warehouse restructuring10

WAREHOUSE RESTRUCTURING

& COST ANALYSIS

PROJECT

COMMENTARY ON WAREHOUSE OPERATIONSThroughout Logomark history the consistent growth of the company has pushed to acquire adequate operational

space. This situation has been encountered in all departments of the company, from the Warehouse, to Prep, to Production, to Shipping. When the “Bell” location had become our new home, it incorporated all operations under one roof. However, shortly afterward “Dyer” was leased, again, to accommodate warehouse growth.

Other flow inhibiting issues observed in the warehouse is our “Prep” staging overflow area and in the Q.C. dept. continually, we encounter the situation of having to stage completed orders going to “Prep” in the warehouse aisles and tunnels. This adds to the congestion already in the aisles from staged inbound pallets. In addition, it affects the runners from “Prep” & “Pack” when they have to search through pallets of orders to locate the ones they need. It may and has caused the errors of, incorrect orders being prepped, decorated, and/or shipped. Also, duplicate orders on occasion had to be pulled due to original lost or missing order.

Over the last year or so, our Q.C department has had to endure an onslaught of tasks regarding investigation of basic Q.C. issues, processing customer returns, fulfilling reject or sample requests, and repackaging cancelled orders. the Q.C. area is small and not equipped to smoothly process all these various tasks in a timely manner. Too often, the department is struggling to deal with all the different tasks, requests, and/or repackaging. This tends to lead to a build-up of pallets with product on them waiting for some type of resolution. A larger and more organized area is needed to accommodate both short and long-term storage along with room for performing inspections, repackaging product, and storing extra frequently requested component items.

Recently we learned that the batteries for our equipment are reaching the end of their lifecycles, and replacements are going to be required. About the same time, we realized our equipment has begun to reach a point of cost in maintenance & repairs, that consideration of new equipment is warranted. Additional manpower required to, handle putting product away & continuance of unloading containers, plus increased order pulling has also pushed this necessary assessment of equipment. Reports show that the average length of time before a significant amount of expense is invested into equipment maintenance & upkeep is 3 to 5 years. Our equipment’s age, ranges between 7-9 years.

Presently, our warehouse is full, Dyer is almost at capacity, and our equipment is becoming a cost nuisance. Unless we make changes within the “Bell” facility we will have out-grown the capacity of it’s current lay-out, spent money repairing aging equipment and wasted effort in being productive.

OVERVIEW OF PRESENTATION TOPICS1.Warehouse’s storage capacity, & expenditures

Warehouse size & current storage capacity Warehouse’s main expenditures & monthly costs breakdown

2. Warehouse’s receiving process, hindrances, and costs Identifying various wastes/costs, risks, & needs in the warehouse

Cost/Time Analysis of Current Unloading ProceduresOverview of Warehouse’s receiving processesCost/Time Analysis of Current Unloading & Receiving Procedures

3. Other Warehouse, Prep, Production, Q.C, or Pack/Shipping functions affected by storage issues Identifying various wastes/costs, risks, & needs in the warehouse

Cost/Time Analysis of Current Unloading, Receiving, & Picking Procedures Identifying various wastes/costs, risks, & needs in the warehouse

4. Creating better flow Prep & Q.C staging overflow area(s)

5. Analysis of current & future equipment maintenance costs Identifying various wastes/costs, risks, & needs in the warehouse Various graphs/charts of equipment expenditures and future projections Comparison chart of equipment costs

6. Restructuring the Warehouse Cost/Time Analysis of Current Procedures vs. Eliminated Procedures with Restructuring Crown’s Layout & Demo of primary equipment Toyota’s Layout & Demo of primary equipment Yale’s Layouts & Demo of primary equipment Comparison of Storage Capacities Comparison of Restructuring Costs Example of equipment financing options

WAREHOUSE’S STORAGE CAPACITY REVIEW

Warehouse total footage is approx. 60,000 sqft.

Warehouse occupies approx. 45% of entire building

Warehouse side “A” (Receiving side) is approx. 38,880 sqft.

Warehouse side “B” (Essentials side) is approx. 21,120 sqft.

Warehouse current storage racks occupies approx. 49,147 sqft. or 82% of the total warehouse space.

Storage rack system’s capacity is 7,104 pallets (incld. pick loc.)

