Energizing Your Warehouse
New Strategies For Greater Efficiency
In a tough economy, the universal battle cry is, "Do more with less!" We're all looking for new ways to squeeze a few more dollars, or a few more hours, from our operations while also delighting customers with ever-better service. In many cases, we're trying to achieve those goals while saving energy and reducing our environmental impact. Warehouse operators can employ many excellent strategies to boost efficiency: warehouse management systems, wireless communications systems, materials handling automation, and well-designed cross-docking, for starters. Companies also are applying techniques that you might not have heard about before. Here's how some logistics professionals are making their warehouses smarter, faster, greener, and more economical. LIGHTS, ACTION One simple technique for saving energy and cutting costs in a distribution center is to replace older lighting systems with high-intensity fluorescents. Warehouses traditionally have used mercury vapor lamps, which give off a bluish light, or sodium halide lights, which have a yellow cast, says Geoff Sisko, assistant vice president at TranSystems, a logistics consultancy in Woodbridge, N.J. Both types of bulb cast a cone-shaped light, making them a less-than-efficient warehouse solution. "With these bulbs, items high up in the racks are cast in shadow," Sisko says. "And low down on the floor, wasted light spills into areas that are covered by racks." In addition, such lights take a minute or two to achieve full brilliance. "They're also power hogs," Sisko adds. Many companies are retrofitting warehouses with T5 fluorescent bulbs and fixtures (T5 refers to the diameter of the bulb, 5/8 of an inch, in this case). These bulbs emit a lot of light, and because of their horizontal shape, they cast it in a linear pattern. "Arranging the lights correctly can provide good light from the top of the racks to the bottom along the aisles. And in open space, the lights can be positioned to distribute lighting evenly," Sisko says. Officials at Lion Brand Yarn Company, the oldest yarn brand in the United States, were so pleased with the fluorescents they installed in a Carlstadt, N.J., warehouse five years ago, they're now retrofitting a second building with that technology as part of a major renovation. "We currently use old-style fluorescent bulbs in the DC's ceiling," says Marty Leiderman, Lion Brand's distribution manager. The lighting contractors have specified T8 bulbs, which measure one inch in diameter. "The contractors are tailoring the light to the application we need," Leiderman says. "As a result, we'll have the proper amount of even lighting throughout the building." The new fixtures and bulbs are more energy efficient than the equipment that was available when the building was erected more than 30 years ago. "We get better light cheaper," Leiderman notes. Lion Brand expects to net a return on its investment in the new fixtures in less than two years. Some companies are going one step further and using motion detectors to control their fluorescent lighting. "If the detectors don't sense movement in an aisle for a predetermined amount of time, the lights shut off, and only a few bulbs stay on to provide minimum light," Sisko explains. "As soon as somebody moves into the aisle and motion is detected, the lights come back on." Another energy-saving technique that can be tied to a fluorescent lighting system is "light harvesting." When bright sunlight enters a room, a sensor sends a signal to a switch to dim the lights. When clouds roll in or the sun moves to the other side of the building, the fluorescent lights grow brighter. It has only recently become possible to control fluorescent fixtures in this way, Sisko notes. This technique is obviously best suited to buildings with large windows -- not a common warehouse feature. "Manufacturing plants currently use it, and schools and offices could use it," Sisko says. A warehouse could install such a system in areas near the loading docks, which do get outside light. If anyone is going to find a practical way to harvest light in a warehouse, it might as well be a company that makes its products from the fruits of the harvest. When Eden Foods, a Clinton, Mich.-based purveyor of organic foods, built an addition to its warehouse last year, it ran a five-foot-high window made of polarized plastic around the top of the facility. "The polarized plastic reduces the amount of lighting needed in the building," says Michael Potter, Eden's president and chairman. "It also lets in warmth in the winter and blocks the sun in the summer to minimize energy consumption." Optimizing the light and other elements to reduce the impact on the earth is part of Eden's corporate culture. So when it came time to build the 72,000-square-foot addition, Potter opted to follow guidelines established by the Leadership in Energy and Environmental Design (LEED) Green Building Rating System. Buildings earn LEED certification for attaining goals in sustainable site development, water savings, energy efficiency, materials selection, and quality of the indoor environment. The addition, completed last year, incorporates recycled steel, highly efficient lighting, and a plumbing system that includes low-flush toilets. Eden also installed a bright white roof designed to reflect light and heat back into space, rather than absorbing it and contributing to global warming. In the near future, Potter hopes to make the warehouse even more sustainable by adding alternative energy sources, such as solar panels or a wind turbine. "Solar panels are becoming increasingly more cost effective," he says. A vendor exhibiting a windmill at a recent natural products expo told Potter he could build one sized to Eden's needs for $10,000. "That's