Lessons in Logistics Precision – Ingram Micro Logistics
Mira Loma, California USA
February 21, 2013
By
Richard Armstrong

Attendees:
Scott Michaelis, Vice President Business Solutions
Patrice Sklencar, Senior Marketing Manager
Jaime Torres, Operations Manager

Ingram Micro Logistics (IML) is the world’s largest technology distributor/3PL. IML’s operations are closely integrated to those of its distribution parent. The combination expands scale and scope for both. Particularly effective is Ingram’s single inventory pool management capability. The single inventory pool can be managed by IML to fill orders for brick and mortar retailers, other distributors and B2C e-commerce. The total inventory pool normally consists of Ingram owned distribution inventory (30-40%), manufacturer owned inventory on consignment, and IML inventory for e-commerce and other channels. Inventory is turned quickly particularly in high-tech where items under 40 days are the norm. Ingram’s distribution customers are comfortable with these arrangements because IML can direct ship to their customers eliminating a relocation/transfer cost.

Managing the billions of dollars of inventory at IML requires a high powered WMS (warehouse management system) “IM-First.” Most of the 100+ distribution centers operated by Ingram share the system. Inventory information, receipts and shipments are all controlled and available in real time. The single inventory pool is often physically located at different DCs. Usually, these are Ingram’s ALCs (advanced logistics centers): Mira Loma, CA; Carrollton, TX; Carol Stream, IL; Millington, TN; Jonestown, PA; Mississauga, ON and Richmond, BC. IML’s DC operations use wireless networks. Radio frequency scanners and systems are used internally to update IM-First. Putaway is directed. Barcodes are standard and KPI (key performance indicator) measures are normally 99% or better. Shipment accuracy is 99.8%. Ingram has spent $40 million on building its IT platform. In addition to IM-First, it purchased and customized i2’s TMS (transportation management system) and other applications. The ERP (enterprise resource planning) system is SAP. RedPrairie has been added to IM-First for labor management. The TMS is used to manage IML’s $150 million a year transportation spend.

IT Capabilities

With a very flexible average of 15,000 employees, Ingram makes 15 million shipments a year. Ninety-eight percent are small package shipments but a large number are integrated truckloads moving to retail stores. Ingram’s 2012 revenues exceeded $37 billion. For IML, revenues were more than $500 million. Employee levels average 2,500 but flex greatly particularly during the fourth quarter.

IML has three major strengths. Its Master logistics provider solution provides omni-channel fulfillment for 55 well known customers. Secondly, for most of these customers, IML is the e-commerce fulfillment specialist. Thirdly, IML is a return logistics, refurbishment specialist.

Sample of Brands Served

IML’s returns capabilities expanded significantly with its 2012 purchase of BrightPoint. BrightPoint is a leading cell phone, mobile device distributor and returns specialist. The BrightPoint acquisition added $5 billion a year in revenue. In 2012, BrightPoint handled 112 million wireless devices. BrightPoint operates returns/repair/refurbishment facilities in Indiana, Kentucky and Texas.

We got a look at IML’s capabilities in Mira Loma, CA. Mira Loma is an ALC reflective of IML’s global capabilities. There are three buildings closely located in Mira Loma. They have 1.7 million square feet of combined space. The Non-Con operation (562,000 sq. ft.) is a customer dedicated e-commerce facility handling most of the products you see at your local general merchandise store. A 240,000 sq. ft. facility handles IML’s largest customer, a household name in PCs, cell phones and pads.

The Micro Drive warehouse (800,000 sq. ft. with 40-foot heights) is a mixed use facility which averages 500 employees but flexes up significantly in the fourth quarter. Micro Drive is divided into four functional areas referred to as buildings. Building 1 is the Pick/Repack Module. This three level module covers 110,000 square feet.

Mira Loma – Micro Drive

Warehouse Process Flow

Shipments start on Level 1 as a carton or envelope on a conveyor. Products are added (picked) as a shipment winds its way up to Level 3. Products are stored in barcode racks. Customers are charged for rack space utilized irrespective of the flow through the space. Locations are replenished between midnight and 5 PM except in the fourth quarter when everything goes 24/7. The IM-First system controls inventories tightly so replenishment is normally “hot.” When products are received, they go through a “Cubiscan 100” measuring device to get dimensions and weights by carton. Mira Loma – Micro Drive is a FIFO (first in, first out) operation. IM-First directs putaway.

Shipments in the Pick/Repack Module which are non-conveyable are picked to a separate straight line conveyor that runs through the mezzanine and then to the small parcel or LTL (less-than-truckload) shipping area.

Shipments that convey up to Pick Level 3 can be sent down the appropriate conveyor line to the mezzanine and then routed to their specific carrier’s staging area. At the mezzanine, the orders are routed for gifting, gift cards, and void-fill, etc. LTL shipments are processed in Building 2. At the shipping dock in Building 2, consolidations are made for packages from Building 1, cartons from Buildings 2 and 3, and pallets from Building 4. Cartons and packages are palletized and shrink-wrapped on the Building 2 dock. They move out as LTL shipments or truckloads usually consolidated for individual retail stores. The normal truckload is 22 pallets.



Value-added Services



Gifting and Personalization



Pallet Displays



Dynamic Kitting



Custom Boxes



Efficient Packaging



Apparel Processing



Customization to the Needs of the Client – White Gloves Services

Jaime Torres points out that there is a lot of variation and diversity in IML’s pick, pack and kitting operations. Numbers of items to handle vary from one to many, some are wrapped, cartons have to be set up, etc. With all of that in mind, you are encouraged to remember that most of the numbers below are averages and ranges in this operation vary widely reflecting IML’s great flexibility and scale advantages.

Mira Loma Overview

Mira Loma – Micro Drive is a good example of IML’s capabilities.  This high level of ability has been globalized.  IML has 10 ALCs in Europe, the Middle East and Africa and 80 in the Asia Pacific region including Sydney and Auckland.

 

Sources: A&A Primary Research, http://www.ingrammicrocommerce.com/

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