Blackwoods Paykels adopts a No. 8
wire approach to DC management

While some new distribution centres are opting for complex technology
and automation, Blackwoods Paykels has reinvented its operations
along more simplistic lines – and it’s working.

Blackwoods Paykels is synonymous with industrial and engineering supplies within New Zealand, with a history of trading stretching back 125 years. Owned by Wesfarmers Industrial and Safety NZ (WISNZ) since 2003, the Blackwoods Paykels range features hoses and fittings, welding, tools, safety (incorporating the well-known Protector Safety brand), abrasives, power transmission and conveyor products. The branch network currently comprises 28 retail outlets (Blackwoods Paykels and Protector Safety, some in combination) throughout the country.

Late last year, the company celebrated the opening of its brand-new purpose-built facility in the Highbrook Business Park, Manukau, which incorporates a new distribution centre (DC), manufacturing plant and fl agship retail outlet. The new facility is part of a business model costing $5 million that WISNZ general manager Mike Taylor says is a 10-year investment that will re-engineer the business. “We’re seeing increasing demand from growth sectors, such as infrastructure, oil and gas, food production and other local industry as the economy picks up,” he says. “This investment is geared towards building quality of service and market share so we come out of the recession as the clear leader in our sector.”

Mayor of Manukau City, Len Brown, who attended the offi cial launch of the new building on 3 November, said: “To invest nearly $5 million in our city, at a time when it is needed, is signifi cant. We are going through challenging times, so to have a major multinational company like Blackwoods Paykels making a long-term investment to service the industrial and engineering sectors is a positive signal as we continue to strengthen the economy.”

The re-engineering also includes expenditure on the upgrade of the national branch network, in preparation for the expansion of the new retail model, and a single IT platform which enables customers to buy products across the Blackwoods Paykels and Protector Safety range on one account.

Consolidation

The decision to move to Highbrook was made over two-and-a-half years ago, says Blackwoods Paykels national manager, Paul Watson. “Our existing facilities were simply too small, with no room for expansion, plus there was nowhere to build a retail showroom – an important part of the new business model,” he says. The new facility consolidates five former sites into one, and occupies a total footprint of 6780 sq m – warehouse/manufacturing 4500 sq m, showroom/retail 690 sq m, and administration support offi ces 765 sq m, with a total of 78 staff. “It’s actually a smaller footprint, but the stud height has gone from 6 m to 10 m,” Mr Watson says.

Built by Aspect Construction, with racking supplied by Dexion and a fl eet of forklifts supplied by Crown, the company moved onto the site in August last year. The retail showroom occupies the ground floor, and is highly visible. “The recent merging of the Blackwoods Paykels and Protector Safety branches into a single offering is prompting several areas of revenue growth,” Mr Watson says. “We currently have a customer overlap of 25 percent between the two brands, but we expect this to increase. Combining the product ranges allows us to serve all bases better and take advantage of the many cross-selling opportunities.”

The rear of the facility is devoted to the manufacture of gaskets, conveyor belts and rubber hoses – Blackwoods Paykels is the only industrial rubber hose manufacturer in New Zealand.

Activity-based stock-keeping

The DC is located immediately behind the showroom, and has 25,000 locations for approximately 22,000 stock-keeping units at any one time. It’s quite compact in size compared to other DCs in Highbrook – Offi ceMax is immediately across the road, with the new CourierPost sortation centre behind. Around 35 percent of stock is directly imported, which involves a high degree of manual handling to break down container loads. Inwards goods and dispatch are handled from one central location (“it’s much safer to keep all the people in one place,” explains warehouse manager Johann Botha), and a simple, short conveyor leads from here up to a mezzanine floor where small-sized products are stored. Another conveyor runs from the mezzanine back down to ground level to serve other storage zones and the dispatch area.

“We’ve incorporated a whole lot of ‘smarts’ in this new facility,” Mr Watson says. “We stole ideas that worked in other Wesfarmers DCs around Australia to set this one up, and as a result have seen increased efficiency, a marked reduction in pick errors, our staffing levels are down, and we’ve reduced the number of forklifts we need.”

For example, quite unlike the retail showroom out the front, where ‘like’ products are displayed together, the DC is arranged by activity rather than product groups. “Fast-moving SKUs are located together, and we’ve tried to separate similar products, so that staff can’t pick the wrong one,” Mr Botha explains. “We based the system on historical demand, but are now at the point where we can start tweeking the process.”

One area that surprised the team was the requirements for dangerous goods storage. “That was an enormous cost,” Mr Botha says. “Anyone contemplating a new DC should not underestimate what’s involved with this.”

The No. 8 wire approach

In some ways, the company is bucking the trend towards automation. All order picking is from a paper-based system, with different-coloured tote bins for customer orders and store replenishments.

A tote bin holding a completed order is positioned on the conveyor with a small piece of refl ective tape facing inwards, which when detected by a scanner directs the tote into the dispatch area. An incomplete order is positioned refl ective tape out, hence missing the scanner, and directed further along the conveyor where another operator collects it for products from another zone. The scanners for the different coloured totes are arranged at different heights, so that customer orders (which are processed fi rst) aren’t mixed up with store replenishment orders. Sounds too simplistic? “We purposefully set out to adopt a more simple model,” Mr Watson says. “It’s almost like the No. 8 wire approach. We have an enormous range of products, plus shapes and sizes, and sometimes keeping it simple is the best way to go.” The team haven’t ruled out adopting RF bar code scanners in the future – the current system could be readily adopted for such a transition – but for the time being they have other challenges ahead. “We now have the space we need for future growth,” Mr Watson says. “The challenge for the immediate future is to increase turnover. We don’t want more stock – we just want to move it through here a lot quicker.”