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Creating a Distribution Powerhouse: Why Rapid Deployment Matters

Today, time is on the cutting edge. In fact, as a strategic weapon, time is the equivalent of money, productivity, quality, even innovation. George Stalk Jr., senior adviser & a BCG Fellow of the Boston Consulting Group

2 Creating a Distribution Powerhouse: Why Rapid Deployment Matters

InTRoducTIon

In a business environment, our quest to increase speed is ever-present. As technology capabilities become increasingly sophisticated, expectations for speed are rising. This is fueling an even stronger competitive environment. Consider the following examples: Mayo Clinic anesthesiologist Dr. Michael J. Joyner studied marathon and other longdistance race results over the last 125 years and found that todays athletes are faster than ever before. In fact, the pace of the mens and womens marathon today is about as fast as the 10,000-metre pace was just after the Second World War. McDonalds aims to serve customers within 90 seconds of taking their order. So, in an effort to speed up times at drive-through windows, staff at the McDonalds Innovation Center spent years developing an automated soda fountain that fills cups as soon as an order is placed into the workflow. When this same crew discovered that hot drinks needed more milk, they added refrigerated storage below the McCafe coffee makers to speed up efficiency. These two improved services have led to the processing of as many as five extra cars per hour in the drivethrough queue. Certainly supply chain operations are being driven to adapt quickly to changes in the business environment that are even more demanding than changes in sports or the fast-food industry.

Speed: In Old English, sped meant success or thriving, having grown out of the same ancient root spe- as the Latin sperare meaning, to hope.

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SPEEd of dEPloymEnT AS A comPETITIvE AdvAnTAgE

In many ways, a materials handling process is the pulse of a supply chain operation and while speed of the system itself is a critical factor of success, its also important to consider the speed of change. That is, the speed at which it is able to respond quickly to changing market demands. Ask yourself this: If your distribution center were to require an overhaul and redesign to accommodate drastic changes in volumes, product assortments or delivery timelines how quickly could you make this happen? In months? Maybe a year? On the other hand, what would the opportunity costs be if you could not accommodate these changes quickly? As a fast-growing business, how can you convert your traditional distribution center into a world-class powerhouse quickly enough to maintain or even create a competitive advantage? There are many examples of businesses today facing this very challenge. Take a multi-channel retailer that exclusively sells footwear, but wants to expand its online product offerings to include apparel and sporting equipment. If the distribution center was designed for sneakers only, it likely uses a conveyor system to route boxes to and from storage and packing stations. This retailer is locked into a conventional bolteddown system that supports shoeboxes while the market is moving beyond footwear and into hockey sticks and other goods which cant convey down their existing system. Yet, it could be a year at least before this DC can operate productively with a new product line.

Can your operation transition from processing shoes to sporting goods in a matter of weeks?:

4 Creating a Distribution Powerhouse: Why Rapid Deployment Matters

In the medical device and supplies space, new treatment modalities are being approved every day for conditions such as heart disease and diabetes. A fast transition to new SKUs at the DC means life-saving products getting to patients sooner. But the redesign necessary to overhaul the materials handling system at the DC faces regulatory scrutiny while pressure mounts to meet aggressive timelines. As your business model changes and expands, your materials handling operation needs to be able to change with it - and quickly. Fast system deployment can be the difference between being first-to-market and missing the trend. If your distribution center could quickly adapt to support your growth without disrupting on-going operations, you could: Beat your competitors timeline: The ability to expand quickly means you can introduce hot or trending merchandise faster than your competitors Begin return on capital sooner: The longer the project takes, the longer your expenses are drawn out on labor costs and less overlap necessary on renting two sites during deployment Require less management time and attention: Deployment in months versus a year or longer means less time your management team spends on planning and meetings, and more time on their actual day-to-day job responsibilities Ease transition during mergers and acquisitions: Less disruption to current operations Stay geographically nimble: Move closer to your target market as demographics change or closer to your transport hubs when gas prices or labor rates fluctuate

THE KIvA WAy To RAPId dEPloymEnT

lEAP fRog THE comPETITIon & ExcEEd cuSTomER ExPEcTIonS
In the old way of doing things, changes to your DC would take years to plan, design and build. And, youd need to commit to equipment and a configuration that would accommodate growth for three to five years, even though your market assumptions, product line, and volume might completely change during that time. A new distribution center means a year of planning and designing before you can even start deployment, right? Wrong.

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Heres how it works:

Kiva Systems has revolutionized the DC with flexibility that is unheard of with any other form of automation. Kivas system allows a complete warehouse transformation in weeks, not months because of its flexibility and portability.

The Kiva warehouse automation solution is the only way we found that would enable us to build our company quickly ... John James CEO Acumen Brands

Using a fleet of mobile robotic drive units, moveable shelves, work stations and sophisticated control software to automate the pick, pack and ship processes, Kiva Systems offers a faster path to a distribution powerhouse offering the competitive advantage necessary to succeed. Because of its flexibility and portability, Kiva is incredibly fast and easy to install. Recently a Top 100 Internet Retailer experiencing exponential growth through its online channels was able to relocate its entire distribution operation - Kiva system, inventory, and all - from one site to a larger site over a single weekend. Operators went home Friday night and came to work at the new facility on Monday morning, able to start work as if nothing had happened - no new orientation, no changes to workflows, no new training was needed. Not a month later, just a weekend to move without a single hiccup in operation and without a single order lost.

One growing eCommerce pure-play created a world-class Kivaenabled fulfillment center in 7.5 weeks. They started with a dilapidated warehouse that had been abandoned for over 20 years and were picking orders less then 2 months later at a pace that allowed them to process in one day what used to take a full week the old way. And, they did this while both continuing operations during the buildout and simultaneously launching 3 new online stores. See the video here: http://www.kivasystems.com/acumen

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For many businesses, growth is a moving target. With Kiva, you can implement the solution you need to handle current volumes and can easily add additional capacity quickly and easily if needed over time. What a contrast with conventional automation, which requires planning for and even buying capacity several years before it is actually needed. Because of this system flexibility, Kiva customers can pay as they grow, which eliminates the risk of over or underestimating how much to buy at once. Making the right automation decision for your business starts by asking the right questions, such as: Is your companys growth five years from now difficult to predict? Is your growth being stunted by limitations within your DC? Is there a chance your company will expand product-lines with goods of different shapes and sizes than what you currently sell? Do you want to offer next-day shipping but your DC cycle-time does not make that feasible? Are you competing with other companies that are able to offer greater merchandise variety? Do you have a hard time staying ahead of orders during the holiday or peak season? Will you soon be outgrowing your current warehouse? Do you plan to launch an eCommerce site? Does a year-long process to get an effective new DC in place feel overwhelming? Did you answer yes to even one of the above questions? If so, its time to consider Kiva. For more information, visit www.kivasystems.com.

300 Riverpark Drive, North Reading, MA 01864 USA +1(781) 221. 4640 fax +1(781) 221. 3077 sales@kivasystems.com www.kivasystems.com

Kiva Systems, Inc. uses game changing automation technology for distribution centers that helps companies simplify operations and reduce costs, while increasing strategic flexibility. Using hundreds of autonomous mobile robots and sophisticated control software, the Kiva Mobile Fulfillment System enables extremely fast cycle times with reduced labor requirements, from receiving to picking to shipping. The result is a building that is quick and low-cost to set up, inexpensive to operate, and easy to change.
Copyright 2011 Kiva Systems, Inc. All rights reserved. Kiva Sytems, the Kiva logo, Kiva Mobile Fulfillment System and all other Kiva products and services mentioned hererin are trademarks of Kiva Systems, Inc

2011.303.005