knoll--Maximizing Knoll's Existing Infrastructure

With a solid understanding of current operations and an established set of benchmarks, Penske determined the most cost-effective strategy for consolidating Knoll's customer shipments.  The result was a two-pronged solution involving Penske's experienced Distribution Center and Transportation Management teams:

• Establish two centrally-located mixing centers to consolidate products from Knoll's four manufacturing plants
• Re-engineer warehouse infrastructure and load planning processes

Initially, Penske recommended establishing two new mixing centers in Holland, Michigan and Allentown, Pennsylvania.  As planning progressed, productivity at Knoll's manufacturing plant in East Greenville, Pennsylvania reached an all time low.  This provided a unique opportunity for Penske.  Rather than have Knoll spend an estimated $1 million leasing a new facility in Allentown, Penske could convert the existing facility in East Greenville from an under-utilized warehouse to one of the proposed mixing centers.

In August 2001, Penske and Knoll began the East Greenville plant conversion.  Penske faced several challenges during the process.  The layout of the facility consisted of three separate buildings and was not optimized for the functions of a distribution center.  Penske re-engineered each of the buildings to the optimal footprint, bulk and buffer layout to maximize efficiency and track inventory location.

Penske devised an aggressive 60-day strategy to move Knoll's manufacturing operations out of the facility and move Penske's mixing center operations in.  The transition was divided into thirds - as Knoll moved out of one-third of the facility, Penske followed behind and immediately began racking and installing sprinklers in each of the buildings.  On Day 61, Penske proved they had successfully met their aggressive schedule.  During the 60-day transition schedule, Penske operators had shipped approximately 10,000 units to customers, enabling Knoll to maintain productivity levels and minimize the impact of the transition.

The second mixing center in Holland, Michigan also presented a challenging conversion process.  The existing facility had been laid out to suit a cross-docking approach.  Penske was required to convert the facility and its operational processes to meet the storage and labor demands of a mixing center.  At 165,000 square feet, this mixing center would not only be required to handle its half of Knoll's outbound storage and distribution, but also needed to temporarily alleviate a significant portion of East Greenville's distribution load.  Furthermore, Knoll had recently shortened its production time from two weeks to one week.  Products now had to be moved within three days of inbound receipt.

The pending demands on the Holland mixing center and Knoll's shortened production time prompted Penske to create a unique warehouse layout strategy.  Knoll needed a warehouse layout that allowed for easy racking and storage of products, while enabling quick movement of the product for outbound shipment.

Penske dismissed conventional loading strategies and developed a "footprint" approach.  Load plans, which determine how products are loaded into a trailer for customer delivery, are sent to Penske operators two weeks in advance of the scheduled outbound shipment date.  The plan is uploaded into Penske's logistics software to determine how products should be racked and sequenced for expedited loading.  This "footprint" is then set up to mirror the trailer load.  Incoming components are consolidated and stored to match the "footprint" until outbound shipment.

Penske's unprecedented "footprint" approach worked.  New loading procedures required by this approach were implemented at the two mixing centers.  Penske and Knoll staff were cross-trained to follow the new racking, storage and loading procedures.  In addition, Penske established stricter scanning requirements, enabling Knoll to improve inventory and order accountability.