Modern Materials Handling - April 2012

PRODUCTIVITY SOLUTIONS FOR DISTRIBUTION, WAREHOUSING AND MANUFACTURING
mmh.com
Federated
Co-operatives:
Earth day,
every day 18
April 2012
®
SPECIAL REPORT
Top 20 systems
suppliers 28
EQUIPMENT REPORT
Conveyors: Gaining
control, getting
smarter 32
BEST PRACTICES
Health care
reform 38
Philip Thiemann,
(left), and Trevor
Carlson, Federated
Co-operatives
SPECIAL SUPPLEMENT
RFID is surging S48

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UP FRONT Breaking news you should know
CEMA: Conveyor industry NA
shipments break record
At the association’s 79th annual
meeting held in Miami, Fla., last
month, the Conveyor Equipment
Manufacturers Association‘s (CEMA)
president George Huber III reported
that 2011 shipments in North
America were up 28%. In addition,
CEMA estimates that shipments
totaled $8.50 billion for 2011, an
increase of $1.86 billion from 2010
shipments of $6.64 billion. CEMA
estimates that new orders totaled
$9.31 billion in 2011. New orders in
2011 were $2.28 billion more than
2010, representing an increase of
33.3%.
The executives representing CEMA
member companies who attended
the annual meeting expressed continued
optimism for 2012 and forecasted
a 10% increase in shipments.
How old is your palletizer
In honor of Columbia
Machine’s 75-year
celebration, a contest
is being held to identify
the oldest operating
Columbia palletizer.
The customer identified
as having the oldest
operating palletizer will
receive a $10,000 parts
credit as well as a free Columbia customer care visit. In
addition, there will be a “participation drawing prize”
given for a $7,500 parts credit. This will be rewarded
regardless of the manufactured date.
The oldest operating palletizer contest began on Mar. 1,
2012, and will run until July 1, 2012. To submit your machine
into the contest, visit palletizing.com/oldestpalletizer.
Southern Indiana Career and
Technical Center opens Motoman
Robot Laboratory
Evansville Vanderburgh
School Corporation (EVSC)
recently announced the
opening of the Motoman
Robot Laboratory at the
Southern Indiana Career and
Technical Center (SICTC). The
center received an advanced
manufacturing grant this
year, allowing it to purchase
eight HP3JC robots with NXC100 controllers. The robotics
program is one of several new programs SICTC has started
to better prepare students for careers in post-secondary
education related to manufacturing.
SICTC’s new Motoman Robot Laboratory will equip
students with the skills needed to support advanced manufacturing
in the southern Indiana region.
SATO America acquires Achernar of Argentina
SATO, a leader in the automatic identification and data
collection industry, announced that it has signed a
definitive agreement to acquire Achernar of Argentina,
a privately held corporation based in Buenos Aires and
one of the region’s most renowned providers of adhesive
labeling solutions.
By its industry diversification and ability to quickly
respond to changes in market demands, Achernar
provides specialty labels for the food, fruit, cosmetics,
pharmaceutical, electronic, lubricant and postal service industries. Founded in
1971, Achernar manufactures a range of labels including prime, promotional,
variable information, security and high durability label solutions.
“The acquisition of Achernar further illustrates our ongoing commitment to
the South Cone region of South America with best in breed for labeling and
identification solutions,” said Bob Linse, president of SATO America. “Our
acquisition of NODOS in 2010 and now Achernar strengthens our business
model of DCS and labeling in the region.”
FAST FACT
$
14.3
billion
Combined size of the
Top 20 Systems
Suppliers
revenue in 2011.
See story, page 28
mmh.com Modern Materials Handling / A p r i l 2 0 1 2 3

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VOL. 67, NO. 4
®
PRODUCTIVITY SOLUTIONS FOR DISTRIBUTION,
WAREHOUSING AND MANUFACTURING
Philip Thiemann
(left) and
Trevor Carlson,
Federated
Co-operatives
COVER STORY
PHOTO: NAYAN STHANKIYA/GETTY IMAGES
SYSTEM REPORT
18 Earth Day, every day
Federated Co-operatives, a Canadian retail co-op, has embraced
sustainability to reduce its costs and return the savings to its members
and customers.
24 Lean, green machine
Federated Co-operatives uses technologies that are environmentally
and worker friendly in its Saskatoon warehouse.
FEATURES
SPECIAL REPORT
28 Top 20 systems suppliers
Modern’s 15th-annual survey of the world’s leading materials handling
systems suppliers shows a continued trend of increased revenue in
2011 for the majority of the top companies.
EQUIPMENT REPORT
32 Conveyors: Gaining control
and getting smarter
Advanced controls and functionality are allowing conveyor systems
to play an increasingly important role in complex materials handling
processes inside our warehouses and distribution centers.
BEST PRACTICES
38 Health care reform
Automated materials handling and data collection systems are
transforming the health care supply chain.
PRODUCTIVITY SOLUTIONS
44 Vertical lift module keeps automotive
parts moving
46 Mobile storage solution optimizes
storage density
SPECIAL SUPPLEMENT
S48 RFID surges ahead
Proponents have changed the conversation and have started tagging
at the item level in what is now called a “source-to-store” approach.
60 seconds with
Sean O’Neill
PHOTO: ALAN WYCHECK/GETTY IMAGES
DEPARTMENTS & COLUMNS
3/ Upfront
7/ This month in Modern
14/ Lift Truck Tips: Battery management
16/ Packaging Corner: Palletizing
52/ Focus On: Lift trucks
58/ 60 seconds with...
NEWS
9/ Amazon.com to acquire Kiva Systems
11/ Betman & Knapp acquire controlling
interest in W&H Systems
12/ CHEP USA to open U.S. headquarters
in Atlanta
13/ IWLA presents award to Rutgers professor
Modern Materials Handling ® (ISSN 0026-8038) is published monthly by
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mmh.com MODERN MATERIALS HANDLING / A P R I L 2 0 1 2 5

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Being green is simply
being smart
The general interest level and media
attention given to the concept
of “sustainability” has traditionally
ebbed and flowed with the price of fuel.
Fuel prices go up, and all of a sudden
we’re bombarded with images of consumers
flocking to buy hybrid vehicles. Fuel
prices stabilize, as we saw over the course
of the past two years, and it’s right back to
the V8 sport utility vehicle while the hybrids
are dropped from the national conversation.
But today, even with the specter of $5
diesel looming, the sheer number of green
messages appears to be dwindling while
coverage of green corporate initiatives
has cooled. According to Modern’s recent
State of the Industry Survey, conducted by
Peerless Research Group (PRG), this shift in
“messaging” shouldn’t come as a surprise
since the ROI of the green marketing message
is still yet to be measured in terms of
sales or market position for many manufacturers
and retailers.
In fact, Modern’s research found that only
38% of respondents said that the adoption
of green initiatives inside their warehouse
and distribution centers is being pushed
down the line from top management—that’s
down from 53% in our 2011 findings. Only
25% of respondents said that their customers
are demanding green initiative adoption,
while only 16% report that they’re
implementing green efforts to keep up with
their competitors.
“But don’t be alarmed,” PRG’s research
director Judd Ashenbrand told me after
he wrapped up the survey. “Efforts to
recycle, energy-saving implementations,
and green packaging are certainly undergoing
continued acceptance.”
Member
Member of
This month in modern
Winner
Jesse H. Neal
Certificates of Merit
for Journalistic
Excellence
MICHAEL LEVANS
GROUP EditorIAL
DIRECTOR
What’s changed, he said, is the pressure
from the top. “It’s interesting to note that
our findings clearly tell us that while many
businesses consider the observance of environmental
efforts to be a socially responsible
act, management in fewer organizations
are now upholding the movement to green
as a corporate directive.”
What’s lost in the findings, however, is the
fact that many savvy supply chain professionals
are proving that the benefits of their
green initiatives—also defined as “smart”
supply chain best practices—are certainly
measurable and are actively trimming costs.
One company in particular that’s been
“smart” for four decades is this month’s
cover subject Federated Co-operatives,
an organization that provides distribution
to 257 retail co-ops in Western Canada.
Federated started their energy conversation
program during the oil crisis in the 1970s,
and most recently installed five 24-foot,
low-speed fans to regulate the air in the
80,000-square-foot loading dock station of
its Saskatoon warehouse.
The project delivered a 10% reduction
in natural gas consumption and nearly
$20,000 in savings during its first year. But
that’s just scratching the surface of what this
smart, green organization has achieved.
For the supply chain team at Federated,
green will never loose steam. To
them, green is simply executing sound
best practices and being smart. “The root
of our program is one of economics,” says
Philip Thiemann, Federated’s warehouse
operations director. “Back then, we thought
$40-a-barrel oil was high, and we have been
looking at ways to decrease our operational
expenses ever since.”
Official Publication of
mmh.com Modern Materials Handling / A p r i l 2 0 1 2 7

Whatever it takes.
A 2 am customer call. A failed servo drive that has shut down a key
sortation system. During peak season. Time for some out-of-thebox
thinking. We chartered a plane and delivered a replacement
drive the same day. No delays. No questions. No problem.
With a $20 million parts inventory of 15,000 SKUs in our Memphis
warehouse, Dematic expedites parts orders with first-class
efficiency. Easy ordering via phone, fax or online. Free shipping.
Same-day shipping on orders placed by 10:00 pm EST.
http://www.dematic.com/na/customer-service
From parts to audits and modernizations, to remote and
emergency service, supplemental staffing and training, we take
service above and beyond.
No one delivers like Dematic.

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AUTOMATION
Amazon.com to
acquire Kiva Systems
AMAZON WILL ACQUIRE ALL OF THE OUTSTANDING
SHARES OF THE MOBLE-ROBOTIC SOLUTIONS
PROVIDER FOR $775 MILLION.
BY BOB TREBILCOCK, EXECUTIVE EDITOR
IN A MOVE THAT STUNNED the
industry, last month Amazon.com
announced that it reached an agreement
to acquire Kiva Systems, a
developer of mobile-robotic solutions
that automate e-commerce order fulfillment
and warehouse operations.
“Amazon has long used automation
in its fulfillment centers, and
Kiva’s technology is another way to
improve productivity by bringing
the products directly to employees
to pick, pack and stow,” said Dave
Clark, vice president of global customer
fulfillment for Amazon.com.
“Kiva shares our passion for invention,
and we look forward to supporting
their continued growth.”
Under the terms of the agreement,
which has been approved by
Kiva’s stockholders, Amazon will acquire
all of the outstanding shares of
Kiva for approximately $775 million
in cash, as adjusted for the assumption
of options and other items.
Subject to various closing conditions,
the acquisition is expected
to close in the second quarter of
2012. Following the acquisition, Kiva
Systems’ headquarters will remain
in North Reading, Mass.
“For the past 10 years, the Kiva
team has been focused on creating
innovative material handling technologies,”
said Mick Mountz, CEO and
founder of Kiva Systems in a statement.
“I’m delighted that Amazon
MMH.COM: Blog
Amazon/Kiva: Wow
BY BOB TREBILCOCK, EXECUTIVE EDITOR
“I’m shocked.”
Those were the first words out of my
mouth when a reporter from The Boston
Globe asked me what I thought of the purchase
of Kiva by Amazon for $775 million.
I’m still trying to wrap my head around
the figure. That is not a reflection on what
I think of Kiva. In many respects, it is a
remarkable company. Mick Mountz, Kiva’s
CEO, had a vision for a completely unique
way of delivering a goods-to-person order
fulfillment solution. Unlike a lot of new technology,
Kiva works by all accounts. That is no
is supporting our growth so that
we can provide even more valuable
solutions in the coming years.”
small achievement. Kiva’s reported revenue
is no small achievement either. Although
Kiva does not release sales figures, it has
been reported in the Globe and the Boston
Business Journal that Kiva “is reportedly
seeing more than $100 million in annual revenue,
thanks in no small part to the growth
of e-commerce (Kiva customers include
Zappos, Crate & Barrel and Gap).”
Still, $775 million That’s dot-com
money. And while Kiva’s growth has
been driven by direct-to-consumer order
fulfillment, at the end of the day, Kiva is a
materials handling company and not a dotcom.
Someone will correct me if I’m wrong,
but I’d venture to say that no materials
handling company has ever generated that
kind of multiple in a sale. Hopefully, a lot of
mmh.com MODERN MATERIALS HANDLING / A P R I L 2 0 1 2 9

