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Music Store in tune with logistics with TGW

2012-30-01

A huge selection of instruments and accessories pulls more and more musicians to Music Store in the city of Cologne, Germany or to www.musicstore.com. Since May 2011, more than 60,000 products, from guitar picks to digital pianos, have been stored, picked and packed and sent to customers from the new logistics centre. Music Store entrusted Pierau Planung and systems integrator TGW with the realisation of the new logistics centre.

As one of Europe’s largest music retailers, Cologne Music Store GmbH has established a reputation among professional and hobby musicians during the last few years, and beyond Germany’s borders, especially in online-retail. A huge range of more than 60,000 items and premium shipping service caused the company over proportional growth, which increased the requirements in logistics. Short-term solutions were found with temporary storage, but these would not allow the company to continue to grow. The situation was complicated: A single retail shop in the city of Cologne, where parts of the administration were situated, one central warehouse with a call-centre and the remaining administration, in addition to five peripheral warehouses. The result is that Music Store needed a consolidated site, where all the different business areas could be grouped beneath the same roof.

Short shipping times, high availability – a must for e-commerce

More than 70 percent of the annual turnover of over 100 million Euros (approximately 141 million US-Dollars) is generated through mail order business and e-commerce. Up to 6,000 packages are shipped daily to customers throughout Europe. To stay competitive, Music Store guarantees attractive prices and high inventory availability and fast order delivery. The synchronisation between the internal ERP system and the shop enables Music Store to update goods availability and price changes immediately. The majority of goods are shipped the same day the order is received, and depending on the destination, arriving at the customer’s home 24 to 48 hours later. Seasonal peaks around Christmas and the mailing of new Music Store catalogues each spring and autumn create challenges for the logistics system.

The sizes of the orders vary significantly. Due to the free shipping within Germany starting with a minimum of 25 Euros, many orders consist of only one or two articles. Whereas other European countries benefit from the flat rate shipping costs by ordering more items at the same time.

Music Store’s rate of returned items is only 8 percent, which is considerably lower than the average online-business. This is due to the precision of the musicians, who select their goods specifically. However, this issue was important for Music Store to prepare preventive measures such as the control of instruments before shipping.

First logistics, then the building

Due to the growth of the business, the shortage in logistics and the expansion of e-commerce, Music Store analysed its actual requirements in 2008. The consulting firm Pierau Planung from Hamburg was contacted and together the logistic processes and the required technological solutions were reviewed. The type of automation technologies to be implemented led the way for the size and choice of building. With this building not only a warehouse in a functional building should be realised. Music Store aimed at integrating a retail shop and setting a highlight for customers in Cologne.

Following this, the ideal site near the city centre of Cologne, directly connected to the city motorway was found and approved, as a 24 metre high-bay warehouse should be implemented. The site would have been too expensive for merely a logistics centre, but the closeness of the Kölner Zoobrücke (Cologne Zoo Bridge), with 120,000 cars crossing daily, the site benefits from another important aspect. The advertising effectiveness and the great infrastructure with direct connection to the motorway intersection of East Cologne were crucial for the choice to invest into this site.

With intensive support by Pierau Planung, Music Store prepared the tender documents and invited a couple of suppliers to present their offers. It was decided that all parts of a logistics solution would be tendered separately, the steel work, the high-bay warehouse, the mini-load warehouse, the picking tower and the material flow controls.

General contractor for complete electro-mechanics

The complete electro-mechanics subsection was finally given to one general contractor. Music Store entrusted TGW, as the service package originated from a single source and one central contact for the whole realisation was guaranteed. Furthermore, TGW offers additional maintenance and customer support. Only the steel work and the material flow controls were contracted out separately, which made the coordination between the several parts easier. Besides, the PLC (programmable logic control) was adapted by TGW in a way that there was an ideal interface for material flow controls.

Each day, a couple hundred pallets with new goods enter the logistics centre. The goods are mostly produced in the Far East and thus supplied in 40 foot containers. The articles of bigger labels are received in Euro pallets. The pallets are either transported directly to the high-bay warehouse for storage via conveyors, or to one of the six re-pack workstations. At these workstations single original cartons are taken off the pallets, identified per scan and transported to the conveying system.