a reasonable price," Potter says. "A significant return on investment and a positive impact on energy consumption with windmills is affordable, even for us." GOING UP Another way to achieve new heights in warehouse efficiency might be, simply, to achieve new heights. In crowded Asian cities, for example, vertical warehousing helps some companies beat the high cost of land, cut transportation costs, and reduce the operation's environmental impact. Multi-story distribution centers haven't yet caught on in the United States, but that could change, says Steve Campbell, senior vice president, director of environmental and development services at AMB Property Corporation, San Francisco. "Multi-story facilities are being discussed at length in the Los Angeles port area, and in the New York/New Jersey market," Campbell says. Officials at those ports are looking for ways to provide adequate distribution capacity in areas where there's little room left to expand. AMB owns, operates, and develops industrial real estate in the Americas, Europe, and Asia, and its portfolio includes about eight million square feet of multi-story warehouse space. Tenants of AMB's vertical warehouses include logistics service providers Exel, Expeditors International, BAX Global, and FedEx. Some shippers also have embraced the concept, Campbell says. A multi-story warehouse allows a company to operate in a dense urban area, rather than locating miles from the population center. That strategy offers several benefits. First, it shortens transit time to customers. "Companies in dense urban areas tie up a significant percentage of total operating cost in transit time," Campbell says. "When they start to cut transit times, efficiency soars." The second benefit is environmental; shorter trips burn less fuel. Also, it's easy to design "green" features into a facility that supports dense usage on a small site. Third, a multi-story warehouse offers much more usable floor space per square foot of land, a real boon in a city where land is expensive. "A typical floor-area ratio (FAR) in the United States is about 35 to 40 percent," Campbell says. "In Japan, FARs reach as high as 375 percent." A multi-story warehouse naturally requires different design solutions than a single-story facility. One approach for moving goods in and out of the higher floors is a pair of spiral truck ramps, one for upward-bound traffic and one for downward-bound. Another solution is to serve just one floor with a ramp, and the balance of the building with both pallet lifters and freight elevators to allow for storage of goods that don't move in and out as quickly. Because the upper levels of a multi-story warehouse must be engineered to bear heavy loads, a vertical warehouse can be more expensive to build than a one-story facility. If the cost of acquiring the land represents at least 50 percent of the total construction cost, going vertical is a good idea. "Many Asian markets, such as Tokyo and Osaka, Singapore, and certain Chinese markets, have reached that tipping point," Campbell says. American cities are nowhere near that tipping point, especially in the current economy with its depressed real estate prices. And certainly, Campbell concedes, recent trends in the United States have favored construction of mega-sized DCs on the outskirts of metropolitan areas. But that trend could reverse itself in favor of development closer to the urban core. A LIFT FOR LIFT TRUCKS Whether the warehouse occupies one story or more, you still need to move goods from one section of the building to another. Forklift trucks provide another focus for companies that want to make warehouse operations more efficient and economical. Some companies that operate large electric forklift fleets have been testing the use of hydrogen fuel cells to power them. Because they emit nothing but water vapor, these cells are environmentally friendly. And while it takes hours to recharge conventional batteries, refilling hydrogen cells takes just seconds. "Companies place a hydrogen tank outside the warehouse, and refuel the lift truck just as you would a car," Sisko says. Another plus is that a hydrogen fuel cell emits the same level of power all day. That's not true of a conventional battery. "As the battery begins to discharge, the power rating decreases. Less and less power is generated, and the lift truck slows down," Sisko explains. Whatever its power source, eventually a lift truck will need maintenance. A service to help lift truck fleet managers squeeze costs out of that area was launched last November by AmeriQuest Transportation, Coral Springs, Fla. Traditionally, AmeriQuest has focused its services outside the warehouse, providing fleet management and truck leasing to about 1,000 members, mainly commercial carriers and companies with private fleets. But when members repeatedly asked for help with their forklift fleets � particularly with buying parts, managing service, and buying whole units � AmeriQuest developed its new Materials Handling Services program, which includes lift truck parts procurement, lift truck fleet management, and lift truck remarketing. Companies that maintain their own lift trucks are candidates for the parts procurement service. Normally, these parts pass through three layers of suppliers -- parts manufacturers, lift truck manufacturers, and lift truck dealers -- before reaching the end user. "By the time an end user gets a part, it has been faced with three markups," says Scott Grushoff, vice president and general manager of AmeriQuest Materials Handling. To gain discounts for its members, AmeriQuest has negotiated agreements with parts manufacturers and large parts distributors. Members order the parts from AmeriQuest. "We cut lift truck dealers and Original Equipment Manufacturers (OEMs) out of the equation," Grushoff