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that cash will go to Mountz and his employees rather than venture
capitalists. What then accounts for Amazon’s interest in Kiva Kiva
directed me to Amazon, which said in its press release that “Kiva
shares our passion for invention, and we look forward to supporting
their continued growth.”
My take Going forward, I think Kiva has several important
things in its favor.
One is robotics. While robots have been common in manufacturing
for decades, they’re new to warehousing and distribution,
where wages were historically much cheaper than a manufacturing
plant. That may be changing and not because of rising wages.
Rather it’s because warehouses are struggling to keep enough
workers to do the job, especially during seasonal and holiday
spikes in demand. Meanwhile, the cost of robotics has come down
and the solutions have improved. This is still very much an emerging
trend, but it’s a trend that works in Kiva’s favor.
Direct-to-consumer: Retailers in particular are struggling with
piece picking, whether they are filling direct-to-consumer orders
or picking smaller and more frequent deliveries to retail stores.
That has been exacerbated by the consumer demand for free
shipping. Controlling operational costs associated with piece
picking has opened up the market for goods-to-person order
fulfillment solutions—whether they come from Kiva or a traditional
materials handling automation supplier.
Despite that good news, Kiva and Amazon have several
challenges.
Niche market: Yes, goods-to-person is a fast-growing market,
but it’s still a niche market. Let’s face facts: The majority of
warehouses are still paper-driven and store things on the floor or
on pallets. I’m guessing the number crunchers at Amazon have a
spreadsheet versus my guesstimate, but to reach Kiva’s reported
target of a billion dollars a year in sales, I think they’d have to
corner the goods-to-person market.
The materials handling industry is catching up: When Kiva
first exhibited at ProMat five or six years ago, no one quite knew
what to make of those little bots. Many in the industry dismissed
them until they started winning orders. Now, conventional materials
handling automation suppliers have upped their game when it
comes to goods-to-person order fulfillment. What’s more, in many
facilities, goods-to-person is one of several picking strategies and
not the only picking strategy—especially as more companies look
to develop multi-channel DCs. Vendors can argue over whether
mobile robots are better than carousels, mini-loads, shuttles or tilt
tray sorters to deliver goods to an order selector, but the truth is
that in this industry there is no-one-size-fits-all solution.
We’ve seen this story before: A few years ago, 3M bought
HighJump Software, a Minneapolis-based company that does software
for warehousing, distribution and transportation. There was lots
of talk about synergies and growth, right up to the time when 3M sold
HighJump. Similarly, Siemens once owned Dematic—until they sold it
to a VC. Kiva is a great company, but they’re annual revenue is barely
a rounding error on Amazon’s $48 billion in 2011 sales. I hope they
don’t get lost inside an organization as large as Amazon.
10 A P R I L 2 0 1 2 / MODERN MATERIALS HANDLING mmh.com

MERGERS & ACQUSITIONS
Betman & Knapp
acquire controlling
interest in W&H
Systems
W&H SYSTEMS, A LEADING materials
handling systems integrator, announced
that Don Betman and Ken
Knapp have acquired the controlling
interests of the company.
W&H Systems will continue to
offer warehouse solutions, which
include consulting, system integration,
software and controls, and
project management. As a result of
the transaction, W&H will increase
R&D, improve products and services,
and add innovative solutions to
promote the continued growth of the
company.
“ Today we have taken
control over our future. Our
plan is to grow the business
and continue to bring
innovation to our clients.”
— Don Betman, president,
W&H Systems
According to the company,
Betman will continue to manage
the day-to-day operations at W&H
Systems. He joined W&H in 1993
when he created the customer service
department. He subsequently
worked as operations coordinator
and vice president of sales and
marketing. He is a member of the
Warehouse Education & Research
Council, as well as a member of The
Council of Logistics Management
and the National Retail Federation.
He attended the University of Maryland
with a focus in business administration
and marketing.
“I have been part of W&H Systems
for almost 20 years, and it’s
been exciting to be integral to many
of our clients’ successes,” said Betman.
“Today we have taken control
over our future. Our plan is to grow
the business and continue to bring
innovation to our clients.”
Knapp, who joined W&H in 1991,
is currently W&H Systems’ COO and
vice president. In this position he will
continue to ensure the satisfaction of
the materials handling needs of W&H
clients. He has filled positions from
field administrator to vice president
of operations, which encompassed
internal coordination of a more than
mmh.com MODERN MATERIALS HANDLING / A P R I L 2 0 1 2 11

100 person team. In that role, he
handled sensitive external negotiations
with high-level executives in
the retail distribution market. Knapp
has a technical degree from Brick
Computer Science Institute, with
Ironclad ® exclusive square tube technology
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a concentration in computer and
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He has attended executive
development programs on finance,
strategic planning and business management
at Columbia University and
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The Wharton School.
“When the opportunity presented
itself to direct the future of W&H, I
did not hesitate. It has been exciting
to be part of this outstanding team
of material handling professionals
over the past 21 years,” Knapp said.
“W&H has always been a solid material
handling company, but we plan
to take to W&H to a new level.”
PACKAGING
CHEP USA to open
U.S. headquarters
in Atlanta
GOV. NATHAN DEAL announced that
CHEP USA, an industry leader in pallet
and container pooling solutions and a
part of Brambles Limited, will relocate
its headquarters to Atlanta. The company
plans to bring 173 jobs to the
new facility over the next five years.
“Georgia has many natural benefits
and other strategic resources that
make our state an attractive location
for companies in the logistics industry,”
Deal said. “CHEP and other
logistics service providers understand
that Georgia has significant capabilities
to support this industry, so we
are indeed glad to welcome this new
headquarters operation to Georgia.”
CHEP manages pallet and container
supply chain logistics for its
customers in the consumer goods,
produce, meat, home improvement,
beverage, raw materials, petrochemical
and automotive industries.
The company is a recognized leader
in pallet and container pooling
services for well-known brands.
CHEP partners with many companies
to develop pallet and container
management solutions that ensure
reduced product damage, offer
enhanced delivery efficiencies, eliminate
waste and reduce supply chain
costs, adding exceptional value for
12 A P R I L 2 0 1 2 / MODERN MATERIALS HANDLING mmh.com

of Logistics and Supply Chain Management
and co-director of the Center for
Supply Chain Management at Rutgers
University. “Throughout his career,
Dale Rogers has contributed enormously
to the progress and growth
of the warehouse industry,” said
IWLA immediate past chairman Linda
Hothem, president of Pacific American
Group. Hothem presented Rogers with
the award during the IWLA Convention
& Expo in San Francisco.
its customers.
“We are delighted to join the
Atlanta business community,” said
Kim Rumph, president of CHEP USA.
“Georgia offers CHEP excellent proximity
to many of our key customers,
provides advantages in recruiting and
attracting talent into our organization
and offers an outstanding quality of
life for our employees who will relocate.
We look forward to becoming
actively involved in the community.”
The CHEP USA headquarters operations
will locate in office space in
Dunwoody. In addition, this location
will be the base for other leaders from
the Americas Region and global functions
of the pallets business segment,
and will serve as a Brambles regional
office with members of the Brambles
IT leadership team. CHEP expects the
facility to be operational by the fall
of 2012 and is actively recruiting for
open positions in the Atlanta area.
SUPPLY CHAIN
IWLA presents
award to Rutgers
professor
THE INTERNATIONAL WAREHOUSE
Logistics Association (IWLA) recently
presented its 2012 Distinguished Service
Award to Dale Rogers, professor
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mmh.com MODERN MATERIALS HANDLING / A P R I L 2 0 1 2 13

lift truck TIPS
California charges ahead
New California battery charging regulations
could foretell industry-wide shift.
By Josh Bond, Editor at Large
California, the birthplace of the Energy Star program,
is again advancing energy efficiency following the
state energy commission’s Jan. 12 approval of
efficiency standards for battery chargers. According to
Kenro Okamoto, electric product planning specialist for
Toyota Material Handling, the new regulations require
big changes for some electric lift truck users in California.
They might also forecast a nationwide model for efficient
forklift battery charging.
“These new regulations are going to force electric lift
truck end-users to change,” says Okamoto. “So much
charging technology is not smart. There’s a lot of waste.”
The commission estimates the 170 million charging
devices in California homes and businesses account for as
much as two-thirds of the 8,000 gigawatts consumed in
the state each year. Unlike industrial chargers, most chargers
for personal electronics do not automatically switch
off at the end of the charging cycle. The new regulations
will change that, but personal electronics will not likely
be the primary source of savings. After all, not many cell
phones have been in use for 10 or more years.
By the time the regulations are fully phased in, they
could save California an estimated $300 million in annual
electricity costs. Any industrial chargers that do not
meet the regulation’s requirements for power conversion,
power required to charge, no-battery draw, and overall
efficiency will have to go.
“The older ferro-resonant technology is still in use
because it is so reliable,” Okamoto says. “Even though it is
heavy and inefficient, it just hasn’t been a squeaky wheel.”
Users might convert to next generation ferro-resonant
technology, which uses power switches to improve efficiency,
but this technology is not sensitive to input voltage.
Therefore its overall power conversion efficiency (the
difference between AC power at the wall and DC power
at the battery) might not comply with the new regulations.
The safest bet, says Okamoto, is “switch mode” technologies
such as IGBT or MOFFET. These high-frequency
technologies are smaller, quieter, and much more efficient
thanks to intelligent switching systems. The efficiency of
such systems is much greater, but the increased complexity
can also lead to increased service costs, says Okamoto.
“You have precise control, which enables great efficiency,”
he adds. “They can perform with a variety of line
voltages, no heavy expensive transformers have to be
used, and power output is very efficient.”
Josh Bond is an editor at large for Modern and can be
reached at josh.d.bond@gmail.com.
14 A p r i l 2 0 1 2 / Modern Materials Handling mmh.com

YOUR OPERATION NEEDS TO BE MORE EFFICIENT THAN EVER.
YOU NEED TO CUT COSTS AND INCREASE PRODUCTIVITY.
AND THERE’S NO ROOM FOR ERROR.
Hyster ® lift trucks are designed to
help you get more done with less.
In fact, the Hyster CT uses up to 12%
less fuel than the leading competitors,
but don’t just take our word for it.
In a recent study, respondents
ranked Hyster #1 in Total Cost of
Ownership among several lift
truck manufacturers. *
To see how our tough, reliable
lift trucks finished first, visit
hyster.com/TCO.
*Peerless Media Research Group, 2011
12HST4925
© 2012 Hyster Company. Hyster and are registered trademarks of Hyster Company.
hyster.com

packaging corner
Pallets take their own
temperature
To combat waste in the food supply chain, packaging
companies are employing technology to monitor goods.
By Sara Pearson Specter, Editor at Large
As much as 30% of all produce that’s
grown in the United States is thrown
away before it even reaches consumers,
says Rex Lowe, president of iGPS
(Intelligent Global Pooling Systems). “That
happens because it is out of date by the time
it arrives at the store, or it has gone through
an unacceptable temperature field that shortened
its shelf life,” he explains.
To combat that waste—both in products
and lost revenue—iGPS has created a line of
plastic pallets embedded with active radio
frequency identification (RFID) tags. This system
provides a platform for pallet-level temperature
monitoring, says Lowe. The tagged
pallets can be rented by growers, producers,
co-ops, shippers and brand owners.
“Previously, the only way to monitor
shipped produce’s temperature was to
measure the temperature of an entire trailer,”
Lowe explains. “But inside the trailer, temperatures of
individual unit loads can vary from bottom to top and
front to back. By each pallet independently measuring
the temperature around itself, it could prevent hundreds
of thousands of dollars in shrink.”
While the technology is still in its infancy, its potential
cost savings to the perishable supply chain—and for
pharmaceutical handling—is huge.
Although tracking individual unit loads with passive
RFID tags has become widespread, the ability to monitor
temperature came with improved battery life and
increasingly affordable hardware, says Lowe. “The active
tag can be set to record temperatures at any frequency
increment; longer increments mean longer battery life,”
he says.
The tag is read by an interrogator that pulls the data
from the tag and pushes it to software for analysis. If a
certain load has spent time outside of a pre-set desired
temperature range, an alert directs that product to be
sold first or discarded. “This practice allows you to do a
recall with a rifle rather than a shotgun,” he adds.
“The requirements for following these products
through the supply chain are only going to expand and
increase,” adds Lowe. “This technology offers a better
means to control and monitor the products from the time
of production to the time of consumption.”
Sara Pearson Specter is an editor at large with Modern and
can be reached at sara@moxiemarketingllc.com.
16 A p r i l 2 0 1 2 / Modern Materials Handling mmh.com

