Diamond Continues Upgrade, Expansion of Its Central Distribution Center in Olive Branch
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A Letter from Steve Geppi *** To our valued retailers: |
Hundreds of Diamond's retailing and publishing partners gathered recently in Baltimore for the 2016 Diamond Retailer Summit. This year's theme was "Future Vision: Building the Comic Shop of Tomorrow," something we see retailers doing every day in greater and greater numbers. Of course, supporting the stores of tomorrow requires new approaches to distribution and logistics, and Diamond Vice President of Operations John Wurzer recently outlined a number of projects that are currently underway in Diamond's Distribution Centers.
For everyone who was unable to attend the Summit, here's a glimpse into the massive project that's happening right now at Diamond's central inventory and shipping distribution center in Olive Branch, Mississippi.
"In 2009, we opened the Olive Branch Distribution Center, the largest facility we or anyone else had built for the distribution of comics and pop culture merchandise,” said Wurzer. "Using historical data and our own experience to make projections, a team of engineers predicted that the new warehouse would meet the industry's needs through 2020."
Our Olive Branch facility is 600,000 square feet in area, 35 feet high, with its own server room equipped with generator back up power, and room for 150 people per shift to work on more than two miles of racking and conveyors that move product around the building. Design and construction of the building was a massive project, surpassed only by the huge job of moving in and getting it up and running.
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| Once empty shelves were quickly filled to - and above - capacity | |
The industry, however, went through massive shifts that no one had anticipated at that time. With the explosion of interest in comics and related products, sales to retailers all over the world grew tremendously. While these shifts were good news for the industry, the change to the status quo presented some serious challenges to the Distribution Center and Operations staffs at Diamond. Part of the shift in the industry was the growth of collected editions and the proliferation of variant covers for comics, each of which occupies its own physical space at the Distribution Center. In short, the warehouse exceeded both its projected 2020 storage and order processing capacity by 2014, and immediate action had to be taken.
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| Massive amounts of product exceeded the Olive Branch warehouse's projected 2020 storage and order processing capacity by 2014 |
Storage of millions of periodical comics, trade paperbacks, and the vast array of related products presents an interesting and unique opportunity. For Diamond's Distribution Center teams to effectively pick products, each is given a physical address, referred to as a “pick face”, “bin”, or “storage location” where it is stored and pulled from when ordered by a customer. When there are not enough pick faces for all the products, a night crew must pull products from other locations to move them into bins that are accessible to an order picker. This frequent moving of product can lead to inefficiencies, and can add to the time required to find product and fill orders.
The first thing that our Operations and Finance teams had to do was locate an additional warehouse that could handle some of the overflow of product. However, this was not a satisfactory, long-term solution. In the end, we were able to lease two new facilities in Olive Branch, one for processing of weekly new product shipments and the other for storage of products that are not available for same-day Direct Ship reorders. Those additional facilities provided us with a little breathing room, allowing Wurzer, Executive Director of Operations Shawn Hamrick, Executive Director of Business Intelligence Steve Tipton and a team of outside consultants to begin planning the next phase of our Distribution Center's evolution.
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| The brand new fourth pick module |
Over the course of last year, we brought in experts to work with our own internal teams to devise what would become a complete reimagining of the Distribution Center's layout and operations.
"Millions of data records reflecting ordering patterns, inventory velocity, and growth trends were dissected, organized and analyzed during the process of developing what ultimately became the solution we decided to implement,” said Tipton. “New software and procedures will be paired with new materials handling equipment to provide much more storage space, along with the capability to manage many more orders."
There are three main objectives for this project: increase storage capacity, increase throughput capacity, and increase order accuracy while reducing damages.
Increasing Storage Capacity
While we can't increase the physical size of the warehouse, we can use the space in different, more efficient ways. A second floor, called a mezzanine, was added to a portion of the warehouse to expand the pick modules available. These modules, where product is stored for picking, and the expansion and addition of a fourth module, will give us over 21,000 new locations where products can be stored and then picked for orders. We are also in the process of adding space for 16,000 additional pallet positions to store back stock to accommodate the industry's continued growth.