Pallet high-bay warehouse and automated mini-load warehouse

In the 24 metre pallet high bay rack almost 14,000 pallets with double-deep storage structure can be stored. Each of the six stacker cranes is equipped with one single-deep and one double-deep load handling device, to increase the throughput rate. “An important detail of the solution for Music Store was that pallets should be able to be overloaded by 10 cm, as the products did not fit the standard Euro-pallets with 1,200x1,800 mm surface”, explains Gernot Kratky, TGW project manager. Retrieved pallets are manually split into single cartons by employees and the products are provided for picking in the flow rack.

The products that have been separated in the goods-in area are transported into the automated mini-load warehouse, where about 15,000 totes and cartons of various sizes are stored. Two TGW Stratus stacker cranes with two Twister load handling devices each supply the 10 metre high double deep shelving rack. This storage area works as replenishment storage for the mini-load picking, on the other hand full cartons are picked out of this storage block and conveyed into the shipping area. Especially for high quality guitars, which reach a retail price of 10,000 to 20,000 Euros, Music Store asked for a special treatment in the system. TGW realised this special requirement with a P&D station (pick-up and delivery station), where packages up to 1,200 mm of length can be brought into the automated carton warehouse.

Pick-by-Light workstations

The mini-load picking takes place at pick-by-light workstations, which are supplied by six TGW Commissioner automatic storage systems. After the picking procedure the source totes are restored into the storage area. Employees receive their picking-orders on pick-by-light-displays. Goods are picked from storage totes into order cartons, which come from the central order start and at this point have already passed the manual flow racks. These order cartons range from 250 mm to 1,300 mm length.

All the picked cartons are transported from the picking area on the upper floor passing the conveyor system back to the ground floor, where the packing and shipping is situated. “Not only goods for shipping are picked here”, mentions Kratky, “customer collections are managed with the same system. However, these are not sent through the regular three pack lines, but directly to a separate conveyor line until goods-out of the retail store at the other end of the building.” If there is an order in the store, it will be prioritised automatically by the ERP system and always picked superiorly, to provide the goods for collection, as soon as the customer pays his check.

For the shipping process cartons are packed at one of the three pack lines and closed before the shipping tag is put on. Consequently, the goods reach the loading ramp, where the packages are transported via telescope conveyor belts and loaded onto the waiting loading bridge of the parcel service. Besides there are goods shipped via freight forwarding companies. All goods, which are considered bulky are sent this way, for example digital pianos or trusses up to four metres.

Short ways, few mistakes, high speed shipping

Music Store invested about 7 Million Euros (approximately 9.3 million US-Dollars) into the new logistics system and expects appropriate benefits, especially due to the omission of internal rearrangement processes, which come along with several storage sites. This centralised approach has reduced the number of touches on the goods, and guarantee immediate availability. Moreover, the new system increased the speed of shipping and minimised the error rate. The new installation was not calculated according to current throughput numbers. If Music Store grows continuously similar to the last years, the new system will work without any problems for the next three years. Furthermore, additional expansion areas and scenes have already been prepared.

The new logistics centre enables Music Store to enhance its product range. Whereas the company had to slow it down in the old central storage, as there weren’t any resources available, new segments can be added to cover all relevant areas. For Music Store full value not only means availability of top sellers but also availability of “exotic” products, which might spend three to four months in the storage area before they are bought.

Smooth cooperation between realisation partners

The new installation and the logistics solution is a success story for Music Store. On the one hand the companionship of Pierau Planung starting with the analysis and the request for proposal until the final phase of the project was very helpful. On the other hand the cooperation between the partners who contributed to the realisation was very good.

Downloads

Description Size Format
Press Information Case Study Music Store 127 KB DOC
In the goods-in area, all goods are scanned and delivered to the conveyor system. 2.5 MB JPG
Music Store offers 60,000 goods in their store and online, from a guitar pick to a truss. 3.4 MB JPG
Up to 15,000 totes and cartons are stored in the automated mini-load storage. 3.2 MB JPG
Three packing lines prepare the picked goods for shipping. 2.9 MB JPG
Via telescope conveyor belts the cartons are delivered to the loading bridges for dispatch. 2.5 MB JPG