PRODUCTIVITY SOLUTIONS FOR DISTRIBUTION, WAREHOUSING AND MANUFACTURING

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SARY IVER mmh.com ANN

April 2020

READER SURVEY 2020 Warehouse/DC Equipment Survey 26

SPECIAL REPORT Modex in review 36

BEST PRACTICES What does innovation mean to you? 44 Varner: EQUIPMENT REPORT Overhead handling 50 Building the INFORMATION MANAGEMENT Voice system evolution 56 world’s best warehouse 18

Anders Eriksson, the supply chain director for Varner AS MODERN system report

Editor’s note: This story on Varner’s automated retail distribution center in Vänersborg, Sweden, is a continuation of our look at global order fulfillment, and our second set in Scandinavia.

18 A p r i l 2 0 2 0 / MODERN MATERIALS HANDLING mmh.com Building the world’s best warehouse

That was the goal of Scandinavian retailer Varner. The result is a most highly automated, omni-channel retail distribution center, that is also flexible, cost-effective, ergonomic and sustainable.

BY BOB TREBILCOCK, EXECUTIVE EDITOR

rom the start of the project, of 10 unique retail chains, each with we declared that we wanted its own go-to-market strategy, along to build the best warehouse with a fast-growing e-commerce busi- in the world.” So says Anders ness. The materials handling systems “FEriksson, the supply chain director address robotic palletizing and depal- for Varner AS, one of Scandinavia’s letizing, automated pallet storage, largest retailers. Eriksson oversaw the automated case storage, automated design and implementation of a new garment-on-hanger (GOH) storage 500,000-square-foot, omni-channel and robotic goods-to-person piece distribution center in Vänersborg, picking. What’s more, it was designed Sweden. “Of course, it’s impossible not only with growth in mind, but to know or measure if it is the best also to be ergonomic and sustainable. warehouse in the world,” he adds, The solution features a repre- “but it was important for us to chal- sentation of most of the tools from lenge ourselves and our partner.” the materials handling tool box, Did they succeed? As Eriksson including: notes, it’s tough to say. But the final • A cross-belt sortation system design, developed in conjunction capable of handling 6,000 cases per with a system integrator (Swisslog, hour. swisslog.com), is one of the most • A seven-crane pallet handling highly automated and flexible retail automated storage and retrieval distribution centers we have come system (AS/RS) with 48,000 pallet across at Modern. The facility can locations. handle the store replenishment needs • A 22-crane case handling mini-

Photos courtesy of Swisslog

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The primary picking engine for e-commerce and store replenishment orders is a goods-to-person robotic solution like this one. The facility also features a garment-on-hanger area (not shown). load AS/RS with space to store approxi- Thorvald Meyersgate in Grünerløkka, pany in Scandinavia.” mately 500,000 cartons. Oslo. Named for the founder, the Frank With nearly 11,000 employees and • An AutoStore goods-to-person pick- Varner store became a huge success. 1,400 stores across seven countries, ing system, currently being expanded to Three years later, Varner opened another Varner has 10 retail chains operating 12 decanting stations, with 224 robots store in Oslo and one in nearby Trond- under their own unique brands, includ- and the capacity to store 116,300 bins heim. In 1967, Varner coined the name ing Cubus, Dressmann, Dressmann XL, serving 24 pick stations. Dressmann in connection with another Bik Bok, Carlings, Volt, Urban, WOW, • A three-level garment-on-hanger new store opening in Oslo. In the ensu- Levi’s Store, Nike Store and Days Like storage and pick mezzanine. ing years, Dressmann stores opened at a This. While the majority of the stores are • Automated palletizing and record pace across Norway. located in Norway, Sweden and Finland, depalletizing. Today, Varner is a family-owned, value- Varner also operates stores in Iceland, • Automated packaging and bagging. driven fashion retailer and one of the larg- Denmark, Austria and Germany. All of Eriksson’s take on the facility: “We est fashion retailers in Scandinavia, with the stores and e-commerce customers have a state-of-the-art facility and a an estimated $1.2 billion U.S. in revenue are supplied from the central logistics supply chain organization that is well in 2018. The company describes itself as center in Vänersborg. equipped, highly competent and pre- “a progressive workplace… [that thrives] Planning for the new facility began pared for the future.” on innovative business development with in 2013. Prior to that, each of the retail the customer in constant focus” and adds chains operated their own distribution Taking control that through its innovative omni-channel networks independent of each another. In 1962, Frank Varner, a budding Nor- retailing strategy, its goal “is to become the These operated from 10 different manual wegian retailer, opened his first store on leading data and tech-driven fashion com- warehouses in Northern Europe, all

