34 DC VELOCITY APRIL 2014 www.dcvelocity.com
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GROWING PAINS
Back in 2009, the company, an operating unit of UTi
Worldwide, was running a dozen distribution centers, nine
of them located in and around the Gauteng region. The fact
that the company had so many operations to begin with was
a result of UTi’s growth, both organic and through acquisitions, says van Rensburg, one of the three primary project
managers on the development of the new DC. The company has averaged 13 percent growth every year since 2004.
“We ran out of space,” van Rensburg says. “We were running at 95 percent. That meant we couldn’t take new clients
on. Just looking at generic growth, we would have been
out of space by [the end of last year].” Changing business
requirements also led UTi to look to develop a more modern and agile operation. The company’s expectation was
that order profiles were likely to shift, with a changing mix
of pallet, unit, and case shipping. It needed an operation
that could adapt quickly to changes in customers’ demands.
All that led the company to begin the process of revamping its distribution, an undertaking that eventually led to its
bringing the operations of eight of those nine DCs under
one roof in the new highly automated DC.
But UTi was cautious in making changes, considering
other options before making a major capital commitment
to a new building. Throughout the process, UTi worked
closely with Fortna, an international supply chain con-
sulting firm whose services include distribution center
planning. Fortna had long been a partner of UTi’s, van
Rensburg says.
The objective was to develop a distribution solution that
would meet the company’s requirements at least through
2025 at the projected growth rates of 13 percent a year, he
explains. Sensitivity analysis was completed to understand
requirements if growth were limited to 5 percent a year.
The analysis showed the company would require between
38,000 and 50,000 pallet locations by 2025. In addition to
meeting growth requirements, the solution would need to
provide for greater operational efficiency than the existing
operating practices. Included in this were faster throughput, fewer manual processes, lower staff costs, improved
security, and “greener” operations. It would have to comply
with the most stringent requirements for pharmaceutical
DCs demanded by UTi’s own clients as well as the World
Health Organization, the Medicines Control Council of
South Africa, and the South African Pharmacy Council.
REVAMP, EXPAND, OR BUILD NEW?
The company first considered whether revamping or
expanding existing operations would meet its requirements, but it soon determined that would not be feasible.
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