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modern system report
Earth Day, every day:
How Federated
Co-operatives
practices
sustainable
distribution
A Canadian retail co-op has embraced sustainability to reduce
its costs and return the savings to its members and customers.
By Bob Trebilcock, Executive Editor
What does it mean to operate a
sustainable warehouse and distribution
network
As we approach Earth Day,
that’s a question being asked
by any number of organizations,
especially as recycling,
energy conservation, social responsibility and
other aspects of sustainability percolate in board
rooms around the world.
Federated Co-operatives Limited, an organization
that provides wholesaling, manufacturing,
marketing, administration and distribution services
to 257 retail co-ops in Western Canada, has
been asking and answering that question for more
than 30 years.
“We began incorporating energy conservation
into our building operations after the oil crisis in
the 1970s,” says Philip Thiemann, Federated’s
warehouse operations director in Saskatoon,
Saskatchewan. “Back then, we thought $40-a-barrel
oil was high, and we have been looking at ways
to decrease our operational expenses ever since.”
In its more than 300,000-square-foot food
warehouse in Saskatoon, for example, Federated
installed five 24-foot large-diameter, low-speed
fans (Big Ass Fans, bigassfans.com) to regulate the
air in the 80,000-square-foot loading dock section
of the warehouse. That project delivered a 10%
reduction in natural gas consumption and nearly
$20,000 in savings during the first year at a time
when natural gas rates were increasing by 20%
(see box, p. 20).
The fans are just one example of how Federated
is approaching sustainability, according to
Thiemann and Trevor Carlson, Federated’s environmental
and technical services manager. “If we are
Federated Co-operatives has been focused
on saving energy, recycling and optimizing
transportation across its network of distribution
centers for more than 30 years.
18 A p r i l 2 0 1 2 / Modern Materials Handling mmh.com

modern system report
PHOTOGRAPHY BY NAYAN STHANKIYA/Getty Images
mmh.com Modern Materials Handling / A p r i l 2 0 1 2 19

modern system report
going to be around for another 20 or 30
years, we have to be sustainable,” says
Carlson. “The savings we have already
realized through our efforts has created
revenue that we can invest in our business,
return to our co-operative owners,
and deliver as savings to our customers.
Those all build loyalty for our brand.”
And, Thiemann adds, “Aside from the
social imperative, there is a significant
economic opportunity any time we can
reduce, reuse or recycle in our operations.”
A sustainable culture
Federated Co-operatives may not be a
household name in the United States.
However, with an estimated $6.5 billion
in annual sales, it is the 49th largest
corporation in Canada, the largest
non-financial co-operative in the country,
and the second largest company in
Saskatchewan.
Founded in Saskatoon in 1928, the
co-operative provides services to 257
retail co-operatives located throughout
Western Canada. The members operate
retail shops, fueling stations, building
material supply centers and refineries.
Federated employs some 2,900 people
and operates five distribution centers
in Calgary, Edmonton, Saskatoon and
Winnipeg as well as a fleet of 143 merchandising
trailers and 103 tankers.
While co-operatives typically form to
increase the buying power of its members,
operational savings are an important
component of Federated’s business
model. Any savings the co-operative can
realize from operating costs is refunded
to its members each year as a patronage
refund. The bigger the net income after
operations—a figure Federated calls
its net savings—the bigger the refund.
Over the last 10 years, Federated has
returned more than $2.5 billion to its
retail members.
Sustainability has been an important
How Federated uses fans to further sustainability
With the cost of heating the Saskatoon warehouse going
through the roof—literally—Federated Co-operatives was
interested in testing whether thermal destratification in its
warehouses would result in significant heat cost reductions
and the reduction of the amount of natural gas needed to
heat its facilities. Destratification is what happens when
layers of warm air that form in one part of a facility mix
with layers of cooler air in another part of a facility to produce
a constant temperature.
According to Trevor Carlson, environmental and technical
services manager, Federated believed a fair amount of
heat was being trapped or lost through the ceiling.
The difference between the temperature of the air at
the floor level and the underside of the roof deck in
some distribution centers can be up to 30 degrees,
depending on the time of year. If that warm air could
be brought down to circulate through the building,
then Federated could reduce the rate at which its
buildings were shedding heat through the roof.
To put the theory to the test, Federated installed
five 24-foot large-diameter, low-speed fans (Big Ass
Fans, bigassfans.com) in the 80,000-square-foot loading
dock area back in 2007. The retail co-operative
then began to measure its heat index in the pilot
area, a measurement that relates the day’s temperature
to the energy demands of the heating system.
The index is expressed as Btu/ft2/degree day. Before
the installation of the fans, the heat index was 4.49
Btu/ft2/degree day. By the end of 2008, the heat
index had been reduced by 10% to 3.61 Btu/ft2/F.
“We believe we saved $19,800 in the first year in
natural gas consumption as a result of the fans,” says
Carlson.
Since then, Federated has expanded the use of
fans to other facilities, says Philip Thiemann, warehouse
operations director. In Winnipeg, for instance,
the co-op installed a fan in a temperature controlled
dock area where hot air was building up in the hot
summer months around the dock doors.
“We had to turn the thermostats down, which put
a constant demand on the refrigeration units,” he says.
“The air movement from the fans allows the air to mix and
even out the temperatures.” In the process, Thiemann
adds, workers have found that the new fans keep the
ambient temperature areas more comfortable on hot days
for less money.
“The big fans use about 3 amps an hour compared to
180 amps for the fans we had been using in the summer,”
he says. “The electrical savings in the summer are greater
than the gas savings in the winter and the workers are
more comfortable.”
20 A p r i l 2 0 1 2 / Modern Materials Handling mmh.com

modern system report
component of those savings. Part of
that is driven by geography: Federated’s
retailers are located in some of the
coldest areas of Canada, making energy
savings an imperative.
As a result, Federated was an early
adopter of energy saving and recycling
programs that are now gaining popularity
in the United States. Carlson points
out that Federated has been installing
state-of-the-art heating and cooling systems
in its warehouses since the 1980s.
Similarly, the co-operative launched a
program back in the 1980s that recycles
nearly 300,000 pounds of paper
annually. In the late 1990s, Federated
was one of the first shippers in Western
Canada to run triple trailers rather than
doubles in one specific geographic area.
“We have a refinery in Regina and
a food warehouse in Saskatoon,” says
Carlson. “We run two full trailers of
fuel along with an empty grocery trailer.
After we drop off the fuel trailers, we fill
the empty grocery trailer.” The program
is a success because Federated limits
the hours when it runs the trailers and
shares the transportation savings with
the government.
After 30 years of projects, a sustainable
mindset has been instilled across
the company, one that
is driven by looking
for a business case
for every project. “If a
project doesn’t further
our business, it’s not
sustainable,” Carlson
says. “But as we do
more of these projects,
the business case only
gets better.” After all,
he adds, the long-term
costs of electricity and
fuel aren’t going down.
“If we find a business
case for today, chances
are that case will be a
whole lot better five
years from now.”
Federated relies on a pool of rental pallets and
captive pallets to reduce the amount of wood waste
going to the landfill.
Sustainable
materials handling
While sustainability
has been part of the culture at
Federated for years, the co-operative
formalized the program about five years
ago. In September 2008, Federated
developed environmental performance
metrics and determined the carbon
footprint of some key larger buildings,
including the Saskatoon food warehouse.
In 2009, the
project was expanded to
include all of its warehouses
and its fleet of
vehicles. According to
Carlson, the information
is being used to
objectively compare its
environmental performance
to other similar
companies, set internal
performance goals and
manage its environmental
impact.
Some of the
Materials like plastic (shown) and corrugated are
baled for recycling to minimize the amount of waste
leaving the facility.
improvements that
have come out of that
effort include a project
to retrofit its warehouses
with T5 high
output lighting systems
equipped with sensors
that turn the lighting on only when people
are working in the area. Designed
for a new grocery freezer in Calgary,
the lighting system is expected to cut
lighting-related electrical usage from
2.9 million kilowatt hours per year to
1.7 million kilowatt hours.
Similarly, Federated is converting
refrigerator and freezer operations to
ammonia-based refrigeration to enhance
electrical systems. And its new trucks
are equipped with electronically controlled
engines that reduce the release of
harmful emissions into the environment.
Yes, energy and transportation savings
are important, but the question
of what constitutes sustainable materials
handling is harder to quantify. “We
hired a consultant to audit our warehouses,”
Carlson says. “They identified
potential projects for us, but generally
felt that it would be difficult to
find ways to improve our warehouse
operations in a sustainable way beyond
energy savings and emissions.”
Still, both Carlson and Thiemann
believe there is a role for sustainability
in materials handling, especially if you
adopt the broader definition of sustainability
that includes the worker. Ceiling
22 A p r i l 2 0 1 2 / Modern Materials Handling mmh.com

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modern system report
Voice picking technology allows order selectors
in the freezer to remain productive while wearing
bulky protective gloves.
Lean, green machine
Federated Co-operatives uses technologies that are
environmentally and worker friendly in its Saskatoon
warehouse.
By Bob Trebilcock, Executive Editor
Receiving: The receiving process
begins prior to the arrival of a trailer
in the receiving and shipping area (1)
when a vendor sends an advance ship
notification (ASN) and books a delivery
appointment. Once the trailer arrives,
Federated manages a paperless receiving
process. Palletized product is unloaded
from the truck and scanned with handheld
devices. With that information, the
warehouse management system (WMS)
creates a license plate bar code tag and
pallets are staged in the receiving and
shipping staging area (2) for putaway.
Priority is given to product that is destined
for the refrigerated (3) or freezer
(4) storage areas.
Putaway: Although there is some
floor storage in the Saskatoon facility,
most product will be stored in pallet
rack, regardless of whether the product
is stored in refrigerated (3), freezer (4)
or ambient temperature (5) areas. The
lower levels of the racks are used for
fans, for instance, not only lower utility
costs, but they have also created a more
productive work environment—or an
environment that reduces the stresses
on productive employees.
Thiemann also contends that the
voice-directed picking solution that was
installed in freezer areas fits the broader
definition of sustainability. “Voice picking
allows order selectors
to wear bulky gloves while
they’re working in the
freezer and still be productive,”
he says. “That’s
not the first reason you go
to voice picking, but it’s a
benefit that is related to
sustainability.”
Thiemann has implemented
sustainable solutions
in other areas as well:
• Federated pays attention
to the dock area, with
vertical dock doors and
seals in existing facilities
along with specially
designed dock doors in new
construction.
• Federated was an
early adopter of CHEP
pallets in Canada for full pallet deliveries.
Instead of using one-way pallets
that may go to a landfill, CHEP
retrieves, sorts and repairs the pallets
used by Federated. The co-op builds
mixed pallets for store replenishment
on a captive pool of plastic pallets.
“Since 97% of our deliveries are on our
own fleet, we can bring back the plastic
pallets, along with boxes, packing
blankets, and some consumables to our
warehouses,” Thiemann says.
• Plastic shopping bags, stretch wrap,
corrugated and one-way wooden pallets
are recycled. “We are not a zero-landfill
facility,” Thiemann says, “but we minimize
the amount of material going into
the landfill as much as possible.”
• Federated eliminated end-of-shift
battery charges. “If your battery still has
a few hours left at the end of the shift,
we’ll run it the next morning before its
swapped out,” says Thiemann. “That
reduces the power surge in the facility
at the end of shift when everyone
plugged in to a battery charger, and it
increases the life of the battery by maximizing
the draw down on each charge.”
Thiemann says that Federated typically
gets about seven years of life out of its
batteries.
“Going forward, we’ll continue to
look at every aspect of our operations for
potential savings,” says Thiemann. “The
root of our program is one of economics,
but we also know there’s a real focus on
environmental issues now. It’s important
that we keep doing what we are doing
and get the message out as well.” M
Federated
Co-operatives Limited
Saskatoon, Saskatchewan
Size: 302,000 square feet plus a planned
165,000-square-foot addition
Products handled: Full range of food
products, including dry groceries,
tobacco products, produce, dairy cooler
and frozen foods. Milk and meat are
crossdocked.
Stock keeping units: 13,500+
Throughput: 1.4 million cases per
month
Employees: 160 in operations
Shifts/Days: 2 shifts/7 days plus some
third-shift activities
picking while the upper levels of the
rack are used for reserve storage. The
WMS first determines whether product
24 A p r i l 2 0 1 2 / Modern Materials Handling mmh.com