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operated by 3PLs. While the supply chain had evolved over the years, it had become too complex and inefficient to address Varner’s changing needs. What’s more, Varner did not have the level of control it wanted over its supply chain. “Fashion retailing is a highly competi- tive business, so you have to constantly cut costs and improve your quality and control in the supply chain,” Eriksson notes. The idea, then, for the new facility was to bring all of Varner’s distribution, including e-commerce order fulfillment, under one centrally located roof that would enable efficient last-mile delivery and cut lead times for smaller and more frequent store deliveries, resulting in less back stock in the stores. “When we decided to centralize all of our products into one warehouse, the main driver was to become more efficient and minimize our store stock,” Eriksson says. All of those factors pointed toward automation, as did the tight labor market in Norway and Sweden. In addition to design questions, the retailer needed a central location to serve all of its growing markets. “We did a center of gravity analysis, and it became clear that the warehouse should be located somewhere in the western part of Sweden, near the harbor of A conveyor and cross-belt sortation system that begins in receiving routes product Gothenburg, but still close to Norway, to the different automated storage, picking and packing areas. where the company is headquartered,” says Eriksson. In Vänersborg, the com- the contract, notes that it devoted some very involved with our partners during pany not only found the proximity to the 8,000 hours developing three different the development phase, and the ware- port and its markets, but also a lot of concepts before it was selected as the house project was no exception,” says suitable land was available for the ware- implementation partner. The build and Eriksson. “We participated actively and house and an additional lot for future implementation phase got underway in learned a lot about warehouse automa- expansion if needed. the middle of 2014 and was completed tion. We felt comfortable that we had Varner worked with its systems mid-2016. The robotic goods-to-person chosen a great solution.” He adds that engineer partner for nearly two years picking area is currently under expan- during the course of the project, Var- to conduct a conceptual study, design sion, growing from 60,000 bins to ner made considerable changes to the the solution and select the partner for 115,000 bins to meet the growing e-com- way it replenishes its stores, and that the project. Swisslog, which conducted merce channel as well as more strategic the solution proved flexible enough to the original study and design process store replenishment. adapt to the changes along with the on a consulting basis before winning “Part of our company culture is to be company’s growth. mmh.com MODERN MATERIALS HANDLING / A p r i l 2 0 2 0 21 MODERN system report

Robots palletize inbound cartons for storage in the high-bay AS/RS and depalletize cartons destined for a mini-load buffer storage area. Automation by design The new distribution center has been described as a “complete solution that 2. Robots palletize and depalletize is the main engine for carton flow—it handles today’s demands for omni-chan- cartons depending on where they are brings cartons out of storage on an as- nel” and “supply chain operations on the needed next; needed basis and sends them to the area customer’s terms, whether they buy in the 3. Buffer storage at the pallet level where there is demand. That could be store or online.” and case-level storage are automated; a full carton that goes to shipping or a It balances the need for speed and 4. A robotic goods-to-person picking carton that will be decanted into a tote accuracy; handling goods at the pallet, area further breaks down cartons into to replenish the robotic goods-to-person carton, each and hanger levels; and to unit level totes for piece picking; and picking area. minimize labor given the low employment 5. Garments that are handled on The robotic goods-to-person picking rates and relatively high wages in Norway hangers are processed in the three-level area creates single and multi-line orders and Sweden. Receiving, palletizing and pick module. for e-commerce fulfillment as well as depalletizing, storage, picking and pack- The cross-belt sorter is essentially mixed SKU cases for store replenish- ing, and labeling have been automated to the traffic director for the facility, mak- ment. Once a shipping carton or e-com- the extent possible. For that reason, the ing sure cartons get to the right area in merce package is complete, the items are facility is able to operate with 80 to 100 the facility based on where they’re most sorted by the cross-belt or a bag sorter to employees—a relatively low number given needed, from crossdocking inbound the right area. the size of the facility and the number of merchandise to an outbound truck to And, the garment-in-hanger area cartons handled per hour. replenishing the robotic goods-to-person combines automated storage with con- There are five areas of automation: picking area. ventional picking in a three-level pick 1. A cross-belt sortation area near The mini-load, which is automatically module for items that aren’t handled in receiving; replenished by the pallet warehouse, cartons or totes.

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The additional data, as well as the any economies of scale doing service and quality of the data, collected by the auto- maintenance with our own staff, so it mated system has been a bonus benefit. was an easy decision to outsource those “We improved the quality of our logistics functions,” he says. data and we have a better understanding The facility has been running for of the importance of data quality” as a four years, with a major expansion of result, Eriksson notes. the goods-to-person picking area While Varner employees are respon- underway. Whether it’s the best retail sible for the warehouse operations, the DC in the world may be difficult to retailer has outsourced maintenance answer, but for one of Northern of the automation and the warehouse Europe’s leading retailers, it is “a management and control systems to world-class facility that we use as a Swisslog. “We are still in charge of the precision tool for inventory manage- logistics center, but seven technicians ment to deliver the correct items to our from Swisslog work full-time in mainte- stores, when they need them,” Eriksson nance and their IT specialists support says. “And, we have the warehouse the warehouse management system,” capacity we need for the foreseeable Eriksson explains. Swisslog is also future. We no longer talk about the While Varner operates the facility, the retailer has outsourced monitoring and responsible for training associates when limitations of our supply chain, just maintenance to Swisslog. needed. The reason is that “we don’t gain about how well everything runs.”

