Hermes Fulfilment GmbH has been presented with the Logistics Innovation Award of the Association of German Engineers (VDI). The Hamburg-based distance selling services provider was recognised for its outstanding returns management system that moves returned goods, especially fashion items, back through the supply chain quickly and cost effectively. At the centre of this process is the company’s automated returns warehouse in Haldensleben (Saxony-Anhalt/Germany) which significantly reduces the amount of time it takes to get a returned item from returns arrival back into the stock available for sale. VDI was particularly impressed by the level of automation and the system’s maintenance concept.
The system has 175,000 bin locations and was integrated into the Haldensleben distribution centre in 2010. The goods are stored and retrieved by 840 shuttles that move up and down 30 different aisles on 28 different levels. The manufacturer claims that it is the largest warehouse of its kind in the world. If necessary, a shuttle can be replaced within ten minutes. Every day, during normal operation, four to five shuttles are removed for maintenance. This means that each shuttle is serviced at least once a year without having to stop the system. Before the system went into operation the returns bins could only be placed into stock manually. Returned items that were in a resaleable condition were picked individually from a stationary storage location by warehouse personnel (picker-to-part) – as was also the case with completely new merchandise. The automated returns system reverses this process: the bins are not only automatically placed into stock they are also automatically retrieved and brought to the warehouse picker’s work place (part-to-picker). This means that on average pickers are able to process an additional 200,000 items a day. It also cuts the cost of storing and retrieving items. Every hour the system moves some 15,000 bins. This leads to shorter lead times that, in turn, increase customer satisfaction.
This system also reflects the trend towards selling a much wider variety of products (long tail) because it means that small quantities of items that form part of a wide product range can be stored in a comparatively small storage space. The major challenge during the planning phase for the automated returns warehouse was how to integrate this high performance processing system into the existing returns management system. This was necessary because batch sorting and static picking procedures were to continue to be used alongside the new automated system. “All three systems work in parallel to move the goods “just-in-time” to the packing and shipping zones. That’s what makes our returns management system so complex,” notes Dieter Urbanke, CEO of Hermes Fulfilment. The system went into operation 18 months after the project planning phase started. “Hermes Fulfilment was early to recognise the importance of an efficient returns management system. Our system enables us to efficiently process the ever-increasing number of customer orders while responding to the needs of the market with respect to customer service, product availability and speed of delivery,” adds Dieter Urbanke.