Supply chain’s best friend
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of diagnostic and information technologies for animal health,
needed to analyze its global distribution to better serve the more
than 50,000 veterinary practices that rely on their products.
Complex orders with diverse temperature
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modern system report
should be stored in reserve storage on
the upper levels or if there is an immediate
need for that product in a pick
module on the lower levels. In addition,
the system manages storage locations
based on expiration dates to ensure
that product nearest its best-by dates
are picked first. Using that criteria, the
WMS directs the driver to an aisle or
a segment within an aisle. The driver
chooses the best available storage location
and updates the WMS.
Crossdocking: Some products, especially
meat and milk (6), are crossdocked
directly to stores using a flow-through
model. When product arrives that can
be shipped directly to a store, it is put
away into an available pick location in a
dynamic storage and picking area in the
flow-through area (7). Once all of the
product has been putaway, the WMS
drops orders for that merchandise and
order selectors begin to fill those orders.
Picking: Whether product is stored
in the flow-through area
(7) or in the pick modules
(3, 4, 5), the WMS
sorts orders into assignments,
prioritizes the
sequence the orders will
be picked based on a set
of rules established by
Federated, and begins
to deliver them to the
floor. Some order selectors
use RF scanners
but most pick using
System suppliers
Fans: Big Ass Fans, bigassfans.com
Case flow rack: Rhinotrac, rhinotrac.com;
Span-Track, unex.com/spantrack.htm
Pallet rack: Frazier, frazier.com; Redirack Storage Systems,
redirack.com
Lift trucks: Hyster, hyster.com; Raymond, raymondcorp.com
Voice recognition: Vocollect, vocollect.com
WMS: AFS Technologies, afsi.com/warehouse-managementsoftware.asp
Dock doors: TKO Dock Doors, tkodoors.4frontes.com
Dock equipment: Serco Equipment, serco.4frontes.com/
Products/DockLevelers.aspx
Wooden pallets: CHEP, chep.com
voice recognition technology. In most
instances, order selectors pick full
cases to pallets. However, tobacco,
confectionary, and health and beauty
products are picked by item to totes.
In those instances, the WMS creates
a license plate ID tag for a tote that is
similar to a pallet tag. Order selectors
are directed to pick items into a tote.
Once the tote is full, it is closed and
loaded onto a pallet. The order selector
then begins picking to another tote.
Shipping: Once a pallet is picked,
it is directed to the receiving and shipping
staging area (2). From there, it will
be loaded onto the next available trailer
in the shipping area (1). In Saskatoon,
Federated uses multiple temperature
trailers. Frozen products are loaded
first, followed by refrigerated products
and finally dry groceries to close out the
trailer. M
Freezer
storage
4
Receiving
and shipping
1
Meat/milk
crossdocking area
6
2
Receiving and
shipping staging
Ambient temperature
storage
5
Freezer
storage
4
Refrigerated
storage
3
7
Flow-through
storage and picking
26 A p r i l 2 0 1 2 / Modern Materials Handling mmh.com

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modern special report
20
Top
Systems
Suppliers
Modern’s 15th-annual survey of the world’s leading materials
handling systems suppliers shows a continued trend of increased
revenue in 2011 for the majority of the top companies.
By Lorie King Rogers, Associate Editor
Here’s the equation: Take the world’s top systems
suppliers, add their reported revenue
for 2011 and what do you get A really big
number: $14,338,000,000. In fact, Carl
Sagan might have said there were billions
and billions of dollars spent in the materials
handling industry last year.
Modern’s 15th-annual survey shows
increased revenue for 18 of the world’s leading
materials handling systems suppliers. In
fact, this year’s combined total revenue tops
last year’s $11.4 billion by about 25%. In addition,
the cut off to make the list rose from
$100 million to $110 million.
This year’s list also welcomes back all of
last year’s Top 20, plus one. If you’re doing
the math and come up with 21, you’re right.
Here’s why: With last year’s No. 1 Schaefer
and No. 2 Daifuku both reporting $2.5 billion
this year, and currency conversion and
fiscal-year-end timing differences, the race
was simply too close to call. As a result, both
companies can claim top honors.
Here are the details on where the remaining
top five companies landed in the Top 20.
Dematic keeps a tight hold on its ranking
with $1.3 billion, up from $1.2 billion last
year. Murata Machinery breaks into the billion
dollar category, going from $749 million
to $1.05 billion. Mecalux made a run at the
billion-dollar threshold with an estimated
$952 million in revenue, while Vanderlande
posted modest growth to $747 million.
The next five system suppliers, which
all experienced an increase in revenue, include
Swisslog, Kardex Remstar, Beumer
Group, Fives Group and Intelligrated. The
combined revenues for these companies
totaled $2.79 billion.
Adding to the equation
Going back to the top of the list, Daifuku
saw its revenue spike more than $600 million
dollars, from $1.95 million to $2.5 billion.
The increase was due in part to the April
2011 acquisition of three companies which
provide airport baggage handling systems and
services, including Logan Teleflex Ltd. (headquartered
in the United Kingdom), Logan
Teleflex S.A. (headquartered in France)
and Logan Teleflex (headquartered in the
U.S.). In a statement to Modern, Daifuku
also attributed the increased revenue to its
sale of storage, transport, sorting and picking
systems (primarily automated storage and
retrieval systems) to a broad range of industries
including food, pharmaceuticals and
agriculture.
28 A p r i l 2 0 1 2 / Modern Materials Handling mmh.com

Top 20 worldwide materials handling systems suppliers
2011
Rank Company URL
2009
Rank
2010
Rank
Worldwide 2010
revenue (US$)
Worldwide 2011
revenue (US$)
Headquarters
1* Daifuku Co. Ltd. daifuku.com 2 2 $1.95 billion $2.5 billion Osaka, Japan
1*
Schaefer Holding
International GmBH ssi-schaefer.us 1 1 $2.19 billion $2.5 billion Neunkirchen, Germany
2 Dematic dematic.us 3 3 $1.2 billion $1.3 billion Offenbach, Germany
3
Murata Machinery
Ltd. muratecusa.com 5 4 $749 million $1.05 billion Kyoto, Japan
4** Mecalux, S.A. mecalux.com 7 7 $574 million $952 million Barcelona, Spain
5
Vanderlande
Industries vanderlande.com 4 5 $742 million $747 million Veghel, The Netherlands
6 Swisslog AG swisslog.com 6 6 $650 million $654 million Buchs, Switzerland
7 Kardex AG kardexremstar.com 10 9 $470 million $596 million Zurich, Switzerland
8 Beumer Group GmbH beumergroup.com 9 15 $210 million $592 million Beckum, Germany
9 Fives Group fivesgroup.com 13 10 $383 million $508 million Paris, France
10 Intelligrated intelligrated.com 15 11 $378 million $435 million Mason, Ohio
11
Knapp Logistik
Automation GmbH knapp.com 14 12 $329 million $423 million Graz, Austria
12
TGW Logistics Group
GmbH tgw-group.com 12 13 $306 million $394 million Wels, Austria
13
KUKA Systems North
America kuka-systems.com N/A N/A N/A $352 million Sterling Heights, Mich.
14 Legris Industries legris-industries.com 8 8 $500 million $289 million Rennes, France
15 Witron GmbH witron.com 16 14 $270 million $270 million Parkstein, Germany
16 FlexLink AB flexlink.com 19 16 $203 million $228 million
FlexLink Systems
(Allentown, Pa.)
17 Wynright wynright.com N/A 17 $135 million $216 million Elk Grove, Ill.
18 viastore systems viastore.com 20 19 $104 million $125 million Stuttgart, Germany
19 Elettric 80 elettric80.com N/A N/A $94.5 million $120 million Viano, RE, Italy
20
Dearborn Mid-West
Conveyor Co. dmwcc.com 18 20 $100 million $110 million Taylor, Mich.
*Tie for No. 1
**based on industry estimate
Source: Modern Materials Handling, independent research survey
Schaefer, tied for No. 1, experienced
a 16% increase in revenue over
last year, going from $2.19 billion up
to $2.5 billion. Schaefer company
president Arnold Heuzen told Modern
that “the company expects continued
growth as a worldwide systems supplier
as it opens new markets and subsidiaries
in Asia, South America and
other emerging economies.”
Top 10 news
Dematic and Murata Machinery attributed
their company growth to similar
factors. On the product side, Ken
Ruehrdanz, warehousing and distribution
market manager for Dematic,
says the market is embracing new
enabling technology and that applications
for certain systems are on the rise.
Regarding geographic coverage, while
they were not able to disclose specifics,
Murata Machinery told Modern that a
significant portion of growth came from
increased expansion in specific regions
within key vertical markets.
Vanderlande Industries also extended
its reach as a systems supplier
by acquiring Beewen, a German
company that supplies a number of
materials handling systems. Swisslog
enhanced its offerings by forming a
joint venture with Heron Corp., an
Austria-based producer of automation
components, to manufacture state-ofthe-art
transport robots and continue
its light goods technology expansion.
Beumer Group, which is back in the
top 10, also expanded its footprint in
September 2011 by acquiring Enexco
Teknologies India Limited, located near
New Dehli.
Rounding out the top 10 suppliers is
the Fives Group, which experienced a
bump from $383 million to $508 million,
and Intelligrated, which grew from
$378 to $435 million.
“Last year, our customers increased
their earnings and were looking for
an attractive ROI that can be found
in our products, services and auto-
mmh.com Modern Materials Handling / A p r i l 2 0 1 2 29

modern special report
20
Top
Systems
Suppliers
mated materials handling systems,”
says Chris Cole, CEO of Intelligrated.
“Intelligrated saw expansion of exports
and growth in international business in
Canada, Mexico and South America.”
In other news
A number of companies benefitted in
2011 when end users loosened purse
strings and invested in materials handling
solutions. “There was a lot of pent
up demand in the market due to companies
not spending money on projects for
awhile, and we benefitted nicely from
market activity,” explains Jerry Johnson,
marketing manager for Knapp. Knapp
benefitted to the tune of $94 million,
going from $329 million to $423 million.
Market activity also led to a record
year for Wynright. In fact, according to
Brigitte Janos Brozenec, executive vice
president of marketing, 2011 proved
to be the strongest year in Wynright’s
Making Modern’s list
To qualify for Modern’s Top 20 list,
companies must be suppliers of
materials handling systems, not just
equipment providers. In addition to
manufacturing at least two major handling
system components, a company
must also employ full-time staff that
designs, installs and integrates materials
handling systems.
These systems include at least
two of the following: transportation
devices, storage and staging equipment,
picking units, sortation systems,
information management systems,
data capture technologies and
other types of handling equipment.
To be considered worldwide suppliers,
companies must have a presence
in North America and must also
be able to report materials handling
revenues to Modern. (Lockheed
Martin, for example, is a systems
supplier with a North American presence,
but isn’t included in our Top 20
list because they can’t single out the
revenue that comes from materials
handling contracts.)
40-year history. In addition to a 125%
increase in robotic systems sales, the
trends toward industry consolidation,
productivity related infrastructure investments,
planned DC expansion, and
distribution center repurposing contributed
to this overall revenue growth, she
explains.
Stuttgart-based viastore’s reach beyond
the four walls resulted in revenue
of $125 million up from $104 million
last year. New business development
and market manager Amanda Rogalski
says, “The increase was due mainly to
our headquarters out of Germany expanding
its export markets. Specifically,
the Russian market performed quite
well for us in 2011.”
While the Russian market helped
viastore achieve a 20% increase, the
European market wasn’t as good to
System Logistics, which experienced
a 15% decrease and missed the Top 20
list this year. Paul Roy, vice president of
marketing and product management,
believes “the lag was mainly due to
the business challenges in Europe last
year.” On the upside, Roy adds, “This
year is already looking much stronger in
both the U.S. and abroad.”
Back in the U.S., Dearborn Mid-
West Conveyor saw its revenue increase
by $10 million thanks to a boom in its
automotive division, explains Michael
Paisley, controller for the company’s
Michigan division. “Automotive work
was slow through 2008 and leading into
2009 with the bankruptcies of Chrysler
and GM. They simply slowed production
and delayed plans for new car
models during that time,” says Paisley,
“But since then, there has been a resurgence
of new models being pushed out
by the Big 3 starting in late 2010, and
going well into this year.”
New to the list
Making its first appearance on the
list at No. 13 is Kuka Systems North
America. Kuka, which develops, implements
and launches robot-based logistics
solutions for general industry purposes,
reported $352 million in revenue
for its North American business alone,
as global numbers were not ready for
release as Modern went to press.
Industry outlook
On the surface, these larger revenue
figures may seem like it’s smooth sailing
for the materials handling industry.
Let’s hope so. But Modern’s recent State
of the Industry reader survey, which ran
in our March issue, leads us to believe
there are still some rough waters yet to
navigate.
We reported that 2011 survey
results showed that the budgets for
equipment spending increased from
an average of $395,000 in 2010 to
$451,000 in 2011. That makes sense.
A number of factors motivated end
users to spend money on materials
handling equipment, and that’s
reflected in increased revenue for
most of the leading systems suppliers.
However, our 2012 State of the
Industry survey also showed forward
momentum stalling a little. And, while
the industry outlook isn’t gloomy, the
short-term future might not be as bright
as hoped. This was also the message at
the State of the Industry meeting held
at Modex 2012 in Atlanta in February,
when the Material Handling Industry
of America (MHIA) forecasted continued,
but slower growth.
In an interview with Modern, George
Prest, CEO of the MHIA said, “What
I hear from our members is that there
is money out there, and there’s a lot
of quote activity. However, people are
being cautious with regard to when
they are releasing orders.”
That said, MHIA anticipates an increase
in new orders of 8% for 2012
followed by an uptick in orders to 12%
in 2013. M
30 A p r i l 2 0 1 2 / Modern Materials Handling mmh.com

