Case Study
Sandman
From Bottlenecks to Breakthroughs: How Sandman Boosted Picking Speed by 500%
Country
Estonia
Industry
Retail
Partner
Swisslog
Warehouse Automation Brings 500% Increase in Picking Speed to Electronics Distributor
Established in 1992, Sandman Group has become the leading wholesale distributor of consumer electronics across the Baltic region. They serve customers throughout Estonia, Latvia, and Lithuania, under three brands, with a mix of physical and online stores. They moved to their current warehouse operations, based in Tallin, Estonia in 2019. It delivers omnichannel fulfillment, with both store replenishment and e-commerce orders processed there. They operate with a just-in-time strategy for in-store replenishment, with frequent regular large orders for 47 bricks ‘n’ mortar stores, alongside typical e-commerce orders for customers buying online.
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When the warehouse first opened in 2019, it had plenty of excess storage capacity. Sandman believed this would provide ample room to keep up with expected demand growth over the next few years and storage needs would increase.
Then the Covid pandemic stuck.
This, alongside other factors, saw demand surge at unprecedented rates. Aare Koppel, the CEO of Sandman Group explains, “when we moved to a new 16,000 m2 warehouse, we were sure that we had 40% free space to support our long-term expansion. However, we began growing much faster than expected”.
Within six months, almost all the spare storage was used up. “Our order volumes grew rapidly in a short period, and it was clear that there was a deficit of active space.”
The lack of space and need for more efficiency and speed to keep up with order volumes, combined to squeeze their warehouse operations. This pressure was creating friction that threatened to slow them down. It was not only limiting potential growth opportunities for the business but negatively impacting customer satisfaction. And all of this at a crucial point when customer expectations for faster deliveries and more convenience were accelerating.
Sandman needed to increase storage capacity. But they also needed to enhance productivity and operational speed to efficiently process higher order volumes. But they weren’t the only challenges. They needed easy to scale infrastructure that could adapt to increased demand in the future. They also needed to combine both e-commerce and in-store inventory in the same setup.
Another critical aspect was the time to market and the ability to go live as quickly as possible. The longer it took for any solution to be deployed, the more it would harm long-term goals by missing out on revenue and market expansion opportunities.
With warehouse floor space fast running out, it became clear that a transition to warehouse automation was the best way of optimizing storage space alongside providing the necessary speed and efficiency.
Any solution would need to not just solve the space issues Sandman were encountering but provide high scalability. One of Sandman’s suppliers, Hama, had recently implemented an AutoStore from Swisslog, an official global AutoStore integration partner. So, when the topic of automation came up, they put the Sandman in touch with Swisslog to discuss their needs. During the resulting consultation, several solutions were proposed, including AutoStore.
The very high storage density of AutoStore, in combination with fast deployment and flexible scaling, immediately made it a clear front-runner. This view was confirmed when the Sandman CLO, Rivo Reinson, was able to visit two live customer sites to see live their AutoStore systems in action during real-life retail operations.
These in-person site visits allowed them to witness the high-speed order processing AutoStore could provide for retail operations similar to their own. “We were really impressed by what we saw”, says Reinson, with the experiences helping to solidify AutoStore as the best fit for their needs. He adds: “ultimately, we chose AutoStore because of its compactness, flexibility, and modular design. We wanted a solution that we could expand or move if needed, and AutoStore met these expectations very well.”
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Customer experience transformed: Rapid deployment of AutoStore speeds up order fulfillment.
Once the Sandman board approved the investment, a contract was signed in March, with the intention of going live by the end of the year. The installation process started in the summer and was already completed by October. AutoStore provided them with the flexibility to meet current needs, alongside easy scaling to adapt and meet changing demand as they grew.
Sandman knew it would be fast to extend the Grid for more total storage or increase throughput capacity with extra Robots or Ports when overall demand increased.
The positive impact of automating order fulfillment with AutoStore could be felt across their whole warehouse. But as Koppel puts it, “most importantly, we've ensured we can meet our customers' demand for fast, reliable delivery, whether they shop online or in-store.”
Today, the warehouse processes approximately 140,000 order lines per month, with around 80% handled by the AutoStore. This provides high-speed efficiency for the bulk of their high demand items, while providing efficient layout with plenty of storage for oversized items such as washing machines or flatscreen televisions.
As Koppel observes, “without this investment we wouldn’t have been able to grow so fast and cost-effectively. Now we have a space-saving, sustainable, and flexible solution that makes our process faster, more efficient, and accurate.”
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A large proportion of the orders the warehouse processes are in-store replenishment. This means single orders with up to 700 – 800 line items (or even more during peak periods such as Christmas). The improved storage capacity and increased picking efficiency provided by AutoStore has helped Sandman shift to a just-in-time strategy for B2B store fulfillment, leveraging advanced AI forecasting.
Precise forecasting models predict SKU demand for each store with very high accuracy, enabling frequent replenishment deliveries to their stores. This has contributed to the 50% reduction of stockouts, as well as cutting the need for excess stock at each store location.
With daily large replenishment orders for 47 stores, inventory turnover rates can be very high. AutoStore helps to streamline this process in several ways:
Increased storage capacity Improves availability of high runners.
High-speed order processing High-speed retrieval capabilities can be combined with sequencing to optimize order processing.
Reduced manual handling for inbound processes Minimizes manual handling demands to re-stock the Grid, saving valuable time every day.
Automatically adapts to optimize picking efficiency for current demand SKU placement is automatically optimized, with current high movers located at the top of the Grid for faster retrieval. As demand changes, it naturally adjusts without any manual intervention to reorganize storage or SKU placement.
With AutoStore in place, Sandman is positioned as a leader in the Baltic consumer electronics market, ensuring exceptional service and high-speed delivery. Even with hyper growth, Sandman was able to solve immediate operational pain points while creating agile, scalable infrastructure that can grow in the future.
Sandman is already planning the next step, with a move to larger warehouse facility in the near future on their roadmap. The lightweight but highly durable construction and modular design means it will be relatively straightforward to disassemble their AutoStore and re-install it at the new warehouse when the time comes.
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“Ultimately, we chose AutoStore because of its compactness, flexibility, and modular design. We wanted a solution that we could expand or move if needed, and AutoStore met these expectations very well.”
“The positive results of our automation journey are clear, with key benefits including faster picking, improved accuracy, reduced need for manual order handling, short lead times, and the ability to respond quickly to changing volumes. Additionally, automation has made it easier to recruit and train warehouse staff.”
“Without this investment we wouldn’t have been able to grow so fast and cost-effectively. Now we have a space-saving, sustainable, and flexible solution that makes our process faster, more efficient, and accurate.”
AutoStore can fit any warehouse or fulfillment center. Make yours the next.