Current number of pick locations (not including “Pens”) is 2,724

Total number of “Pen” pick locations is 1,349

Current warehouse capacity is at >98%

WAREHOUSE’S MONTHLY COSTS BREAKDOWN

Warehouse’s % of lease amount (45% of building) $47,958.75 Electricity costs (20% of facility’s total monthly usage ) $2,460.00 Equipment costs (5yr. Monthly avg. of repairs & maintenance) 4,338.25 Hr. personnel labor exp. (Mo. avg. over 12 mo. period) $39,874.00

Total Monthly Warehouse Expenses $94,631.00

IDENTIFYING VARIOUS COST/WASTE,RISKS, & NEEDS IN THE WAREHOUSE

Since April 2013 we began to consistently encounter storage, staging, and picking issues due to our growth.

By October 2013 we began receiving full containers straight from port, at a average rate of one container a day (avg. 80+ pallets). This has produced a steady flow that has become difficult to manage under our current operating procedures, thus majorly reducing our ability to regulate the amount of pallets flowing into our facility

Fact:A staged pallet is handled as much as 10 times before it’s placed into a rack due to current limitations. The risk of product becoming damaged becomes elevated through handling multiple times by staging pallets in aisles (O.S. pallets, product in pick loc., & S/O).

Wastes, Costs, & Risks: Travel time to return to where staged pallets are located vs. putting straight

away into locations Additional manpower required to handle putting product away & continuance of

unloading containers

“BELL” WAREHOUSE’S RECEIVING PROCESSES

Aisle 1/2 Aisle 3/4

ANALYSIS OF CURRENT PROCEDURES

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$

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4 2.58 64 43.52 57 38.76 17 11.56 142 $96.42

Unloading ProcessIndividual Break-down of Processes & Costs with Current Layout

Total Cost

Cont. / Trlr.

arrives at LM

4-6 empty pallet(s) are laid out on

floor by end of container

Product is then unloaded onto pallets by

item & color

As a pallet is finished it's

moved to staging area

for QC/Accuracy

New pallets placed at tail

& process repeats until container is

emptied

Current Layout

Operating P rocedures


Logomark product is delivered via oversea containers, interstate trucking, and local pick-ups done by Logomark driver.

As product arrives, it is off-loaded onto the dock, sorted & palletized by stock # and color.

Once the entire truck is off-loaded it is then verified against packing slip for accuracy.

To clear the dock allowing space for the next inbound load, the palletized product is then labeled, wrapped and moved as close as possible to the aisle of the pick location for that product.

If there are available overstock locations for the product, it is then put into the rack

As the racks become full, any remaining pallets are staged in the aisle of where the product belongs waiting for overstock locations to become open from orders being pulled.

The amount of time pallets spend being staged in the aisles can vary, from 24 hours to as much as 5 days (depending on product movement).

As more freight arrives it is either, staged in the aisles again adding to/replacing the pallets already waiting for put away, or is relocated to the “Dyer” warehouse.


Aisle 5/6 Aisle 7/8


Aisle 9/10 Aisle 15/16


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4 0.93 64 15.62 57 13.91 17 4.15 30 14.10 189 88.83 128 60.16 64 30.08 523 $227.77

Pallets are transported to

appropriate aisles for putaway

Unloading Process

Travel time for returning to

aisle for staged pallets

Receiving Process

Staged container load is then verified

for QC/Accuracy

Pallets are moved from

staged area to "Wrap

Machine" for wrapping

Individual Break-down of Processes & Costs with Current Layout

Total Cost

Cont. / Trlr.

arrives at LM




item & color



for QC/Accuracy



emptied

Current Layout


IDENTIFYING VARIOUS WASTES, INEFFICIENCIES, & NEEDS IN THE WAREHOUSE

Since whenever we began the practice of staging pallets in the aisles, it has had adverse effects on our time pulling orders. When this occurs, it carries over affecting the Prep department also.

Fact:The time pulling a S/O varies greatly on negotiating around inbound product that is staged in the aisles. Adding to the pallets of product that are already staged for S/O’s in aisles 24-26, it becomes so congested that it takes extra time to, transport pallets to Prep department, move pallets around to access pick locations, restack/consolidate previously staged pallets for accommodating more staging space (O.S. or S/O), and put away overstock.

Wastes, Costs, & Risks: Additional equipment to handle excessive product movement Extra time spent to shuffle pallets around to access picking location(s) Extra time spent to shuffle pallets around to access O.S. locations Extra time spent searching for specific S/O’s by Prep dept.