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modern equipment report
Conveyors:
Gaining
control,
getting
smarter
Advanced controls and functionality
are allowing conveyor systems to
play an increasingly important role
in complex materials handling
processes inside our warehouses
and distribution centers.
By Lorie King Rogers, Associate Editor
For decades, conveyor worked as a simple mechanical mode of
product transportation. You could walk into a warehouse or
distribution center and see lines of conveyor running product
from here to there and there to here. Today, conveyor systems
do more than just transport product, they support more sophisticated
tasks to save time, space and energy for DC operations.
“The goal is always to move as much product as you can with
the least amount of effort, people, capital, hours or whatever
the metric, in order to get product to the right person,” explains
Jerry Koch, director of corporate marketing and product management
for Intelligrated. When it comes to delivering product,
Koch says “it’s a race for the front door.”
32 A p r i l 2 0 1 2 / Modern Materials Handling mmh.com

W
Automating manual tasks improves efficiency and accuracy,
and it can also increase throughput. But increasing throughput
is about more than just running the conveyor faster. Some of
today’s conveyor systems can run as fast as 600 feet per minute,
but what operations are seeking from these systems is control
and functionality.
“The good news is that enabling technology, such as conveyor
systems, have evolved and form the foundation on which new
high-performance automation is based,” says Ken Ruehrdanz,
warehousing and distribution market manager for Dematic. “You
need more technology, not more people.”
In fact, any time a person touches a product, not only is there
a cost involved, but there’s potential for error, miscounting, mislabeling
and misplacing product. “The beauty of automation is that
it reduces the number of touches and gets the right product to the
right person in the right condition,” says John Clark, director of
marketing for TGW Systems.
Advances in software
Over the last decade, a key change in the materials handling sector
has been a heavy shift toward the goods-to-person principle,
explains Lennard Koppelmann, director of IT for SSI Schaefer. If a
company analyzes its business model, it can typically come up with
a fully automated, goods-to-person solution that results in fewer
people and a better ROI, he says. The question then becomes:
How can I achieve better throughput at the workstations
One answer is software. The warehouse control system
(WCS) has the intelligence and capability to control the conveying
equipment while the warehouse management system
(WMS) has the information about the product and orders that
ride on top of the conveyor. With all components of the automated
storage and retrieval system communicating together,
product is sequenced onto the conveyor in the right order. The
WCS communicates in real time and tells the conveyor where
to divert, transfer and merge product.
Conveyor is laid out in a route that minimizes travel time,
but the software makes the decisions about where product
should go. “Software makes flow decisions based on the operations
around the conveyor and what’s happening in a picking
area,” says Intelligrated’s Koch. “Totes go to a divert, or transfer
point, if there are things in it to be picked,” he explains.
In a goods-to-person picking operation, the conveyor is
guided by software that allows for the highly coordinated task of
lining up and transporting the containers with SKUs in and out
of the pick station in the precise sequence at exactly the right
time for fulfillment.
With such a highly coordinated task comes the need for a more
When it comes to delivering product, smart conveyor can
help an operation win the race for the front door.
mmh.com Modern Materials Handling / A p r i l 2 0 1 2 33

modern equipment report
robust WCS to manage the equipment. In
other words, the more you automate activity
within a facility, the more the WCS has
to play a role and link the conveyor to all
the other systems.
The goods-to-person strategy is considered
part of the outbound process
because it’s all about filling orders to
be shipped to customers. But, the outbound
operation can only be successful
if you receive, store and slot product
efficiently on the inbound side and
move it with as few touches as possible.
Better bar code reads
The storage and slotting process starts
with product being inducted into the
system, which typically means having
scanners to read bar codes. At one
time, getting a good bar code read would
acknowledge that product was on the
conveyor. According to Clark, “The system
intelligence has gone from ‘I see a
box’ to ‘I see a box. I know what’s inside
the box. I know where to send this box.’”
But to send the box on its way, the
system needs a good read to capture the
information. A fixed bar code scanning
device located in the conveyor bed is
used to identify product and send related
information to the host system, which in
turn directs product to the ideal storage
location. In cases where a system is handling
small items, more scanners might
be added to the conveyor bed to make
sure a small item isn’t missed.
In addition to positioning a system’s
sensors in the conveyor bed, bar code
reading technology can be located in a
bridge frame around the conveyor. So,
instead of one sensor, you have many sensors
looking at the product from a number
of angles, which ensures a good read
before the conveyor moves the product.
In addition to placement, scanning
equipment itself is improved. As technology
continues to advance, devices are
getting smarter. The devices have better
accuracy and are getting good bar code
reads. “Without a good read, an item
After a carton is sealed, it’s reweighed,
rescanned and reverified so a shipping
label can be applied and the carton
can be sorted according to the ideal
shipping mode.
would go to a reject line then manual
intervention would be required to get it
back in line,” says Chris Glenn, director
of product technology for Hytrol. So, if
the upfront devices aren’t good, there
could be costly problems down the line.
Weighing and shipping
If the box is headed to the shipping area,
smart conveyor can play a role in confirming
order accuracy and determining
the optimal shipping method. While we
don’t often think about the weighing process
as a function of conveyor technology,
it’s become part of the process that
keeps product moving along the conveyor
without interruption. This streamlined
process can save time and money while
increasing throughput.
Here’s how it works: Once a carton
moves out of the picking area, it is
scanned and weighed as it passes over
load cells located underneath the conveyor.
The system captures its information
from the bar code and sends it to
the host system or quality check station.
“By scanning the bar code, we know
what is supposed to be in the carton and
what it should weigh. If the weight isn’t
within the system’s defined boundaries
for that item, we know something’s
wrong,” explains Russ Devilbiss, sales
manager for Carter Controls and chair
of the Material Handling Industry of
America’s (MHIA) Conveyor & Sortation
Systems Industry Group. “In an order
fulfillment application, you need to know
right away if an operator made an error so
the item can be pulled off the conveyor,
corrected and manually put back into the
system as soon as possible.”
While certain conveyor scale technology
can handle product weighing
1,000 pounds, others are capable
of detecting weights that barely tip
the scale at 1/100 of a pound, or the
equivalent of a single sheet of paper.
34 A p r i l 2 0 1 2 / Modern Materials Handling mmh.com

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According to Devilbiss, one little piece
of paper can make a big difference if it’s
not detected and cost money down the
supply chain.
As the carton is conveyed down the
line, collateral materials like catalogs
and packing dunnage can be inserted
before it’s sealed. Then it’s reweighed,
rescanned and reverified so a shipping
label can be printed and applied and the
carton can be sorted according to the
ideal shipping mode. “All of these steps,”
Devilbiss points out, “are made possible
by conveyor carrying the product.”
Running on demand
While order and shipping accuracy can
impact a company’s profit margin, energy
usage can impact its operating budget.
“Energy consumption and the rising
cost of powering a conveyance system
is a significant line item,” says Dematic’s
Ruehrdanz. “But technology is rising to
the continuous demand from end users
The conveyor’s decentralized drive system turns power on and off to
individual conveyor zones as needed when moving product.
to squeeze cost out of the process.”
Back in the day, conveyor had one
on/off switch, which meant it was either
completely off or the entire system was
running. These days, conveyor systems
have decentralized control. This means
the conveyor is configured into zones
that are each equipped with a localized
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power source so that each zone can turn
on and off as it’s needed to move product.
As Schaefer’s Koppelmann explains,
the conveyor is intelligent enough to
know that if product on a conveyor hits
a sensor, the next sensor turns on, moves
the product, and so on down the line—
meaning that each section of conveyor
only runs when it has something to move.
The brains behind this part of the
conveyor operation are so-called smart
cards, which are small devices located
in each section that provide localized
control. “The advent of small unitized
control panels, gives you a low cost way
of actually controlling a small segment of
conveyor,” says Michael Brown, industry
and market director for Interroll.
Small indeed. Integrated circuit
technology enables control panels to be
smaller than ever. In fact, Brown says that
“a control panel that was once the size of
a phone booth can now fit in the palm of
your hand.”
And now that unitized electrical controls
can be mass-produced in factories,
operations with miles of conveyor, or
with conveyor that’s a permanent part
of its building structure, can go through
and update—even 10 feet at a time. As
Brown sees it, there’s already a budget
for electricity to power the conveyor, but
after a retrofit and movement is controlled
zone by zone, an operation could
realize huge savings by using energy only
when it’s needed to move product.
Conveying down the line
With evolving technology, companies
can get more out of conveyor than ever
before. Functionality has increased, ROI
has sped up and the installation is faster
and easier.
“As technology continues to advance,
conveyor will play a role in improving
operations,” Dematic’s Ruehrdanz forecasts.
“It’s not an old age technology; it’s
modern and supports new, sophisticated
tasks that are being performed in today’s
most current, state-of-the-art facilities.”
But state-of-the-art doesn’t necessarily
translate into a larger facility, and
it’s not just the big players that can benefit
from smart conveyor. “Conveyors
are becoming less expensive and have
off-the-shelf solutions that offer major
benefits even for smaller operations,”
says SSI Schaefer’s Koppelmann. “If the
math is right and the ROI is correct,
everyone can benefit.”
Companies mentioned
in this article
CARTER CONTROLS: cartercontrols.com
DEMATIC: dematic.com
HYTROL CONVEYOR: hytrol.com
INTELLIGRATED: intelligrated.com
INTERROLL: interroll.com
SSI SCHAEFER: news.ssi-schaefer.us
TGW SYSTEMS: tgw-group.com
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modern best practices
Health care reform
Automated materials handling and data collection
systems are transforming the health care supply
reform
chain.
By Bob Trebilcock, Executive Editor
For most of us, materials handling and supply chains are
industrial-based. Raw materials, parts, components and
finished goods are handled inside the four walls of industrial
facilities.
Increasingly, organizations that never thought of themselves
as supply chain organizations are looking to best practices
in materials handling equipment and technologies to improve operations
that aren’t necessarily industrial. When they do, they are reducing
their labor costs while improving accuracy and turnaround times.
Take the health care supply chain. Manufacturers
and distributors of pharmaceuticals, medical devices
and supplies have long used materials handling automation
and technologies in their industrial operations.
But today, large hospitals are also adopting supply
chain technologies to manage the flow of materials
inside health care facilities. Those include automatic
guided vehicles (AGVs), horizontal carousels and miniload
automated storage and retrieval systems (AS/RS)
to move goods and warehouse management systems
(WMS) to track the delivery of materials right to the
bedside of patients.
Tie them all together and the health care supply
chain can theoretically provide visibility into the journey
of a product from the manufacturing plant all the way to
the patient, in some instances. We may not be there yet,
but the systems and technologies needed to achieve that
idea are being implemented today.
This represents a different way of thinking about
health care and hospital logistics. “One hundred years
38 A p r i l 2 0 1 2 / Modern Materials Handling mmh.com