Automating fashion distribution Varner, Vänersborg, Sweden The 500,000-square-foot distribution center in SIZE: 500,000 square feet Sweden handles fast-fashion store replenishment and ITEMS: Owns 10 retail chains. Fashion e-commerce fulfillment in a highly automated setting. retail. SKUS: 50,000 SHIFTS PER DAY/DAYS PER WEEK: arner’s distribution center was ers arrive at receiving (1) from the port, 2 shifts, 6 days centrally located in Sweden for cartons are unloaded onto extendable access to ports and the retailer’s conveyor (2) and transported to a cross- networkV of stores and customers across belt sortation area (3). The cartons are ing area can sort 6,000 cartons per hour. seven European countries. Processes sorted by SKU to a robotic palletizer (4). Cartons for which there is immediate were designed to manage pallets, car- Pallets are automatically stretch wrapped demand are crossdocked to shipping (7) tons and item-level units and piece and then conveyed to the automated into an outgoing truck for store delivery. picking for e-commerce fulfillment and storage and retrieval system (AS/RS) (5) Mini-load system: Cartons destined garments on hanger. for temporary storage. for storage are conveyed to a mini-load The facility is divided into several pro- When product is retrieved from the storage area (6) serviced by 22 cranes cessing areas. AS/RS, it’s conveyed to a manual pro- and with storage capacity for 500,000 High-bay AS/RS: The high-bay cessing area where the stretch-wrap is cartons. The mini-load serves as the area provides bulk buffer storage for removed. The pallets are then automati- primary carton order fulfillment system 50,000 pallets. The product stored here cally depalletized and the cartons are for the facility. When Varner’s enter- represents a limited number of SKUs conveyed to the mini-load storage system prise resource planning (ERP) system purchased in large quantities for one of (6), which is the facility’s main order ful- assembles orders, they are sent to the Varner’s value chains and stored at the fillment engine for store replenishment. warehouse management system (WMS). pallet level. When floor-loaded contain- Carton receiving: The carton receiv- Cartons are then retrieved from the

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mini-load and sent either to the ship- gated container. Once all of the items for ping area, where they are loaded onto a that container have been picked, a lid is System suppliers truck, or to the robotic goods-to-person automatically added, the box is labeled SYSTEM DESIGN, INTEGRATION & GENERAL CONTRACTOR; LIGHT picking area . and then conveyed and sorted into an (8) GOODS & PALLET CONVEYOR Robotic goods-to-person picking: outbound truck. Items for e-commerce SYSTEMS; MINI-LOAD AS/RS, Cartons destined for the goods-to-person orders are put into one of 40 different PALLET-HANDLING AS/RS, WMS, WCS & WES: Swisslog picking area may come directly from polybags. Finished bags are then con- CROSS-BELT SORTATION: Beumer receiving or from the mini-load system. veyed to a bag sorter and sorted into a ROBOTIC GOODS-TO-PERSON Cartons go first to a decant area (9), roller cage. PICKING: AutoStore where the contents are emptied into a Garment-on-hanger (GOH) area: ROBOTIC DEPALLETIZING: Kuka tote and conveyed to the upper level Some incoming cartons are sorted Robotics for storage and handling by the robots. directly to the GOH area (10). There, ROBOTIC PALLETIZING: Qimarox Where there is demand for product, the they are decanted onto hangers that are AUTOMATIC CARTON ERECTION & CLOSING: Jomet robots remove a tote from storage and inducted onto the GOH system. The E-COMMERCE BAG SORTATION: Qubica send them to one of the workstations. area serves a three-level pick module. MINI-LOAD RACK SYSTEM: Bito Storage All stations can fill e-commerce orders Associates are directed by voice to pick Solutions and orders for mixed SKU cartons for items. Those items are placed on a cen- PALLET RACKING: Stow store replenishment. Items for store tral conveyor line, delivered to a labeling ORDER RELEASE MODULE FOR SORT- replenishment are picked into a corru- area and then loaded onto trucks. ING INCOMING CASES: Dynamic Logistic Systems TELESCOPING CONVEYORS FOR LOADING AND UNLOADING: Caljan

High-bay AS/RS 5

10 Garment-on-hanger area

Mini-load Palletizing 6 4

Cross-belt sorter 3 Robotic goods- to-person-picking Extendable conveyor 2 8 7 Shipping 2 Extendable conveyor 9 Decant area 1 Receiving

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