“BELL” WAREHOUSE’S PICKING ISSUES

Aisle 17/18 Aisle 21/22


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4 2.58 64 43.52 57 38.76 17 11.56 30 14.10 189 88.83 128 60.16 64 30.08 64 90.88 47 66.74 38 53.96 173 245.66 845 $746.83

Pallets are transported to

appropriate aisles for putaway

Unloading Process

Travel time for returning to

aisle for staged pallets

Additional time spent to move staged

pallets for access to pick

loc.

Receiving Process Picking ProcessAdditional

time spent to move staged

pallets for access to O/S

loc.

Additional time spent negotiating down aisles with staged

pallets

Staged container load is then verified

for QC/Accuracy

Pallets are moved from

staged area to "Wrap


Individual Break-down of Processes & Costs with Current Layout

Total Cost

Cont. / Trlr.

arrives at LM




item & color



for QC/Accuracy



emptied

Current Layout


Additional time spent picking on aisles with

staged pallets

CREATING BETTER FLOWOther flow inhibiting issues observed in the warehouse is our “Prep” staging overflow area and in the Q.C. dept.

Continually, we encounter the situation of having to stage completed orders going to “Prep” in the warehouse aisles and tunnels. This adds to the congestion already in the aisles from staged inbound pallets. In addition, it affects the runners from “Prep” & “Pack” when they have to search through pallets of orders to locate the ones they need. It may and has caused the errors of, incorrect orders being prepped, decorated, and/or shipped. Also, duplicate orders on occasion had to be pulled due to original lost or missing order.

PREP STAGE OVERFLOW

Aisle 25 Aisle 24

PREP STAGE OVERFLOW

Tunnel Outside Prep Aisle 26/27

CREATING BETTER FLOWOver the last year or so, our Q.C department has had to endure a onslaught of tasks. Investigation of basic Q.C. issues, processing customer returns, fulfilling reject or sample requests, and repackaging cancelled orders.

The Q.C. area is small and not equipped to smoothly process all these various tasks in a timely manner. Too often, the

department is struggling to deal with all the different tasks, requests, and/or repackaging. This tends to lead to a build-up of pallets with product on them waiting for some type of resolution. A larger and more organized area is needed to

accommodate both short and long-term storage along with room for performing inspections, repackaging product, and

storing extra frequently requested component items.

Q.C. AREA

Original Q.C. Staging Tunnel Outside Q.C. Aisle 40/41

IDENTIFYING VARIOUS WASTES, INEFFICIENCIES, & NEEDS IN THE WAREHOUSE

In September 2013 we learned that the batteries for our equipment were reaching the end of their lifecycles, and replacements were going to be required. About the same time, we realized our equipment has begun to reach a point of cost in maintenance & repairs, that consideration of new equipment is warranted. Additional manpower required to, handle putting product away & continuance of unloading containers, plus increased order pulling has also pushed this necessary assessment of equipment.

Fact:A study of reports, show that the average length of time before a significant amount of expense is invested into equipment maintenance & upkeep is 3 to 5 years. Our equipment’s age, ranges between 7-9 years.

Wastes, Costs, & Risks: Cost of maintaining current equipment will continue to rise as the equipment gets

older. Over a short time the amount spent on maintenance & upkeep can exceed the

cost of just replacing the equipment outright when it’s beyond 3-5 yrs old. When equipment is down frequently due to repairs, it will affect productivity

throughout the facility.

1A293089 1A293151 9A139025 9A139026 1A294145 6A229542 9A150784 9A155136 9A155137 1A300834RR5220-35 RR5220-35 WAV50-

118WAV50-

118SP3410-30 PE4000-60 WAV50-

118WAV50-

118WAV50-

118SP3420-30

$0.00$500.00

$1,000.00$1,500.00$2,000.00$2,500.00$3,000.00$3,500.00$4,000.00$4,500.00$5,000.00$5,500.00$6,000.00$6,500.00$7,000.00$7,500.00$8,000.00$8,500.00$9,000.00$9,500.00

$10,000.00$10,500.00$11,000.00$11,500.00$12,000.00$12,500.00

Total Maintence Spent on Individual Units

Maintence Expenses (2013)






WAREHOUSE’S EQUIPMENT COST ANALYSISList of Current Equipment & Annual Expenditures

Model # Ser. # Maintence Expenses (2008)






Maintence Expenses (yearly avg.)

Yearly P.M. Labor Exp.