ago, a health care system was about
someone in a white coat giving you
chicken soup,” says Peter Brereton,
CEO of Tecsys, a WMS provider that is
installing its software in large hospitals
that are transforming themselves into
supply chain organizations. “Today, it’s
a complex supply chain. Our system is
being used by hospitals to break down
bulk items into patient dosages that
are tracked all the way to the bedside,
where a nurse scans her bar code, a
patient bar code and the product bar
code.”
Although hospitals are increasingly
integrating into the health care supply
chain, there are still two distinct sides
to the equation: manufacturing/distribution
and health care facilities. Each
has its own set of materials handling
challenges and best practices.
Large health care facilities are embracing
hospital logistics, using WMS, horizontal
carousels and pick-to-light systems to manage
inventory and orders.
From manufacturing through
distribution
Manufacturers and distributors of health
care products have to control costs and
maintain quality and accuracy just like
manufacturers and distributors in other
industries. What’s different is the degree
of regulation confronting providers of
health care products. That’s because
lives, and not just inconvenience, are at
stake in health care.
“If you get the wrong book from an
e-commerce company, you’re unhappy,
but your health isn’t in jeopardy,” says
Don Derewecki, senior business consultant
with TranSystems. “If you get
the wrong medication or the right medication
in the wrong dosage or after its
expiration date, that’s closer to home.”
As a result, regulatory requirements
are on the rise. Manufacturers and distributors
must provide an audit trail of
everything that went into the manufacture
of a product along with a
record of every touch throughout
the supply chain. Providing that
electronic pedigree is driving the
adoption of software applications
that provide visibility.
“In the health care industry,
it’s not enough to be cheaper on
labor,” says Matt Walker, an executive
vice president with TAKE
Solutions. “Companies that are
regulated by the FDA must be
able to provide visibility into the
parts, components, materials and
lot numbers of everything that
goes into the manufacturing process.
In the case of a recall, they
must provide track-and-trace visibility
across the supply chain.”
Similarly, to get a new
drug, medical device or other
regulated health care product
approved for production,
manufacturers must validate their supply
chain processes. That includes a
demonstration that they have a Good
Manufacturing Process, or GMP, in
place.
“Before you can start manufacturing,
you have to document that what you
say you’re going to do is what happens
when you run software, fill vials, pack
cases, load pallets and ship product,”
explains Tom Coyne, CEO of System
Logistics. “You must chart out your supply
chain and map where the product is
touched. You must prove that the quality
of your processes is there.”
That’s where automation comes into
play. Horizontal carousels, mini-load
automated storage systems and AGVs
are clean, efficient and accurate. Those
attributes are important to controlling
costs. In addition, the software systems
that direct automation are able to collect
data at every key point in a process.
“Health care manufacturers are interested
in efficiency and cost,” says Coyne.
“But the ability to demonstrate that you
have control over your processes drives
this industry more than any other we
have worked in.”
Automation, Coyne adds, removes
the human element from the equation.
“When you’re using automated materials
handling, you’re collecting information
at every step that can be used for
the validation process.” The high cost
of the products being handled, in comparison
to consumer goods, makes the
systems easier to justify.
In addition to manufacturing, automated
materials handling systems are
playing an increasingly important role
in health care distribution, according to
Kim Baudry, market development director
for Dematic. “Just as retailers are
mmh.com Modern Materials Handling / A p r i l 2 0 1 2 39

modern best practices: health care
investing in automation to make smaller
and more frequent deliveries, the health
care industry is rethinking how product
is distributed,” Baudry says.
For example, she points out that
hospitals are bypassing the traditional
wholesale distribution channel and
receiving shipments directly from
manufacturers. “If I’m a drug manufacturer
like Pfizer or Merck, I might have
shipped pallet load quantities to a distributor
like Cardinal Health,” Baudry
explains. “Now, I might ship directly to
a major hospital, but I’ll ship in smaller
and more frequent orders.”
Those orders might be broken down
into even smaller units of measure destined
for a specific floor or department
in the hospital. And, as with the manufacturing
supply chain, automated
order fulfillment systems record every
time a product is touched through the
distribution channel network. “We’re
seeing a lot of voice and pick-to-light
systems that collect information about
the fulfillment process to comply with
regulatory requirements,” says Baudry.
“And by using an automated storage
Automated systems not only direct picking
operations, they collect the information
required to comply with new regulations.
technology, they add a measure of security
to the process.”
Hospital logistics
Health care manufacturers and distributors
have recognized the importance
of their supply chain operations for
years. Large hospital systems with 600
to 1,000 beds are coming to realize that
they, too, are supply chain organizations
and are developing hospital logistics to
optimize the storage and flow of inventory
through a facility.
“Health care provider groups are facing
tremendous financial pressures,”
says Tecsys’ Brereton. “Medicare and
insurance payments are being squeezed
as patient expectations are rising. They
no longer have unlimited funds. They
are trying to improve patient care while
improving their business model.”
In fact, hospitals have many of the
same complications as a direct-to-consumer
distribution center. For instance,
a large hospital delivers thousands of
individual orders to hundreds or even
thousands of delivery addresses within
a complex. What’s more, the range of
products and number of SKUs is complex:
a typical hospital delivers surgical
kits to an operating room, replenishes
supplies in the supply rooms at
a nurse’s station, manages the hospital
gift shops, fills thousands of individual
prescriptions and meal orders, as well
as items like towels and sheets. It also
has a reverse logistics requirement,
removing trash, dirty laundry and empty
food trays from the hospital.
Inventory is a significant cost. Not only
do supplies get squirreled away at nurses’
stations, but hospitals face the same
SKU proliferation as retailers. For example,
physicians have the ability to order
Physician Preference Items, or PPIs. The
result is that three different physicians in
the same department may each use similar
tools from different manufacturers
for the same procedures or treatments.
“Imagine if every client who walked into a
drug store could design their own shampoo
and asked you to carry it and you get
a sense of the problem,” says Brereton.
Warehouse management systems
are bringing the same level of inventory
management to hospital logistics that
they brought to the distribution center
a decade or two ago.
“You can translate millions of dollars
of inventory back into cash within
the first year by not having to replenish
areas that may already have inventory
squirreled away because nurses
and doctors didn’t trust the old system,”
Brereton says. Those same systems are
then used to direct the order fulfillment
processes at a very granular level. “We
are working with a hospital system in
St. Louis that is using a WMS to break
down bulk items into patient dosages
that are tracked right to the bedside
and to the patient’s bill,” says Brereton.
Similarly, hospital systems are adopting
the same automated materials handling
and data collection solutions for
their systems as health care manufacturers
and distributors. Those include
horizontal carousels, mini-load systems,
pick-to-light and voice-directed fulfillment
systems for storage and picking as
well as AGVs to deliver product from the
40 A p r i l 2 0 1 2 / Modern Materials Handling mmh.com

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modern best practices: health care
Right piece, right place, right time
With horizontal carousels, a hospital delivers
52 million pieces a year.
By Bob Trebilcock, Executive Editor
At Children’s Hospital Colorado,
a new 298-bed hospital facility
outside of Denver, three 52-foot-long
horizontal carousels integrated with
pick-to-light technology and order
processing software (Kardex Remstar,
kardexremstar.com), are managing the
delivery of more than 141,000 pieces a
day to nurses and clinicians, or 52 million
pieces a year.
At Children’s Hospital Colorado, horizontal carousels
are used to pick thousands of pieces every day for
use in the hospital.
Processing orders
The hospital stocks an estimated
1,700 SKUs in the stockroom that are
managed by the hospital’s enterprise
resource planning (ERP) system. The
horizontal carousel is used to fill
broken-case piece picks, known as low
units of measure inventory, according
to Richard Hire, director of materials
management. Bulk case inventory and
larger supplies are stored in
an adjacent shelving area.
The stockroom is responsible
for three types of orders:
• It replenishes 147 supply
cabinets located on the
patient floors.
• It fills orders for clinicians
who request supplies, such as
diapers, that are not inventoried
and stocked in the automated
supply cabinets.
• The stockroom also supports
restocking of ambulatory
cabinets.
Dynamic picking and
fulfillment
Regardless of the type of
order, the fulfillment process
is the same. Orders
are entered into the ERP
system and then routed to
the carousel’s order processing
software. When an order
selector at the carousel initiates the
picking process, the three horizontal
carousels spin and position for the
first pick.
Directed by pick lights, the order
selector picks the exact quantity of a
specific item for the order. The order
selector confirms the pick by pushing
a green “task complete” button and
places the item on a delivery cart. As
the order selector is picking the first
item, the other carousels spin to position
the next item to be picked.
Once the delivery cart has all necessary
supplies from the horizontal
carousel area, the cart is moved to
an associate who picks any remaining
items from the bulk area. When the
order is complete, the associate takes
the order up a few floors to restock
the automated cabinet, delivers the
supplies to a clinician, or restocks the
ambulatory cabinet. As a department
standard, all orders are filled and
delivered within two hours of when
the order was placed.
Since hospitals must respond to
emergency situations, the system
allows an order selector to pause a
current order to fulfill a hot order
needed immediately by a clinician.
As with all major projects,
Children’s Hospital Colorado calculated
an ROI for the project. The payback,
however, is measured in more
than cost savings. “Our main focus is
to keep the nurse at the bed with the
patient ensuring we provide the best
patient experience possible,” says
Hire. “The horizontal carousels in the
stockroom help us do just that.”
warehouse area into the hospital itself.
“You don’t want the same person handling
patient dosages who is handling
food trays and hauling trash,” explains
Jay Yale, managing director for Frog AGV
Systems. “A stainless steel AGV virtually
eliminates contamination from human
handling. What’s more, we can build in
three or four security checks to ensure
the accuracy of a delivery. And, an AGV
delivers on time on a 24/7 basis.”
Those same requirements for
clean, timely and accurate deliveries
are driving the implementation of
other technologies such as carousels
and pick-to-light. “The hospitals we
are working with are using automation
to improve accuracy and control
labor costs like any other facility,” says
Denny Arciero, director of distribution
solutions for Systems Logistics.
However, automation works well with
the heightened urgency associated
with hospital operations. “You’re supplying
the nursing stations, operating
rooms and patient rooms,” Arciero
says. “On-time delivery is a must.”
Adds Brereton: “Our industry has
always been about delivering the right
product to the right place at the right
time. Hospitals are realizing that automation
and supply chain software
drives down the cost of providing
health care, saves lives, and improves
the patient’s experience. That’s what
this is all about.” M
Companies mentioned
in this article
Dematic: dematic.com
Frog AGV Systems: frog.nl
System Logistics: systemlogistics.com
taKE Solutions: takesolutions.com
Tecsys: tecsys.com
TranSystems: transystems.com
42 A p r i l 2 0 1 2 / Modern Materials Handling mmh.com

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©2012 Delta T Corporation dba the Big Ass Fan Company. All rights reserved.

modern productivity solution
Vertical lift module keeps
automotive parts moving
Zimbrick European parts department relocates and reduces storage
floor space while increasing worker productivity by 70%.
By Lorie King Rogers, Associate Editor
Zimbrick European, located in Madison, Wisc., is
focused on servicing quality cars like Mercedes-
Benz, Porsche and Audi. The parts department is
focused on providing quality service to its customers,
including 23 service technicians.
When the Zimbrick European operation expanded
into a new building, its original 2,300-squarefoot
parts department was only allotted 400 square
feet on the first floor, with the majority of the parts
storage in a second floor mezzanine area. “We needed
a means to move parts between floors, short of
running up and down the stairs every time we needed
to store a part or remove a part from inventory to
sell it,” explains Steve Stepnock, parts and service
director.
So, Zimbrick European installed a vertical lift
module (VLM; Kardex Remstar, kardexremstar.
com). Now, once parts are received and checked in
by a clerk on the first floor, the system is updated
to reflect accurate inventory levels. Fast moving,
smaller parts are stored in the VLM on the first
floor, while slow moving, larger parts are stored
on the second floor mezzanine in bin shelving.
Selectable access pick windows in the VLM link
the two levels and facilitate part sharing in storage
and retrieval operations.
When a service technician needs a part, he
uses the computer in the workstall to transmit the
request to the parts department, where an employee
looks up its location and availability. If the part
is stored in the VLM, the request is transferred and
the machine automatically retrieves it. “It’s absolutely
seamless,” says Stepnock.
If the part is stored on the second floor, a clerk
retrieves it and uses the VLM to transport it down
to a runner who delivers it to the technician. “The
whole idea is not to have our technicians leave their
workstalls to procure parts,” says Stepnock.
In its new space, the VLM has enabled the
Zimbrick European parts department to support
its technicians, satisfy its wholesale business by
supplying parts to local Madison body shops, and
service walk-in customers. It has also reduced floor
storage space by 84%, cut labor and the risk of injury,
and increased productivity by 70%. M
44 A p r i l 2 0 1 2 / Modern Materials Handling mmh.com

