News

WMS reduces payroll costs by 18 percent

07.09.2011

In 2008, AVK International A/S implemented 2008 Astro WMS and has today reduced payroll costs by 18 percent relative to revenue.

This has been achieved despite the clear trend towards more complex pick and demand patterns and the resulting increased logistics costs.

Efficiency, service level, speed and flexibility - these are the main requirements for AVK International A/S warehouse management, and in all areas, the introduction of Astro WMS has led to marked improvements. AVK International A/S is part of the AVK group. The AVK group is not one of the country’s most well known companies, but it actually has sales of more than DKK 3.4 billion, which puts the company at the heavy end of Danish business.

From DKK 100 million to 3.4 billion

"When I joined AVK in 1984 we had net sales of DKK 100 million. Today our net sales are DKK 3.4 billion. We have been on an incredibly exciting journey with extensive organic growth and acquisitions", commercial logistics manager Per K. Møller tells us, whilst he proudly shows us around the warehouse. The distribution centre is divided into two stock areas, goods reception, a packing area and a dispatch area. There are approximately 8200 pallet places on racks and approximately 5000 pallet places on the floor. The warehouse aisles are always neat and tidy with clearly marked vehicle and pedestrian lanes, and a small almost silent army of AGVs, automated guided vehicles from the affiliate Q-Transportmateriel A/S, are the backbone of the internal transport system and bind the 13,200 m2 warehouse area together.

18,.000 tons of goods each year

AVK’s main production consists of valve products and accessories for water supplies, wastewater, gas and fire extinguishing systems. In addition, the group also produces and markets a number of other products for industrial and processing systems throughout the world. The materials used are typically solid castings and many of the products are extremely bulky and heavy. The warehouse staff work in two team shifts, the inventory is approximately EUR 6 million and approximately 2000 product numbers are stocked. The warehouse ships approximately 135,000 order lines a year to 60-70 different countries distributed throughout the globe. 135,000 order lines is not all that many compared with many other companies, but in terms of weight the figure takes on an entirely different complexion: each year, AVK International A/S picks and dispatches approximately 18,000 tons or 55,000 m3.

Warehouse management is similar to a wholesaler’s

"Previously we had an internally developed warehouse management system, which had served us well for many years. But we had grown too much and the system was not sufficiently automated to keep up with our needs. When it came to us choosing a new WMS system we quickly realised that our needs and warehouse management system were very similar to a wholesaler’s. Several wholesalers in Scandinavia use Astro WMS from Consafe Logistics, and as Astro is also one of our customers, it was an obvious choice for us. After reference visits to such companies as Ahlsell and Volvo in Sweden, we were convinced", Per K. Møller tells us.

Improved capacity management, traceability and work environment

Per K. Møller points out a number of benefits with the introduction of the new WMS: "We went from extremely manually based warehouse management, where much of the knowhow and management was in the heads of employees. We are privileged to have loyal and skilled employees, but as the company’s rapid growth gradually made itself felt with more and more products, order lines and more complex pick patterns, this started to become a difficult task. The introduction of Astro WMS has resulted in us skipping various generations and has led to direct transition to a highly automated warehouse. It is impressive to see how quickly the employees have managed to adopt the new technology and the many new work processes."

The AVK International A/S warehouse is now perceiving significant improvements in:

• Capacity management and thereby HR management and resource consumption
• Traceability; among other things, AVK International A/S supplies equipment for gas distribution, which places stringent requirements for traceability
• Work environment, the screen and image controlled picking improves guidance and prevents much heavy lifting
• Training times, which have been considerably shortened
• FIFO (First In First Out), which AVK International A/S operates for some products
• Vulnerability to key personnel who fall sick or leave the company

Master data and superusers

AVK International A/S has gained substantial experience when introducing the new WMS. Firstly, AVK International A/S discovered that the quality of its master data was simply not good enough. “We must admit that we had overestimated the quality of our own master data, and we had underestimated how important it is. By and large it is impossible to get anything at all in a warehouse to work optimally if one does not have complete control of master data”, he says. AVK International A/S makes constant endeavours to optimise dispatches with a high degree of order consolidation and compression of pallets. This leads to increased complexity in the work flow and day-to-day planning and synchronisation.

"In order to optimise the handling of these circumstances it has proved to be beneficial to have a person with extensive WMS knowhow who in the course of the day can obtain the necessary overview based on the online information and status reports WMS can provide. Based on this he is able to make the optimum decisions for the coming hours’ operations. We have achieved this and it works splendidly", Per K. Møller tells us.

Logistics should support sales

Per K. Møller is the commercial logistics manager and also has organisational responsibility for sales logistics. "We know that it is extremely important for our logistics staff to work together with our sales staff.

We are also eager to establish dialogue between our and our customers’ logistics departments, so we can together develop solutions which will enhance the customers’ businesses, thereby reducing the overall costs to the benefit of the customer and ourselves," he says.

Among other things, AVK International A/S is working on the elaboration of a logistics pricelist, which will render visible how expensive warehouse and logistics activities really are. "The warehouse management of goods is what really adds to our costs bill. It is extremely expensive to find, pick, move, pack and dispatch a product. It adds much more to the overall bill than, for example, freight and carriage. However, very few people are aware of this."