CEI Logistics Presents A Case Study In Automated Shipping & Manifesting

1. CEI Logistics Presents A Case Study In Automated Shipping & Manifesting

2. Topic Page Pre-Existing Manual Process . . . . . . . . . . . . . . . . . . . . . . . . . . 3 Challenges . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5 Design Process . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7 Solution . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 9 Benefits . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 20 Questions . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 23 Appendix: CEI Logistics Design Methodology

3. Pre-Existing Manual Process

4. Orders picked and delivered to process area in bulk Large boxes diverted to large box processing area Each carton is packed, weighed, and processed for shipping Shipping information is retrieved from host terminals Several operators individually process each order on an array or carrier specific shipping systems L-T-L orders are processed via another manual process, and bills of lading are processed on manual typewriters Completed orders are accumulated to carrier dedicated carts The carts are transported to the dock area Order Status is “batch updated” to the host once daily Shipping information and billing reconciliation has a three day cycle built into the process, from shipping to invoice. Client is anticipating business in excess of $ 2.5 billion for design year Manual Process

5. Challenges

6. Phenomenal sales projections would overwhelm current shipping system Established quality standard was un-attainable with current system and forecasted volumes Three day billing process was costing the company revenue dollars Overtime for the manifesting area was above budget The array of manual, carrier specific, manifesting systems was inconsistent in quality arena (wrong address, incorrect zip code for address, etc.) Solution had to interface with the clients existing host system, (on both the shipping and business side) Installation of the chosen solution could not interfere with ongoing operation. Challenges

7. Design Process

8. CEI Logistics’ standard methodology was utilized for evaluation, specification , and implementation phases of project (Note: Appendix “A” CEI Logistics Design Methodology) Initial effort focused on mapping entire process from pack, to ship, to invoice Growth projections were applied to the model. Alternatives evaluated and preferred concept identified The concept was simulated, and the design accepted. Project team, including site coordinator was assigned for the design/build phase of the project. Customer’s primary objective was “process control” Design Process

9. Solution

10. Solution

11. Orders are picked to tote(s) and transported to the pack and ship area Once the order arrives in pack/ship it is placed into an array of carton flow racks, based on whether the order is to be expedited or shipped in a conventional time frame The packers pull work from the carton flow racks, performs a QC of the order contents, packs the order into the appropriate container, and places a license plate on the container identifying the transaction number. The balance of the solution is the automated manifesting system Solution

12. Solution

13. Solution

14. In-motion manifesting automates those labor-intensive tasks associated with preparing shipments. These tasks include the metering of parcel flow to shipping stations, the scanning and weighing of parcels, rate shopping, carrier selection, tracking, L-T-L bills of lading, application of shipping and tracking labels, and dynamic update to host(s) systems of shipping status. One person can support what used to be a manual group effort. Solution

15. Typical Automated Manifesting System Sortation Conveyor Validation Scanner Printer/ Applicator Scale Display Parcel ID Scanner Print Belt Meter Belt No-read/ Exception Lane Brake Belt Scale Solution

16. The automated manifesting system consists of the following elements: Manifesting application Application server (with host interface) Manifesting control computer Parcel ID Scanner¹ In-motion scale¹ Print/apply applicator¹ Validation scanner¹ Downstream sortation conveyor, including no-read/exceptions lane¹ ¹ Elements controlled by manifesting control computer Solution

17. Solution

18. Solution

19. Solution

20. Benefits

21. The order cycle time is dramatically reduced “It took us an average of five minutes to handle an order with our old system. Now, we handle twenty orders in five minutes—many in as few as 12 seconds—and we’re more accurate than we were before.” The improvement is on an order of 25 to one. Error reduction Automated manifesting identifies order entry errors such as wrong zip code for city, non-existing address, carrier “no-service area”, and a variety of rules based shipping instructions that are infinitely configurable. Single point rate shopping System now maintains all current shipping rates via subscription service. Operators are not responsible for maintaining numerous rating packages. Benefits

22. Automated Bills of lading and parcel tracking numbers Application automatically maintains “blocks” of parcel carrier tracking numbers, and generates bill of lading documentation on demand Automated shipping history Allows user to create reports with pertinent information and costs, when needed. Real time host interface System updated host system(s) in real-time to support every thing from customer service to invoicing. Consolidation of exception processing System allows single point of interface for exception processing, greatly reducing the time required to process exceptions Benefits

