When you see IKEA’s massive blue and yellow buildings, what’s the first thing that comes to mind? Iconic, modern design? Affordable prices? Swedish meatballs? How about the little hex wrench that’s included with each piece of ready-to-assemble furniture?
Regardless, behind it all is an ultra-efficient and flexible state-of-the-art warehousing system that can handle rising consumer demand and store expansion.
Nearly 30 years after entering the U.S. market, IKEA’s 49 North American stores represent 15 percent of annual worldwide sales, but the company’s stateside growth has resulted in enormous distribution challenges. Physical expansion of its six distribution centers, combined with an automated storage and retrieval system from LTW Intralogistics, significantly increased productivity.
Between 1985 and 2000, IKEA opened DCs in Brossard, Quebec, Westampton, N.J., and Ontario, Calif. As volume continued to grow, the company opened DCs in Perryville, Md., Savannah, Ga., and Tacoma, Wash., and replaced the Ontario facility with one in Tejon, Calif.
The Tejon facility was expanded by 850,000 sq. ft. in 2004 and was a virtual twin of the original. On completion the DC had two high-bay sections, each with six LTW aisle-changing stacker cranes. The high bays are 12 pallet positions tall and can house some 60,000 Euro pallets, whose dimensions differ from those commonly used in the United States.
Each crane covers four or eight rows of racking and can be converted to a fully automated system. “The high-bay sections allow us to take advantage of height and density of storage, greatly reducing the footprint size of our building,” says James Leddy, warehouse logistics coordinator for IKEA.
The Perryville expansion, completed in 2005, also resulted in twin buildings. “These two distribution centers were a step in our evolution from conventional warehousing to eventually building AS/RS [Automated Storage and Retrieval] systems,” he says. “They provide many of the same benefits of AS/RS systems but ... allow for less stringent parameters on the products being handled. However, the fully automated operations are far more productive.”
Scalable expansion possibilities
The Perryville and Tejon facilities were initially designed with 24 high-bay aisles, but were serviced by only six automated storage and retrieval cranes. IKEA, known for product development, attention to operational details and tight cost control, reorganized the structure of its DCs and further streamlined operations. The company installed cranes that would allow scalable expansion to accommodate expected growth in sales from new stores and increased inventory.
“Most high-bay warehouses use AS/RS cranes that are only capable of traveling in a straight line in one aisle,” says Leddy. “Since cranes are a major part of the cost in high-bay warehouses, reducing the number of them can produce savings.”
One very unique attribute was the crane’s ability to change aisles in a short distance. “With aisle-changing stacker cranes,” he says, “the number of cranes can be matched to the warehouse throughput instead of to the number of aisles. The aisle-changing cranes reduced the initial capital investment, since the company did not have to buy an entire system in the beginning and [could] grow into it.”
IKEA had previously used other stacker crane models, but was looking for something different. “We found that our counterparts in Europe had begun using LTW and, after investigating them, we chose to do the same.”
IKEA started with six cranes servicing 24 aisles in Perryville and Tejon. As it shifted logistics focus to re-manage SKU volume, it “gradually added 50 percent more aisle-changing cranes to each of our four high bays in both DCs,” Leddy says. IKEA is now running nine cranes in each 24-aisle high bay for a total of 18 aisle-changing cranes in each DC.
“Even though we handle thousands of pallets a day in each DC, we don’t always need a crane in every aisle,” he says. “If demand on a product is not immediate, then we can have the crane work multiple aisles and optimize the use of the crane.”
Precision and safety
The advantages of the system were immediately apparent. “Using LTW cranes enabled us to take advantage of unique aisle-changing capabilities,” Leddy says. “Space utilization, capacity and flexibility were the driving forces behind using the system. Additionally, the stacker cranes permit full pallet load inventory to be moved quickly, safely and precisely in and out of the high bays.”
About 90 percent of the pallets in the high bays are single-SKU units; 10 percent of the total inventory moving from Perryville and Tejon to pick stations or shipping consists of mixed-SKU pallets, Leddy says.
The system can also be effective in other distribution centers. “High-bay storage can be utilized in many types of distribution operations,” he says. “The movement to these types of buildings is more aggressive in Europe than in the North American market. But within the past 10 years, the manual systems have clearly become more popular in the U.S.
“As a company, we are very happy with high-bay storage solutions,” Leddy says. “Our usage has developed, and we now build fully automated systems that house multiple pallet types. They still provide us with the greatest density of storage, but also provide us greater flexibility in operations as well as improved productivity.”