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modern productivity solution
Mobile storage
solution optimizes
storage density
Aveva DDS centralizes parts storage and
optimizes floor space with the installation
of a mobile storage solution.
By Lorie King Rogers, Associate Editor
A
veva Drug Delivery Systems, located in
Miramar, Fla., manufactures transdermal
drug delivery systems that provide medication to
patients topically, through the skin. One of the most
commonly known is the nicotine patch for smokers
trying to kick the habit.
The FDA strictly regulates all aspects of Aveva’s
manufacturing process, even the manufacturing
equipment itself must adhere to rigid guidelines.
For example, if a machine needs a part replaced,
it must be replaced with exactly the same part,
explains Stephen Zakovsky, Aveva’s inventory specialist.
“And, it has to be done in the least amount
of time or a batch of medication could be wasted—
and that’s expensive,” he says.
Because the company’s maintenance parts were
not kept in a central location, rather stored in various
places throughout its 117,000-square-foot facility,
time was wasted when trying to locate specific
items. Aveva’s remedy was to install a space-saving
mobile storage rack system (Spacesaver Industrial,
spacesaver.com) to optimize storage density and
floor space and provide 24/7 access to replacement
parts and tools.
The storage system includes two static end cabinets
and five rows of mobile carriages in between.
Carriages measure 7 feet high, 36 inches wide, and
30 feet long, and can be configured with heavyduty
shelving, drawers and cabinets to accommodate
a variety of parts and tools. An ergonomically
designed handle and a mechanical-assist drive unit
enables the carriage to move easily along the track.
As it moves, a single 3.5-foot aisle within the storage
system is created, which allows full access to
any cabinet by one inventory manager.
With more than 10,000 unique part numbers
coded and consolidated into one centralized space
that measures just 25 feet x 40 feet, the storage unit
has improved organization and all but eliminated the
duplication of parts purchases. In addition, integrating
lockable drawers and having the ability to compact
the aisle and restrict access to certain part positions
have increased security of high-value parts.
“With controlled inventory, we are much more
proficient in every aspect of the manufacturing process,”
says Zakovsky. “We are able to find a place
for everything critical to the operation and quickly
service the needs of each department.” M
46 A p r i l 2 0 1 2 / Modern Materials Handling mmh.com

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A SPECIAL SUPPLEMENT TO
surges
ahead
By Maida Napolitano,
Contributing Editor
Proponents have
changed the
conversation and
have started tagging
at the item level in
what the industry
is now calling a
“source-to-store”
approach.
T
he RFID chatter is getting louder.
After conducting successful pilots
of item-level RFID initiatives,
Walmart, then American Apparel,
and now Macy’s, Bloomingdales,
Dillards and JCPenney have all
announced plans to roll out EPC
(electronic product code)-enabled,
RFID technology at the item level in
their stores this year.
For the RFID industry, this turn
of events has been electrifying. Not
only are these retailers driving RFID
adoption, but they’re also propagating
the benefits throughout each of
their supply chains. This, in turn,
creates opportunities for significant
process and usage standardization
across the industry with the mass
adoption of the technology.
Many have already jumped on
the bandwagon. An October 2011
study of 58 suppliers and 56 retailers
across North America, conducted
by Accenture on behalf
of the Voluntary Interindustry
Commerce Solutions Association
(VICS) and its Item-Level RFID
Initiative (ILRI), reports that the
technology is at a “tipping point”
with more than 50% of retailers and
suppliers already piloting or implementing
item-level RFID.
Joe Andraski, president and CEO
of VICS, has no doubt. “The technology
has been around for a while,
but it hasn’t been used extensively
because we haven’t done a lot of
extensive tagging—until now,” says
Andraski.
Michael Liard, RFID director for
VDC Research, has been keeping
a close eye on the technology for 12
years and sees the technology rapidly
evolving and maturing. “We’re seeing
significant developments in terms of
innovation, price points coming down,
standards being ratified and passed,
and use cases being solidified.”
Many credit the groundwork laid
by Walmart and the Department of
Defense in 2004 where the focus was
the EPC tagging of cases and pallets.
True, it might not have reached
S48 A P R I L 2 0 1 2 / MODERN MATERIALS HANDLING mmh.com

the levels of success they expected,
but it became the foundation that
proponents have used to change the
conversation and start tagging at the
item level in what the industry overall
is calling a “source-to-store” approach.
More item-level tagging
With multiple pilots completed and
full roll-outs on tap, the expected benefits
of item-level tagging have been
well-documented. Inventory accuracy
has improved to rates above 95%; the
time required for workers to perform
cycle counts in stores has decreased
by up to 96%; and out-of-stock events
have decreased by 50%.
According to Andraski, it’s the
reduction in out-of-stock events that
has been the biggest differentiator.
“When a shopper goes to retailer X and
the product’s not there, it’s a lost sale
and it’s also a dissatisfied consumer.”
In an RFID-enabled supply chain,
shoppers would rather go to Macy’s or
Bloomingdales where they know their
favorite products are in stock.
This means more sales, which
subsequently means more revenue to
all trading partners within that chain.
Andraski reports that research has
shown increases in sales for stores with
EPC tagging between 4% and 21% and
averaging about 6%. “That’s huge,” he
adds, “especially in this economy.”
What does the adoption of itemlevel
RFID tagging mean to the many
warehouses and DCs that support
these retailers and their suppliers It
means streamlining DC operations to
fully leverage RFID’s value. It’s leveraging
RFID’s ability to capture information
on multiple items simultaneously
and remotely, without line of
sight. It’s checking an order without
opening a carton. It’s automatically
identifying and counting groups of
pallets, cases and items in one read
where bar codes were previously used
to manually scan them one at a time.
There is no bigger driver right
now than item-level tagging initiated
by apparel retailers. Though most of
the tagging is limited to the supply
chains of replenished apparel such
as jeans, underwear and socks, plans
are underway to add more product
categories. It’s especially straightforward
in a closed-loop supply chain
when the apparel manufacturer owns
its supply chain from end to end.
“American Apparel is a perfect
example,” says VDC’s Liard. “They
manufacture their clothes; they distribute
their clothes; they sell them
in their own stores. That organization
can use RFID at the point of manufacture,
they can use it in the warehouses
and DCs, and they use it in
the retail store.”
Other item-level tagging initiatives
have started as a result of anticounterfeiting
and brand protection
programs for other types of products.
“They’re using RFID at the item level
in pharmaceuticals,” notes Liard. “As
it gets manufactured and goes through
the supply chain, there’s a chain of
custody called its ‘e-pedigree.’”
Much improved readers and tags
While spotty read performance and
stray tags may have prevented many
from adopting the technology, significant
hardware and software developments
is changing minds. Readers
have been able to capture tag information
from longer distances consistently.
For example, Motorola has
introduced a more ruggedized next
generation RFID reader that has
handled increases in volume of items
moving through warehouses and the
Simplified, high-level schematic of how item-level RFID
works from “source to store”
Timely and Accurate Data
Manufacturers/Suppliers Warehouses & Distribution Centers Customer to Stores
Factory workers attach an RFID tag
to each item's label and verify it
using a handheld reader. That data
is stored on a company’s system
linking the tag ID with that item's
stock-keeping unit (SKU).
Source: Modern Materials Handling
Pallets of inbound cartons are read at receiving
docks. Workers place inbound cartons on receiving
conveyor systems with built-in readers and
antennas to read the unique ID number on each
item's tag without opening each box. After
pick-pack operations, the product is inducted and
read in another network of shipping conveyors,
updating the system to indicate that specific
products have been shipped to a particular retailer.
Customers have visibility of orders and
are confident in the status provided by
the system. Merchandise is automatically
received with few disputes and
data is shared with the company’s
enterprise system.
mmh.com MODERN MATERIALS HANDLING / A P R I L 2 0 1 2 S49

A special supplement to modern materials handling
RFID
reading of tags in densely packed pallets.
“Based on customer feedback, this
RFID reader offers a greater level of sensitivity—being
able to read tags in more
challenging environments and on more
products—and provide more configuration
options that can be tuned within
harsh industrial situations,” says Mike
Maris, senior director for Motorola.
In addition, Intermec’s latest network
readers, released in early 2011,
have longer read ranges and offer
the ability to read more tags, faster.
According to Kurt Mensch, Intermec’s
principal product manager for RFID,
its Advanced RFID Extensions (ARX)
can determine the motion of tags to
identify tags of interest and discriminate
surrounding tags.
Each year it’s not uncommon to see
smaller, more powerful tags introduced
into the market for a growing number
of uses. Inlaid in different forms and
paper mediums, they can now be easily
attached to a wider range of assets—
from airplanes to sheets of paper or even
loads with liquid and metal—and still be
consistently captured by today’s readers.
And, Omni-ID recently launched a
tag that combines RFID with e-paper
technology. Ed Nabrotzky, Omni-ID’s
CTO and marketing vice president,
calls it visual RF tagging. “Visual RF
tagging allows wireless tracking of items
like other active systems, but adds the
element of dynamic visual cues for the
worker.” The tag combines RFID with
a display that can show product locations,
pick instructions for an order, or
any other human-readable information,
allowing the system to instantly communicate
to workers new tasks to perform
on the fly, such as quality holds or
re-routing of orders.
Convergence of technologies
There has also been innovation in how
RFID software and hardware are being
used not only in isolation, but also as
part of other wireless technologies to
minimize inaccuracies while maximizing
efficiencies within the DC.
For example, the RFID system
introduced by TotalTrax automatically
captures and tracks the physical
movements of a lift truck fleet by
“combining different forms of data
collection devices—optical, RFID,
position based—and load detection
sensors, combined with optical positioning
and our software,” according to
Sarah Brisbin, marketing director for
TotalTrax.
This “smart truck” dramatically
enhances warehouse management
system capabilities based on real-time
knowledge of the actual location of
each lift truck, optimizing operator
movements and task interleaving.
Intermec also offers another reader,
which according to Mensch, is the only
long-range handheld RFID reader on the
market that combines five wireless technologies
in one device: RFID, wireless
WAN, GPS, Wi-Fi and Bluetooth. “This
flexibility allows a single reader to be
used for any application, from asset management
inside the warehouse to trailer
management in the DC yard,” he adds.
To help add to this momentum,
tag costs have been declining and are
expected to be driven down with widespread
adoption by retailers at the itemlevel.
In fact, just a small decrease in cost
can have a substantial impact. A retailer,
for example, that ships 100 million units
per year can save as much as $1 million
with just a penny saved per tag.
According to Liard, ROI times have
shrunk over the last few years. “There is
increasing evidence that it’s been less
than a year.”
RFID’s Catch-22
While there are more drivers than ever
pushing RFID’s adoption, not all are convinced.
Andraski believes a lack of education
is holding companies back from
investing and innovating. One of the biggest
challenges, he says, is that companies
view RFID initiatives as a source of
competitive differentiation; thus, it’s been
a challenge to get users to share their
experience and their ROI modeling.
“Others can’t learn if they don’t share
their success story in a public fashion,”
says Liard. “It’s a Catch-22 for RFID.”
—Maida Napolitano is a contributing
editor to Modern Materials Handling
Benefits of RFID
In an October 2011 survey of 58 suppliers
and 56 retailers across North
America conducted by Accenture on
behalf of the Voluntary Interindustry
Commerce Solutions Association
(VICS) and its Item-Level RFID Initiative
(ILRI), both retailers and suppliers
ranked “improved inventory visibility”
as their top realized benefit of having
implemented item-level RFID tagging
programs.
Here are some other expected benefits
for suppliers and retailers within
the four walls of RFID-enabled warehouses
and DCs.
• An internal reduction of inventory
levels as a result of greater inventory
accuracy.
• An increase in speed and accuracy
in materials handling operations
by substantially reducing the number
of touches per carton, resulting in a
significant reduction in DC labor cost.
• An increased speed of cycle
counts, decreasing the labor required
while simultaneously increasing the
accuracy of the count.
• A reduction or elimination of
manual item-level audits of carton
contents, thus minimizing the time and
labor associated with the DC receiving
process.
• The ability to audit each outbound
pick-pack carton quickly to
ensure a high degree of outbound
accuracy and be able detect errors
before they are found by the customer.
• A reduction in the number of
claims or chargebacks by retail customers.
• The automatic ability to create
an automated shipping notice (ASN)
based on the products in the container
and the time of departure of that
container.
• The verification of an entire container
manifest without needing to
unpack the container.
• With consistent, highly accurate
performance, it will allow a supplier
to completely bypass the retailer’s
DC, and instead ship direct to stores,
avoiding any need to crossdock that
merchandise at the retailer’s DC.
• A reduction in shrinkage due to
customer and employee theft.
• Enable continuous quality
improvement and result in fewer
return-related costs and markdowns.
• By enabling tracking and tracing,
RFID has the potential to reduce the
cost of compliance with free trade
agreements, governmental mandates
and regulations while improving customs
processes.
S50 A p r i l 2 0 1 2 / Modern Materials Handling mmh.com