23. Questions?

24. Appendix “A” CEI Logistics Design Methodology

25. Integrated Solution Methods & Procedures Equipment Information Systems Equipment Layouts & Material Flow People

26. During Task 1, project team orientation and lines of communication are established. • Activities • Finalize Steering Committee and Project Team participation • Introduce team members and discuss individual roles and responsibilities • Review project work plan and objectives • Establish specific project review dates and short term schedules • Identify internal sources of information • Develop data requirements list • Deliverables • Project team readiness • Initial coordination of activities • Data collection assignments Task 1 Project Kick-off/ Team Mobilization Task 2 Baseline Current Processes Task 3 Model Future Activity Task 4 Evaluate Alternative Operating Concepts Task 5 Define Recommended Solution Task 6 Build Business Case/Present Solution

27. During Task 2, each step of the current process is mapped considering methods, procedures, equipment, layout and systems. • Activities • Interview key stakeholders • Identify current and future customer service requirements and trends • Map existing processes and systems • Identify key performance measures associated with process components • Analyze operational data • Develop data model that captures the current activity levels and characteristics for each process • Develop functional activity flow model expressed in appropriate handling unit of measure • Compile data and validate results with team • Deliverables • Detailed mapping of current processes • Process activity model Task 1 Project Kick-off/ Team Mobilization Task 2 Baseline Current Processes Task 3 Model Future Activity Task 4 Evaluate Alternative Operating Concepts Task 5 Define Recommended Solution Task 6 Build Business Case/Present Solution

28. During Task 3, current activity is projected into the future. • Activities • Estimate future trends based on management and team input such as: • Projected sales growth • Changes to SKU mix • Increased inventory turns • Additional value added services • Project data from task 2 into future operating requirements • Deliverables • Activity models trended for probable future activity Task 1 Project Kick-off/ Team Mobilization Task 2 Baseline Current Processes Task 3 Model Future Activity Task 4 Evaluate Alternative Operating Concepts Task 5 Define Recommended Solution Task 6 Build Business Case/Present Solution

29. During Task 4, future process alternatives are both quantitatively and qualitatively evaluated. • Activities • Examine current process maps and identify re-engineering opportunities • Identify system requirements and material handling impact associated with opportunities • Estimate operating costs for each alternative • Estimate capital investment required for each alternative • Assess the facility layout impact of each alternative • Assess the impact on IT systems • Identify the qualitative characteristics • Perform economic and qualitative analysis • Review analysis with team • Deliverables • Description of future process concept alternatives • Assessment of probable impact alternatives could have on systems, material handling, and layout • Estimated costs and benefits for each alternative • Subjective evaluation of qualitative criteria • Return on investment calculations using client financial model and methodology Task 1 Project Kick-off/ Team Mobilization Task 2 Baseline Current Processes Task 3 Model Future Activity Task 4 Evaluate Alternative Operating Concepts Task 5 Define Recommended Solution Task 6 Build Business Case/Present Solution

30. During Task 5, the future process will be mapped and preferred concepts identified, considering methods, procedures, equipment, layout and systems. • Activities • Develop future process maps based on reengineering opportunities and preferred concept alternatives • Develop concept layouts • Define required IT functionality • Identify material handling equipment required • Deliverables • Reengineered future process map • Concept layouts • Layouts for each reengineered zone • Functional description of material handling and layout changes required • Description of significant procedural and methods changes required • Staffing and productivity estimates • High-level description of system functionality required to support reengineered process Task 1 Project Kick-off/ Team Mobilization Task 2 Baseline Current Processes Task 3 Model Future Activity Task 4 Evaluate Alternative Operating Concepts Task 5 Define Recommended Solution Task 6 Build Business Case/Present Solution

31. During Task 6, we will summarize the investment to implement the future process along with the expected quantitative and qualitative benefits. • Activities • Refine estimated investment cost to implement recommended alternative • Estimate new operating costs based on future process maps • Estimate capacities, cycle times and other performance measures based on future process maps • Document qualitative benefits • Draft / present business case • Deliverables • Future process performance estimates (i.e. productivity, accuracy, capacity, customer service, etc.) • Investment cost estimates • Refined ROI calculations • Formal business case presentation Task 1 Project Kick-off/ Team Mobilization Task 2 Baseline Current Processes Task 3 Model Future Activity Task 4 Evaluate Alternative Operating Concepts Task 5 Define Recommended Solution Task 6 Build Business Case/Present Solution