Bright Future in Asia for Future Electronics

While others are scaling back, Future Electronics is bucking the trend by ramping up its presence in Asia and Europe. Though the groundwork was established in better days, the company’s decision to press ahead even when the global economy went through a crippling recession underscores its confidence in the future of the electronics industry and Future’s vital role in it.

“The electronics industry is cyclical, always has been, always will be. Smaller independents have closed. This presents market opportunities for us. We are ramping up inventory, building inventory, keeping headcount and investing in systems,” said Martin Bates, Director, Operations at Future Electronics.

The Montreal based company is the third largest distributor of electronic and electro-mechanical components with operations in 42 countries in the Americas, Europe and Asia. A franchised distributor, Future has the largest available to sell inventory in the industry. “We take the view that inventory is our asset, our competition sees it as a liability. We stock every type of component and we stock it in-depth,” said Mr Bates.

Being privately owned since its founding by Canadian Robert Miller in1968, the company is at liberty to put into practice what it deems best for the business. At its new Asia Pacific Distribution Centre in Singapore, which occupies 107,000-sq. ft. at the Changi Logistics Centre, Future has access to 1.2 million product lines in six key categories: electromechanical, semiconductor, passive component products, interconnectors, product components and development tools. “We work with customers to identify the right products, ensure the right industry profile,” Mr Bates added.

Backed by a powerful IT system, which gives sales personnel global visibility of the company’s inventory in real time, Future is able to provide a level of service which has endeared it to customers.

The scale and scope of the inventory is expected to increase as the company beefed up its operation in Asia, which it has identified as the region with the biggest potential.

A new beginning at Changi Logistics Centre
The move into a new facility, doubles the capacity of its previous premises, offers Future the opportunity to start afresh. In late 2007, the company invited selected system suppliers to propose a material handling system which would enable Future to operate more efficiently and achieve its target, to reduce process time by at least two hours. “We don’t make the presumption that we know what is best,” Mr Bates remarked.
 
After several rounds of briefings, involving close scrutiny of project details, Schaefer was awarded a turnkey contract in September 2008. While Schaefer’s proposal of a semi-automated system differs from Future’s other facilities – US’ Memphis and Europe’s Leipzig - Mr Bates believes it is an appropriate fit, as the relatively low cost of labour in Singapore does not warrant a fully automated solution.

As Future’s lease at Jurong was coming up, Schaefer had to work within a tight dateline to ensure the system would be up and running a year later.
The entire process worked like clockwork. Installation of the system began in January. It comprises a free standing pallet racking system with 544 pallet locations, a two-tier R3000 shelving system with 25,236 shelves, an automated conveyor and order consolidation system to facilitate high performance order picking, 100% quality control (QC) checks and consolidation of orders prior to packing and shipping.

The installation was completed at end June and after a series of tests, Future moved in as planned on Friday, August 14. By the following Monday, shipments were despatched from the new DC.

Ramping up the Singapore DC
After a challenging first month when the two parties had to handle glitches as expected in any new system and an unplanned spike in demand, the system has delivered better results than anticipated. Process time was reduced by three hours – two hours within the warehouse and a further one hour because of the DC’s proximity to the airport – making it possible for Future to push back the cut off time for next day delivery. Five external audits by suppliers also gave the DC an unprecedented 100% accuracy.

The sterling results was achieved through the combination of an in-house warehouse management system (WMS), which dumbs down the process making it easy on operators, and a system which is designed for efficient flow.

At the receiving station, palletised shipments from suppliers are broken down at dedicated repack stations and the boxes labelled with a unique pick number for easy traceability. The boxes are wheeled to the shelves for putaway and made available for picking by the following day.   

At the pick face, operators are directed by RF terminals to the specified location. “We keep the process simple, just one task at a time. In this way optimal productivity is achieved by having the operator focus step by step,” said Mr Bates. If an operator cannot find the pick at the designated shelf, he goes on to the next task, rather than spend time looking for it. An inventory control team will be alerted to find the misplaced box. As the picks are made by zones rather than by customer orders, an operator can achieve a targeted pick rate of 100 an hour quite comfortably.

After 10 picks, the products are wheeled on trolleys to the drop stations. The operator scans each product at the drop stations and puts it into a transport tote. The conveyor system then relays the totes to the QC workstations, where all products are checked before being returned to the totes. Single order totes are taken by the conveyor directly to the packing area while multi tote orders are conveyed to the universal buffer system (UBS), the brain of the system. Here multi tote orders are automatically consolidated before being returned to the conveyor and transported to the packing stations. The UBS also controls the work flow and prioritises shipments: Urgent shipments are given priority, while those which are not are held in the buffer area.

After packing, the cartons are put on a carton conveyor to be taped and weighed before being handed to the respective forwarding agents located at one end of the DC.

Since September, the DC has enjoyed month-on-month increases in volumes, as the electronic industry recovers on the back of an expanding economy and as the company gains market share. But Future is still able to manage with the same headcount.   

As part of its contract with Schaefer, which covers the entire life cycle of the system, the two partners are fine-tuning the processes to generate more productivity gains, to enable the DC to handle increasing volume without a proportional increase in headcount.   

Future is already planning ahead even though the new DC is designed for growth and capable of handling more than twice its current volumes. Said Mr Bates, “Asia’s potential is so large we won’t want one DC to supply all of Asia.” Before the Singapore DC reaches its theoretical maximum capacity, another will be set up in China for the Chinese market.

www.futureelectronics.com