvement, they will usually point to a piece of production equipment. The investment might even be a complete new line for a new group of baked products to cash in on the latest trend. Very rarely will bakers point to the distribution area when talking about operational improvements and expansion plans.
On the contrary, areas once reserved for distribution were likely used to accommodate more production and packaging capacity. The result is that over time, many bakers find themselves distributing a greater volume and variety of baked foods with the same distribution methods they have been using for five or 10 years. How can baking managers know if their distribution processes and systems are best suited for their current environment? When do baking managers know when their distribution methods are in need of a diagnosis?
Baking managers should look for two factors that indicate their distribution process is in need of an overhaul or at the very least a check up, notes Graham Jones, director, Logistics Planning LTD, Devize, England. “As the work required to manage and reconcile orders increases, the more a baker would benefit from a computer-aided picking system,” Jones says. “Therefore, the first indicator to look for is an increase or addition of office staff to reconcile and manage orders. Secondly, an increase in SKUs, throughput and/or delivery drop points create more complexity in the picking process. A significant increase in these areas would indicate that a different distribution process would aid in handling the added complexity.”
Reconciliation was the igniting spark for Orlando Baking, Cleveland, to upgrade its distribution technology. When Orlando Baking wanted to improve the reconciliation of inventory from production to truck to customer, the company decided an upgrade of its paper-based picking system was needed. “Our previous paper-based system was OK, but with regards to the reconciliation of products, we kept struggling. Identifying and correcting errors was simply too time consuming and error prone,” says John Anthony Orlando, executive vice president of operations for Orlando Baking,
Until May 2008, Orlando Baking had used a paper-based system to distribute finished products. A paper pick list was produced for each route delivery that needed to be made for that day. Then pickers, as directed by the printout, would take the appropriate products from a central holding location and load the trucks.
Orlando Baking ultimately decided to install a light directed distribution system. “Within a couple of weeks, we saw an improvement in the area of reconciliation, as well as a reduction in time to pick and load orders,” Orlando says. “Our reconciliation program continues to move forward very well, especially as we learn from the data that is available. Balancing inventory from production to truck to customer requires significant work to integrate the systems of each area; however, moving away from a paper-based picking system brought us much closer to where we wanted to be.”
With a light directed system, a picker grabs a stack of bread trays and instead of looking at a piece of paper to distribute the trays, the picker looks at displays that are hanging at each ship point. These lights show the number of trays needed. Typically, these displays have multiple lines or colors, so a team of up to five or six pickers can work on the same ship points. With light directed picking systems, pickers are quicker and more accurate. Pickers save time because their hands are never occupied managing a paper pick list. Additionally, a picker can more quickly and accurately read one of the six lines of information illuminated in a specific color on the display. Converting to a light directed system versus picking products while carrying paper and pencil proved to be far more efficient and cost effective, Orlando notes.
“Hands-free picking is king. There is no time lost managing a piece of paper or even working a scanner,” says Heinz Ahlborn, founder and owner, Distribution to Demand LLC, Indianapolis. A good rule of thumbis when a bakery moves from paper-based picking to WMS-guided(warehouse management system), hands-free technology, there is a 20percent to 30 percent gain in efficiency, which represents a low-hanging fruit opportunity for many companies.
With regards to any computer directed picking process, “most people can see there is a potential for cost savings associated with picking hour reduction. However, there are other advantages that are not so obvious when pickers no longer pick orders with the aid of a paper and pencil,”Jones says. “These hidden advantages include increased accuracy,ingredient traceability, visibility with regards to exactly what products were sent to which customers (and what picker and driver sent them there), reduction in time to reconcile and enter orders, better hygiene and even a reduced carbon footprint.” Many of these hidden advantages are possible because an electronic record exists of every transaction that takes place, which simply is not possible with paper.These records enable a manager to better manage and even track productivity and error rates by each individual picker. “If you can't measure it, you can't manage it,” Jones adds.
Finland's largest baker, Fazer Bakeries, which owns and operates 16 bakeries and one flour mill, also replaced its paper- based picking systems. “The main drivers for Fazer Bakeries to move away from our paper-based system were to reduce labor costs, improve ergonomics and deal with labor availability challenges,” says Heikki Kiiski, project manager,Fazer Bakeries, Helsinki.
Fazer Bakeries installed light directed picking systems, in addition to two fully-automated gantry systems. The fully-automated systems are used at Fazer's two largest bakeries, which move 30,000 to 40,000 or more trays of bread every day. “The fully-automated system requires much less labor, but the skill set of that labor is much higher. With a fully-automated system, the operator must be PC literate and mechanically inclined, whereas with the light directed system, one only has to look at a computer screen and read numbers,” Kiiski says.Although Kiiski is happy with both systems, he did note, “the payback for the fully automated system was much longer than the light directed system.”
In Fazer's automated system, stacks of bread trays are automatically placed under a gantry immediately after production. The area under the gantry serves as a large holding buffer with each stack containing only one SKU. Customer orders are downloaded to a robot, which moves from stack to stack picking up trays as needed until a stack of mixed SKUs is collected and ready to be shipped to the customer.
“Full-scale automation is good in theory. However, to make full-scale automation good in practice, end-users must make certain their supply chain is fully aligned with their customer requirements,” Jones cautions. Both machines and computers are powerful tools, but they will perform precisely as they are instructed.
Another distribution tool that may be on the horizon for bakers is RFID tags.An RFID tag stores information and transmits that information without someone having to scan a bar code. If an RFID chip is embedded into a plastic tray, then information about the products in that tray, such as the SKU, quantity of items, lot number and expiration date, could bereadily transmitted. The RFID tag could even provide an information trail to keep track of trays.
The cost of making and/or retrieving RFID tags has been too high for their wide-spread use. “Applications, which already have a reverse logistics nfrastructure in place, such as returnable trays for baked products,can take advantage of the overwrite and reuse capability of RFID tags and therefore avoid one of the costly hurdles associated with the single use of RFID tags,” Ahlborn says.
If significant growth and business changes have taken place since the most recent review of a bakery's distribution methods, then it is likely that those methods are no longer optimal. The optimized distribution solution may contain light displays, scanners or even embedded RFID tags, but it is sure to deliver cost savings, increased accuracy and transparency.