The Mankato, MN-based e-commerce company had experienced massive year-over-year growth during its life but its picking operations were not evolving to keep up. Couple the growing demand for costumes with the growing demand for labor in the Mankato area and things had hit a boiling point for Fun.
"Their problem was that there is no labor to be had in the area," says Frank Sterner, VP of SJF Material Handling. "They were hiring over 1,000 people in order to process their Halloween Costumes for about an 8-week period before Halloween."
That labor force consisted mostly of college students. However, as more and more companies opened operations in Mankato, that formerly cheap source of labor began to dry up.
SJF was brought in to evaluate the effectiveness of the existing warehouse operations, including the product profiling, racking layout, conveyor system and information technology. Together with Fun’s management team, a plan was developed to help streamline the operation and improve operational efficiencies.
Evaluation of collected sales order data enabled the implementation team to identify seasonal and peak demands for high and slow moving SKUs and corresponding labor requirements. Utilizing this information, a plan was put into action that included: replacing the manual order process with order execution software to include RF technology, re-slotting of the product to minimize the walking distance during picking, automated conveyor systems to transport orders to the designated pack stations, and a final sortation system to sort parcels to designated carriers. This implementation resulted in increased labor efficiencies and a first-year labor reduction of nearly 27%.
Tom Fallenstein, President of Fun.com, wanted a solution to achieve the results in the most economical way. As an integrator and supplier of both new and used equipment, SJF went to work and provided offers for both new and a combination of new and used equipment refurbished through SJF. Fun elected to proceed with the used option that offered lower capital cost and better delivery time.
"The number of touches they had for each order was seven before the item would get to the packing stages," Sterner says. "The new system reduced that number to two."
SJF recommended going to an RF type picking, as previously fun was using paper picking.
"By re-profiling the product within the pick rack and placement of the conveyor system, more than 90 percent of the picks go right to the conveyor reducing travel distance," Sterner says. "We moved them to tote picking, before they had used baskets and carts to deliver everything. And we incorporated dual quality control check using the RF gun by scanning the item when it goes in, and an in line weigh check scale system within the conveyor system as opposed to at the packing station where it had been done previously."
These changes still produced staggering efficiency gains while not straying too far from Fun’s established and comfortable modus operandi.
This year, with the addition of automated bagging technology, SJF partnered with Sharp Packaging to add two auto baggers. With this implementation, Fun expects to increase pack speeds from two parcels to 10 parcels-per-minute on each lane.
"It was about applying good principles to the operation in order to move them into that next stage," Sterner says. "Taking a company that was very comfortable with themselves and introducing them to automation and new technologies."
In addition to the massive efficiency challenges SJF was faced with, another issue that came up had to deal with the sorting system that the company had ordered new from a manufacturer, but they failed to deliver.
Since the system design hinged on the ability to sort parcels at the shipping dock, the sorter was a crucial element to the systems success. Unable to find a new vendor, the SJF engineering team was able to redesign an SJF Sweep Sorter to meet Fun’s requirements in time for Fun’s peak season.
Overall, the company was able to handle their busy Halloween rush and still manage to save 25% in operating costs, by reducing labor 27% and increasing efficiency from 2000 labels generated per hour to over 4000.
"They said that because they could not hire the number of people that they would have needed, if it wasn’t for the changes we instituted, they would have never made it through their season. They credited the entire change over to their success for last year’s season."
Distributor: SJF Material Handling Supplier: Orbis, Mettler Toledo, Ridg-U-Rak, Cogan, Sharp Packaging