FOCUS ON Lift trucks
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Order selector series
includes four models
Offering Smart-Glide, a continuous
height-sensing system that optimizes
the maximum travel speed at various
fork heights by providing step-less
speed control, a line of order selectors
delivers faster travel speeds, improved
acceleration and increased productivity.
The AC-powered series includes the
heavy-duty counterbalanced OS030BF,
standard-duty counterbalanced
OS030EF, straddle selector SS030BF
and furniture selector FS030BF. Lifting
capacities range from 1,500 to 3,000
pounds, while the truck’s pallet clamp
automatically centers and grips loads
for safety and time savings. To minimize operator fatigue and enhance visibility, the
spacious operator compartment features a low step height, wide-cushioned floor
and footswitch position that promotes a natural stance. Yale Materials Handling,
800-233-9253, www.yale.com.
Narrower chassis reach truck
powered by fuel cell
With a narrower, 42-inch wide chassis, the
RM 6000 narrow aisle reach truck can be
powered with fuel cell technology. The
vehicle incorporates fuel cell controls
and gauges in the truck dashboard with
programmable performance settings and
advanced diagnostics. Capable of reaching
heights of 400 inches to deliver loads,
the truck has a MonoLift mast, featuring a
boxed-in cross section to reduce twisting
and flexing. The mast is offset 7 inches to
the left of the operator for maximum visibility
at height, eye and ground levels. To
protect mast cylinders from damage during
use in tunnels, conveyors and drive-in
racks, the vehicle is configured with one
fewer cylinder than conventional mast
trucks, and locates them near the center
to minimize racking contact. Vision system
options for increased precision include
a laser fork guide and camera with color
monitor. Crown Equipment, 419-629-
2311, www.crown.com.
Selective Pallet Rack • Drive-In • Push Back
Flow • Pick Modules • Cantilever • Stacker Cranes
Roll-Out Shelving • Seismic Base Isolation

Order pickers equipped
with continuous height
sensing technology
Featuring AC power, a line of four
order pickers has been upgraded to
handle lifting capacities from 1,500 to
3,000 pounds. The series includes the
heavy-duty counterbalanced R30XM3
with travel speeds up to 6.5 miles per
hour; standard-duty counterbalanced
R30XMS3; the R30XMA3 straddle
selector; and the R30XMF3 furniture
selector. Employing the supplier’s
HySense continuous height sensing
control system, the technology provides
smooth, gradual linear speed
reduction. This produces a more
refined braking action while traveling
at extended heights to bolster operator
confidence and productivity. Other
operator-friendly features include an
ergonomic compartment with a 1-inch
thick, shock-absorbent floor mat and a
flush-mounted footswitch to minimize
fatigue. For visibility, a transparent,
cantilevered grid-style overhead guard
and widely spaced mast channels
are included. Hyster, 800-497-8371,
www.hyster.com.
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mmh.com Modern Materials Handling / A p r i l 2 0 1 2 53

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FOCUS ON Lift trucks
BUILT in the USA
800 241 2869
Compact battery
compartment option
for 4-wheel truck
The 8 series of four-wheel AC
electric lift trucks—with 4,000
and 5,000 pound capacities—
may now be specified with a
compact, 27-inch battery compartment
to facilitate maneuvering
in narrow, 12-foot aisles and
to accommodate tight turning radius requirements. The slim
compartment configuration houses either a 36-volt or 48-volt
battery. Because of the smaller battery size used and the lower
charger output required, the vehicle saves on initial battery
and charger costs. Without compromising travel or lift speeds,
the compact option offers the performance of an AC-powered
system, including extended battery shift life, reduced downtime
between charges and a virtually maintenance-free system.
Toyota Material Handling, 800-226-0009,
www.toyotaforklift.com.
WORK ACCESS AD 1/4 PAGE 2012_MMH - ADVANCE LIFTS 1/30/12 3:42 PM Page 1
WORK ACCESS LIFTS
SAFER & MORE EFFICIENT
THAN LADDERS OR SCAFFOLDING
• Advance work access lifts can elevate
workers, materials & tools to convenient
work heights at the push of a button.
• Applications include production, assembly,
inspection, maintenance and order picking.
Sit-down moving mast reach truck
Featuring maximum lift heights up to 35 feet, improved
operator comfort and fourth generation AC technology,
the ETV/ETM 214/216 series of sit-down moving
mast reach trucks is ideal for narrow aisle and high-rack
applications. Because operators
remain seated while
driving the truck, enhanced
comfort increases productivity.
Features include curve
control for automatic speed
reduction during cornering,
AC technology for drive,
lift and steering motors,
the ability to operate up to
two shifts on one battery
charge, and a new mast that
increases visibility. Optional
regenerative lowering
also can provide longer
run times on one battery
charge, especially in high-lift
applications. Jungheinrich,
877-543-6757, www.jungheinrich-lift.com.
we offer THe MoST LIfe Per $ SPeNT
1-800-843-3625 www.advancelifts.com
54 A p r i l 2 0 1 2 / Modern Materials Handling mmh.com

Heavy-duty walkie
stackers handle up to
3,500 pounds
The PWT15 and PWT18 heavyduty
electric walkie straddle
stacker models feature an
AC-powered drive motor and
electric power steering option
to give operators precise
control when traveling at any
speed. The stackers handle capacities from 3,000 to 3,500
pounds and can be easily powered-up by key or with an optional
keyless access pad. Optionally, after a set period of inactivity,
the forklift automatically powers down, conserving energy and
allowing for more run time. An advanced regenerative braking
system enhances efficiency and control by smoothing out directional
changes and reducing brake pad and component wear.
For reduced noise, the AC-powered drive motor is brushless.
Mitsubishi Forklift, 800-648-5438, www.mit-lift.com.
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Walkie pallet truck squeezes into tight areas
The APX AC-powered walkie pallet truck, rated at 4,000 pounds
capacity, is ideal for manufacturing, grocery and general warehouse
operations. Compact, the vehicle features a short truck
length and narrow width, making it easy to maneuver in small
warehouses or tight settings. To increase safety and efficiency,
the truck’s offset tiller arm allows the operator to walk beside
the vehicle for better fork tip visibility. Stability is enhanced by
a robust chassis with rugged steel skirt riding on four continuous
contact points to reduce load sway during faster travel,
around corners and
on uneven floors. At
start-up, the truck
runs a self-check
while on-board diagnostics
provide easy
troubleshooting.
Nissan Forklift, 815-
568-0061, www.nissanforklift.com.
mmh.com MODERN MATERIALS HANDLING / A P R I L 2 0 1 2 55

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2/9/2010 1:05:37 PM
FOCUS ON Lift trucks
Regenerative
lowering increases
narrow aisle truck’s
battery run time
To maximize the number of
pallets that can be moved
per hour, the 7000 reach
truck series is optimized for
efficiency with regenerative
lowering to produce energy
when the forks are lowered,
increasing battery shift life.
The narrow aisle trucks
feature an intuitive control
handle that decreases training
time for operators and improves overall operator comfort.
Visibility is improved with an open mast, while a low step
height with universal deadman pedal increases operator comfort.
The vehicle’s suspension has A-frame construction with
steel springs providing a solid connection between frame and
wheels. To eliminate caster snap, the steered idler wheel offers
full-time traction and steering. Maintenance is simplified and
downtime reduced with an external encoder, see-through reservoir
and fewer moving parts. The Raymond Corp., 800-235-
7200, www.raymondcorp.com.
Economy class electric stacker
The Big Joe S22 eStacker is an economy class, electric, walkbehind
forklift developed for users with limited duty cycles
and confined operating areas. Tasks related to ergonomic work
positioning and the staging of loads are ideal for this stacker,
as are the double stacking of pallets in tight retail applications.
The unit handles up to 2,200 pounds and provides lift to 62
inches with its standard monomast configuration. Features
include a rugged steel frame, DC drive
system, Curtis controller, adjustable
straddles, ergonomic control tiller,
maintenance-free batteries, key switch,
a battery discharge indicator, and (with
an integral charger) can be plugged into
a standard 110V outlet. For further customization,
options include a remote lift
control pendant, various fork lengths,
battery upgrades, and two additional
mast configurations with maximum
lift heights ranging from 105 to 126
inches. Big Lift, 630-916-2600,
www.bigjoeforklifts.com.
56 A p r i l 2 0 1 2 / Modern Materials Handling mmh.com

Sideloader trucks converted to AC power source
The four-wheel Drexel SwingMast SL30, SL40 and SL50 trucks have been
converted to 100% AC technology. Other features include a new swivel
seat, single joystick control, more shift and larger side load bed to
increase shift run time as well as improve operator comfort and productivity.
For a reduction in maintenance costs, the truck is constructed with
totally enclosed brushless AC motors and the elimination of the hydraulic
SAFETY steering pump and TIPS motor. Landoll, AIR 540-582-3000, CIRCULATION
www.landoll.com/mhp.
est temperature at the ceiling level.
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The Ryson Please Multiple contact: Entry Spiral Conveyors facilitate Multi-
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Traffic controls are required to prevent loads from
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MHIA is your resource for finding products and s
that give you improved safety, productivity and p
through better material handling and logistics. A
association leading this industry, MHIA brings yo
try news, research, education and world-class eve
as MODEX 2012. Member companies of MHIA ar
manufacturers, integrators, consultants, third-par
providers and publishers furnishing equipment, s
and innovative solutions to improve your supply
membership information contact Ray Niemeyer,
Membership at rniemeyer@mhia.org or call 704-
mmh.com MODERN MATERIALS HANDLING / A P R I L 2 0 1 2 57

modern 60 Seconds with...
Sean O’Neill
St. Onge
Title: Vice president
Location: York, Pa.
Experience: 22 years in the
supply chain management industry
Primary Focus: Bringing materials
handling optimization to the life
sciences and healthcare industries
Modern: What is St. Onge doing
in the health care supply chain
and what brought it about
O’Neill: We’ve been working in
the health care supply chain for at
least the last 20 years. The focus on
hospitals, or getting close to the
point of care, has happened in the
last 10 years.
Modern: Is the health care supply
chain now extending into the
hospital
O’Neill: Yes, and it represents an
evolution in thinking. Hospitals and
health networks used to outsource
the activity associated with getting
materials and supplies into the
hospital. Now, some hospitals are
stepping back and asking questions
like: “Is there something we can do
independent of the distributor”
So, you’re seeing things like
automatic guided vehicles moving
supplies into the hospital and
bringing laundry or food trays back
down to the warehouse. Think of it
as hospital logistics. There’s a daisy
chain reaction to the patient care—
it’s an incredibly difficult problem
and a lot of people are in the same
boat. It’s a neat problem, and a
challenging one.
Modern: Is there now a continuum
that begins at the manufacturing
plant and extends all the way to
the patient
O’Neill: It’s heading in that direction.
You can think of each of those
systems separately. But at the end
of the day, what counts is the last
100 yards to get the product to the
customer. In this case, the customer
here is the clinician, the nurse, and
the patient in the bed. We’re trying to
create visibility across the continuum.
Photographer Alan Wycheck/Getty Images
It’s a never-ending battle.
Modern: What’s driving that trend
O’Neill: It’s all about the delivery of
care. You don’t want a clinician or a
nurse doing logistics functions like
retrieving supplies. That’s a nonvalue
added job that they shouldn’t
have to handle. Instead, you’re
creating an infrastructure that allows
a nurse or clinician to focus on their
jobs. That’s taking stress off of the
experts. M
58 A p r i l 2 0 1 2 / Modern Materials Handling mmh.com

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