says. "On average, members save more than 30 percent on the parts they buy." AmeriQuest's inventory includes replacement parts, batteries and chargers, tires and poly wheels, electric motors, and many electronic components. Warehouse operators who don't service their own lift trucks may sign up for AmeriQuest's fleet management service. When a member needs service, AmeriQuest dispatches a technician from an authorized provider, with which it has negotiated rates and established service standards. On site, the technician calls an AmeriQuest employee who is an expert on lift truck repair, and the two collaborate on the problem. "There's no open checkbook for the technician to do any repairs he deems necessary," Grushoff says. When the work is done, the repair service submits an invoice to AmeriQuest, which makes sure the vendor abides by the agreed rate and bills only for a reasonable amount of labor. Members also take advantage of AmeriQuest's rates for parts. At the end of the month, members receive a consolidated statement for all repairs performed. AmeriQuest monitors repair records to make sure service shops don't send inexperienced technicians who repeatedly misdiagnose problems. It ensures that equipment still under warranty is treated correctly. It also provides software that corporate managers can use to monitor lift truck usage and maintenance across all their locations. Under its third offering, AmeriQuest helps members find buyers for used forklift trucks. Although AmeriQuest charges a fee for some of its truck fleet management services, there is no fee for using any of the services in the Materials Handling program, Grushoff says. Building a Team No matter how green the building or efficient the processes, you can't run a warehouse without people. When employees on the floor pull together as a team, opportunities to improve the operation abound. One key to running a world-class warehouse is to develop a corporate culture in which management and employees share common values, says Ron Cain, president and CEO of third- party logistics provider (3PL) TMSi. A strong sense of community in the warehouse drives excellent performance because everyone's efforts are aligned. "There's a higher purpose than just showing up to work," Cain says. A non-asset-based 3PL based in Fernandina Beach, Fla., and Portsmouth, N.H., TMSi typically staffs and manages logistics inside its customers' facilities. For example, TMSi has been running parts warehouses in Jeffersonville, Ind., and Jacksonville, Fla., for General Electric since 2002 and one in Cranbury, N.J., since 2008. Distributors and technicians use these parts to service washers, dryers, refrigerators, and other major appliances. At each warehouse, GE provides the facility, the warehouse management system, and the customer orders, explains Edward Huttunen, parts distribution manager for GE in Louisville, Ky. TMSi, which staffs and manages the warehouse, is responsible for receiving, putaway, picking, shipping, arranging inbound and outbound transportation, and keeping inventory in good order and accurate. COMMUNITY SERVICE One strategy that TMSi's managers use to build team spirit on the warehouse floor is to encourage community service. In the GE facilities, the 3PL's employees have held food, clothing, and toy drives for charities that benefit children and have sometimes gone off site to volunteer for those organizations. "Collaborating for the sake of others encourages employees to feel like partners," Huttunen says. "It provides a different perspective of your fellow workers and generates camaraderie and strong bonds." Employees at other TMSi-run warehouses have participated in walk-a-thons, run after-school programs, and led students in renovating houses for the needy. "Those facilities always outperform the others," Cain says. Performance soars because public service projects get employees used to the idea of putting others first. "Once they do that, they become a true team built on trying to continue to improve," Cain says. That spirit spills over into the warehouse, where employees feel empowered to influence the culture and the processes. TMSi's efforts to strengthen corporate culture in the warehouse go beyond philanthropy. The 3PL treats employees like valuable team members, encouraging them to share ideas and information among themselves, with GE and with GE's customers. For example, when distributors and technicians visit a GE warehouse to learn about the operation, TMSi staff are on hand to explain how they fill orders. By the same token, TMSi includes floor staff in "action workouts" -- lean exercises in which GE's employees, customers, and distribution team collaborate to improve specific warehouse processes. Associates who work on the front lines have valuable insights, and they're thrilled when managers take their suggestions for improvement. This kind of collaborative corporate culture gives employees a sense of ownership. "Employees are all over any kind of problem that touches their area," Huttunen says. "An employee with that attitude will seek out information and follow through without prodding from management." In the current economic slump, when it's more important than ever to control costs, TMSi's teams have stepped up to the task. "They've worked with their associates and have been able to improve productivity through increased flexibility," Huttunen says. "They have also maintained a high-value proposition for our customers." FULL SPEED AHEAD "We're going to find a way to do it" could also be the cry of all logistics leaders who devise creative solutions for their warehouse operations. A smarter, faster, greener, more efficient warehouse puts a company in position to ride out tough times and keep speeding ahead. | 
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