Monde Nissin is a Filipino snack food giant known for its products like instant noodles under the Lucky Me! brand, as well as baked goods and biscuits under the Monde,Nissin, Voice, and Bingo brands. Incorporated in 1979 and started manufacturing operations in 1980, the company was the first firm in the Philippines to sell pouches of dry noodles to make instant soup, and currently commands an impressive 85 percent share of thenoodles market and 30 percent of the biscuit sector.
The Philippines – the secondlargest market in the ASEAN region with a population of around 106 million people – has a huge appetite for snacks and packaged beverages. It is no wonder that revenue has been growing annually at double-digit rates for Monde Nissin, which prompted the company toexpand its manufacturing operations and distribution centre. “When your business is growing at 10% or more annually, you need to prepare for expansion for the next five to 10 years,”said a representative from Monde Nissin. “Sometime in 2013 as we were planning the growth of our business, we also decided to build a second warehouse in our Sta. Rosa, Laguna plant to support the expansion.”
“We face complexities in supply chain and warehousing. Different customers require different things, rules, regulations, etc., and their ordering patterns vary as well. Our warehouse needs to catch up with these demands, especially when we are growing significantly every year. Thus the need to build a new warehouse and equip it with technology that would balance customer requirements for flexibility and our need for efficiency.”
Representative from Monde Nissin
When your business is growing at 10% or more annually, you need to prepare for expansion for the next five to 10 years
Challenges - More storage in a smaller footprint
Monde Nissin subsequently acquired an adjacent lot to construct a new warehouse, but it was nearly half the size of their first DC. With a small plot ofland, the only way to maximise storage space is to go vertical, thus a new high bay warehouse storage solution was desired. “The extended lot is only 7,000sqm, but we needed at least double that size,”. Aside from being small, the land is irregularly shaped, not rectangular. There is a narrow land connecting the old siteto the new one.” Monde Nissin’s team began looking for an automated logistics solution that could minimise the area required for storage and eliminate manual handling of stocks from Warehouse 1 (old) to Warehouse 2 (new), and vice versa. They chose Dematic over other Automated Storage and Retrieval System (ASRS) suppliers because its solution balanced out the cost and satisfied their requirements for flexibility and efficiency.
Working in conjunction with Dematic and its partner in the Philippines, Prime Sales Inc., Monde Nissin has implementedan ASRS comprising storage and retrieval machines (SRMs), automated infeed/ outfeed pallet handling system and interfloor pallet lifters to facilitate the fast and efficient transfer of pallets inbetween multiple levels of the warehouse. The 30-metre high bay warehouse is served by an ASRS of three single deep aisles and one double deep aisle for a total storage capacity of more than 12,000 pallet positions. The system is designed with the possibility to add three more double deep aisles forfuture expansion.
The project called for reliable and robust SRMs and pallet conveying equipment, to which Dematic responded by providing standard SR-U 1200/1 machines which can handle heavy loads at high elevations, and BK25 conveyors which provide high throughput rates, quiet and reliable operation, easy maintenance and lowest lifecycle cost. The SRMs feature floor-running top-guided configuration, with load storage and retrieval functions accomplished through the use of ashuttle mechanism. The low approach dimension and high degree of flexibility in handling various sized storage containers allow maximum utilisation of the available storage space.
An interlinking conveyor system provides bi-directional automated pallet transportation between the old warehouse and the new one, with conveyors installed in an overhead bridge.
An interfloor pallet lifter at the ‘Western’ end of the warehouse provides transport of pallets from the 1st floor to 2nd floor where they can be merged with pallets on the interlink conveyor system. Thisis intended for inbound single SKU pallets to be stored in theASRS. Two additional bi-directional interfloor pallet conveying systems transport pallets between the 1st, 2nd and 3rd floors. These systems support the movement of product pallets and picked pallets between the picking areas, ASRS infeed/ outfeed, and the dispatcharea.
The new warehouse moves 80 to 100 pallets per hour. Peak volume is at 2,000 pallets a day, but sometimes it goes up a little bit more – up to2,500.
Dematic’s solution allowed for high storage capacity in a reduced footprint. “The warehouse’s footprint is 7,000sqm and we are at 12,000 pallet positions.That can expand to 21,000 pallet positions with the same footprint. If you look at our old warehouse, the footprint is 12,000sqm but in terms of storage, it only has 14,000 pallets. The new warehouse is using nearly half of the footprint of the old one, but the storage is almost thesame.”
The latest controls technology for Dematic’s pallet SRMs make them highly efficient and accurate. “Failure of accuracy is probably less than 0.5%.The system can’t be prone to errors because the volume that we are dispatchingon an hourly or daily basis is substantial. Automation really helps us to avoid errors and delays, especially during peak seasons.”
Preventive maintenance and repair service are critical to maximising system uptime, and Dematic made sure that keeping the system running smoothly doesn't have to take a lot of money or time.
“One major advantage of this system is that it is easy to maintain. The conveyors’ chains, motors and other parts arereadily available locally.”
Dematic also provided the warehouse control system (WCS) software for this facility, which contains comprehensive visibility, traceability and management tools. The software manages the inventory and rack locations in the ASRS and communicates storage, retrieval and transportation missions to the equipment in real time.
“We added functions to it so that it is easier for us to use the software, which we couldn’t do with other systems that we can buy off the shelf. Thirty percent of the WCS is customised to our needs, including wave picking and batch picking functions, the look of the screens,and how productivity reports are being made.”
For a country like the Philippines where the cost of manual labour is still considerably low, investing in anASRS isn’t often justified. However, FMCG companies should consider using the technology for its other benefits.
“If you calculate only labour as asavings factor, it will notbe enough. In our case, we have to calculate potential transportation costs of moving our warehouse off-site and the risk of errors in order processing which could lead to penalties. Manual labour is prone to errors, especially if the velocity and throughput is very high. Right now we have about 100 employees inthis warehouse. If we didn’t have the ASRS, we would have needed 50% more manpower.”
“We all know that warehousing and supply chain costs affect the pricing of a product. An inefficient warehouse could either reduce our profitability or increase the price of our products, rendering us uncompetitive. As amarket leader in the Philippines, smaller brands and newcomers in the market always challenge us so we have to be one step ahead of them, otherwise we loseout on market share. We have to contain our warehousing costs and this systemhelps us do that. Factoring in all thesebenefits, it is very easy to justify the investment on Dematic’s ASRS.”
Key to the successful ramp up and ongoing operation of the system is the technical support and training provided by Dematic to Monde Nissin’s operation and frontline maintenance staff. The training covered classroom theory as well as hands-on sessions for the system equipment and controls. Regular preventative maintenance services for the first 12 months of system operation were also carried out.
“The system is new and Dematic is also a new provider for us so in the beginning there were challenges in the learning curve, aligning on the requirements, and maintenance. However, these issues were resolved by Dematic’s specialist technicians; they were responsive to our needs.”
Today the new warehouse runs up to 24 hours per day and up to 6 days per week and has achieved high productivity, attributable to the system’shigh storage and throughput capacity, fast responsiveness, inventory accuracy and traceability, and rugged and reliable pallet handling.