Warehouses and Distribution CentersOh, what a simple world it used to be.
If you needed additional storage space for ice cream product inventory, you added a room or built a well-insulated building capable of holding -20 to -30 degrees F year around. It was equipped with a waist-high reversible-belt conveyor running down the middle of the room. Floor-stacked product from production was received manually, stacked and shipped via this conveyor.
A medium-temperature dairy cooler was typically built in a similar manner, with a floor-level chain conveyor running down the middle of the facility. This conveyor also was used for receiving and shipping of both individual cases and floor-stacked cases, which were manually dragged to and from the conveyor.
But by the late 1960s and early ’70s, significant material-handling changes were afoot. Some in the dairy and ice cream industry were beginning to incorporate modest material-handling productivity improvements that saw pallets, pallet racks, fork lifts and pallet jacks replacing floor-stacked inventory and conveyor belts along with manual product handling.
Some in the ice cream industry also were beginning to convert floor-stacked inventory storage to folding mobile carts that could be used for storage, receiving or shipping, and even to replace fixed shelving inside ice cream route delivery trucks. It should be noted that the “cart systems” were frequently more adaptable to converting material handling in existing ice cream storage facilities than were the pallet systems.
Concurrently during this same period, the financial and accounting side of the dairy and ice cream industry was also being introduced to computerization of its accounting systems. As we all now well know, it was but a short time until production, warehousing and distribution were beginning to look at how these new batch-process mainframe computer systems could be used to process their operating information as well.
As an indicator of how fast some companies were already beginning to incorporate computer technology into their operations, the Southland Corp. (now 7-Eleven) designed and built its first computerized distribution center in Orlando, Fla., in 1974. Geographic location for this center – initially serving Florida, Georgia and Alabama – was determined by a computerized routing system that optimized the trade-off between inbound inventory shipping and outbound store route delivery distances and costs. All inventory management and order processing was also computerized and all delivery routes were scheduled and routed using the same routing system that located the center in Orlando.
So, within less than 10 years, innovative dairy and ice cream companies shifted their material-handling, warehouses and distribution centers from floor-stacked manual handling to first-generation computerization, along with additional productivity improvements using improved methods of material handling and storage.
Today, some 30 to 35 years, later many of those same dairy and ice cream warehouses and distribution centers are handling multiple times the product volume, thanks to continuing evolution of the technologies first applied in the early 1970s. Whereas mainframe systems of the ’60s, ’70s and ’80s operated as batch process (after the fact) data systems; today’s warehousing systems can be fully integrated into both business operating systems and financial systems on a real-time data status basis.
Fully integrated real-time warehouse, production and distribution systems can transmit inventory replenishment orders to production or outside suppliers as inbound orders (inventory draw down) are received and customer invoices can also be automatically created and transmitted as orders are picked, or shipped or delivered. Or, in a variation to that approach, dairy and ice cream retail customers’ own in-store merchandise sales, through their retail POS systems, may initiate supplier payments and replenishment orders as on-shelf inventory is sold “out the front door.”
This early 21st century “instant current product status and location” (from the integration of production, procurement, sales, warehousing and distribution systems incorporating a combination of wired and wireless communications, scanners and possibly RFID chips) improves customer service, reduces inventory, reduces product outs, increases sales volume and increases speed of inventory throughput (improved turns and cash flow).
Such systems combined with real-time routing systems have the ability to not only provide proprietary customer services and “guaranteed” customer delivery reliability but to also drive substantial and continuing improvements in transportation and route delivery productivity.
Indeed, these are not “your father’s warehouse and distribution operations.”