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| The mezzanine was a huge undertaking, with the construction project going on for the last six months | |
Increasing Throughput Capacity
Throughput is a measure of how many orders per hour can be picked and packed by the Distribution Center. Increasing this capacity takes a combination of new materials-handling equipment, such as conveyor belts and automatic sorters, and changes to our processing procedures.
To that end, we are adding over a mile of conveyor, which will move product and orders through the warehouse, either to other parts of the building or to waiting trucks when shipments are ready to go to customers. We are also adding machines that automatically weigh boxes, measure their dimensions, and apply shipping labels, which gives us much better information about the packages and reduces the potential for human error. A ceiling-mounted monorail circulates an unending stream of empty boxes, which allows the people on the warehouse floor to focus on picking and packing orders, and a similar system automatically moves empty product boxes to an area where they can be processed out of the warehouse. As boxes are filled and sealed, they will move down an automated line that will sort them via barcode readers that scan the boxes. This will then move the boxes to the appropriate pallets or trucks for delivery to customers, reducing opportunities for boxes to end up in the wrong place.
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| We are adding over a mile of conveyor, which will move product and orders through the warehouse | A ceiling-mounted monorail circulates an unending stream of empty boxes |
Increasing Accuracy
While it's important to increase our ability to process orders quickly, it's just as important that we do so accurately. The changes we've made in this area are the most dramatic and have taken the most time to research; a great deal of analysis has gone into determining what constitutes best practices, given the many different types of products that Diamond distributes to its customers every day.
The first change will be to our pick method. Currently, a box (or group of boxes) moves through the warehouse and the order picking team uses automated headsets to pick products from their assigned area and place them in the box as it moves through. Under the new system, the pickers will pick all product for a group of orders at once, scanning the barcode on the product to ensure they have the correct items, which will then go into specially-designed totes and move to an order sortation area. In this area, the barcode is scanned again, and a large wall with an area for each order will indicate which orders need that item. Once all items for an order have been pulled and verified, an order packing specialist will choose the appropriate size box, and pack the box in such a way as to minimize damage to the products. As they do so, the items are scanned a final time, and any items that are missing or are identified as damaged are flagged and pulled for the shipment before it is sealed and sent out for delivery.
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| Currently (left) boxes move through the warehouse and the picking team uses automated headsets to pick products from their assigned area and place them in the box as it moves through *** Under the new system (mock-up photo, right), pickers will pick all product for a group of orders at once, using proper judgement to determine box size and placement of items into boxes, which then go into specially-designed totes and move to an order sortation area |
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"We believe that this is the best possible solution, allowing our pickers and packers to be both fast and efficient," said Hamrick. "With a person making decisions about the size of the box and the way the product is put into it, the amount of product damaged in the packing and delivery process should decrease. We are also researching different types and sizes of boxes and packing paper, while keeping in mind the delicate balance of damages vs. increased freight costs."
Where We Are Right Now on the Expansion
At this point in the process, the mezzanine has been built and is in use, and many of the new materials-handling equipment is on-site. The existing pick modules have started to be expanded, and the new module has been built and partially integrated into our operations. We are currently testing the software integration that must be completed before we can move on to other phases of building and testing, so that the transition can proceed smoothly.
One of the greatest challenges is that the warehouse has remained fully operational during design, construction and various implementation phases, and must continue to do so.
This project represents a massive investment by Diamond, but one we feel is necessary to meet the current and future needs of a market that continues to grow and evolve.
Members of the Operations and Business Intelligence teams of Diamond have spent significant amounts of time away from home, supervising the construction at Olive Branch and coordinating teams of programmers inside Diamond and with our outside vendors. Millions of dollars and thousands of employee hours have been spent working on the expansion, and there is still a lot of work to be done.
We'll be providing more updates as we progress through different phases of the project which are expected to progress into early 2017, and are looking forward to showing you more!
