Automation and big box management. Elgiganten’s recipe for success
Scandinavia’s largest home electronics and household appliance retailer has automated warehouse procedures and optimised big box management. They’ve increased efficiency by 25% greater efficiency while handling a 225% increase in goods flow.
Elgiganten (called Elkjøp in Norway) is owned by British DSG international plc. It is the largest home electronics and household appliances chain in Scandinavia with sales of over 18 billion NOK (1.9 billion euro approx). The company has around 300 stores in Scandinavia employing 6,600 people. It also sells direct to consumers via the Internet. All logistics in Scandinavia is handled by a separate company, Elgiganten Logistik AB
93,000M2 Distribution Centre in Jönköping
Elkjøp manages all logistics from its Distribution Centre in Jönköping, mid Sweden. Goods are received directly from factories around the world and transported to the warehouse by road and rail with rail tracks directly to the building. More than 10,000 trailers and 2,000 railway carriages annually move around 720, 000m3 of goods, both to stores and to Internet customers. All goods are controlled through their ERP system and SattStore WMS. More than 6000 articles are moved through or via the warehouse which has a storage capacity of about 76.000 m3. 100 trucks manage goods daily, communicating either through truck PC or voice via the wireless LAN.
How do you deal with increased sales and fewer lines per order?
That was the question facing Elgiganten. It’s all about increases. As demand for consumer electronics increases, both from in-store sales and through the Internet, EIgiganten has to deal with an increased range of goods, increased volume and increased internet sales, which means less order lines per order. This put a strain on manual routines which had to be re-thought.
The solution - semi automation
The solution has been to build a semi-automatic warehouse capable of dealing with a large range, high goods flow and a capacity to package large quantities of goods.
Elgiganten has integrated picking for both in-store and internet, introduced voice picking, automatic box lifting and closure for store orders, along with dedicated internet packing. The company has also rationalised its quality control procedures.
Elgiganten uses a modular approach to picking and packing. There are 26 picking stations and some 5000 picking spaces. By using a modular approach, pickers pick those goods close to their area and partially fill orders, sending them along the conveyer belt for other people in the chain. There are also 20 packing stations capable of handling 1,000 packages pr hour for Internet sales.
By automating routines and using voice picking, Elgiganten has succeeded in handling the increase in total sales and range, improving efficiency and decreasing wrongly picked goods by one third.
Streamlining big box management
Managing big boxes such as Plasma TVs, washing machines and dishwashers creates its own logistical problems. Previously there was too great a distance between warehouse space and loading, and too large movement for replenishment of picking places. The same article was often moved through several routes.
Goods are stacked in denominations of 4+4, 8+8, etc on trucks. When these stacks were broken up it meant extra lifting for the next truck. Every time goods were moved created a greater risk for damage. Finally, different shop sizes need different order quantities.
Make life easy. Move full stacks
The easy way to reduce complexity in goods flow was to create tasks with only full stacks of goods, reducing the number of trips per truck. The full stacks were then assigned different priorities. Priority one was to pick the whole stack and transfer it direct to the loading bay for transport. The second priority was to replenish picking areas, and the third was to pick from the remaining areas to fulfil orders.
Filling ratios increased by 25%, volumes up by 225%
By reworking the warehouse layout according to these principles, Elgiganten have reduced replenishment to a minimum, removed return truck journeys are now able to work with full stacks on trucks (4+4, 8+8), supplying both large and small customer orders with high quality.
This streamlining has resulted in increase in filling ratios of 20%. Big box efficiencies have increased by 25%, despite a huge volume increase of 225% in the last few years.
Looking to the future
Elgiganten are already looking to implement further improvements in the near future. The include increasing goods flow throughout the dc by trimming processes even further, and looking for ways to accomplish even better customer service. Regarding big box movement, ideas include a dedicated area for flat screens and integrating suppliers into the supply chain to make supplier selection and management much simpler.