RR5220-35 1A293089 $375.04 $523.61 $2,493.68 $690.53 $1,501.09 $1,169.95 $1,126.65 $300.00

RR5220-35 1A293151 $650.27 $672.82 $0.00 $965.48 $429.64 $1,256.09 $663.38 $300.00

WAV50-118 9A139025 $2,739.62 $375.01 $2,612.31 $1,932.69 $2,628.01 $2,051.28 $2,057.49 $240.00

WAV50-118 9A139026 $2,619.72 $320.61 $1,986.10 $1,657.39 $1,072.35 $1,347.74 $1,501.65 $240.00

SP3410-30 1A294145 $322.15 $94.47 $402.70 $103.00 $1,233.34 $775.06 $489.45 $300.00

PE4000-60 6A229542 $4.00 $0.00 $0.00 $427.10 $2,006.83 $945.21 $564.86 $240.00

WAV50-118 9A150784 $30.00 $1,538.21 $379.91 $2,407.16 $1,465.41 $1,976.99 $1,300.61 $240.00

WAV50-118 9A155136 $0.00 $0.00 $199.80 $291.86 $2,435.38 $163.35 $516.07 $240.00

WAV50-118 9A155137 $0.00 $0.00 $1,350.12 $396.23 $1,102.74 $2,635.39 $915.08 $240.00

SP3420-30 1A300834 $0.00 $0.00 $0.00 $0.00 $0.00 $403.38 $68.23 $300.00

Summary, & Monthly Breakdown of Total Expenditures for Equipment

Model # Ser. # Date Aquired Cost of Unit Total Amt. Spent on P.M. Labor

Maintence Expenses (2008-2013)

Total Amt. Spent per Unit

Monthly Avg. of Total Amt. Spent

Projected "Major" Exp. (5yrs)

Projected Mo. Avg. of Total Amt. spent

RR5220-35 1A293089 9/20/2005 $30,069.25 $2,400.00 $6,753.90 $39,223.15 $392.23 $9,373.18 $357.33

RR5220-35 1A293151 9/20/2005 $30,069.25 $2,400.00 $3,974.30 $36,443.55 $364.44 $9,905.60 $340.80

WAV50-118 9A139025 9/22/2005 $12,391.25 $1,920.00 $12,338.92 $26,650.17 $266.50 $8,911.91 $261.49

WAV50-118 9A139026 9/22/2005 $12,391.25 $1,920.00 $9,003.91 $23,315.16 $233.15 $4,890.29 $207.39

SP3410-30 1A294145 10/7/2005 $23,390.37 $2,400.00 $2,930.72 $28,721.09 $287.21 $6,547.25 $259.33

PE4000-60 6A229542 10/7/2005 $10,213.62 $1,920.00 $3,383.14 $15,516.76 $155.17 $2,824.30 $134.86

WAV50-118 9A150784 4/27/2007 $12,736.91 $1,680.00 $7,797.68 $22,214.59 $274.25 $4,341.59 $226.98

WAV50-118 9A155136 11/15/2007 $13,894.37 $1,440.00 $3,090.39 $18,424.76 $227.47 $4,345.84 $194.62

WAV50-118 9A155137 11/15/2007 $13,894.37 $1,440.00 $5,484.48 $20,818.85 $257.02 $4,526.35 $216.63

SP3420-30 1A300834 11/27/2012 $25,628.00 $300.00 $403.38 $26,331.38 $1,880.81 $5,045.00 $627.53

Color Legend: Drive Motor replacement Battery replacement Var. Maint. Exp. Drive Motor & Battery replacement

Drive Motor & Var. Maint. Exp. Battery & Var. Maint. Exp.

RR5220-35 1A2930899/20/2005$39,223.15

15%

RR5220-351A2931519/20/2005$36,443.55

14%

WAV50-1189A1390259/22/2005$26,650.17

11%

WAV50-118 9A1390269/22/2005

$23,315.16 / 9%

SP3410-30 1A29414510/7/2005$28,721.09

11%

PE4000-60 6A22954210/7/2005

$15,516.76 / 6%

WAV50-1189A1507844/27/2007$22,214.59

9%

WAV50-118 9A15513611/15/2007$18,424.76 /

7% WAV50-118 9A15513711/15/2007$20,818.85 /

8%

SP3420-30 1A30083411/27/2012$26,331.38

10%

Total Amount Spent per Unit

EQUIPMENT COST COMPARISONComparison of Expenditures for Additional/Replacement Industrial Equipment

Model # Total Amt. Spent per Unit

Mo. Avg. Spent per Unit

Projected "Major" Exp.

(5yrs)Projected Total

amountProjected Mo. Avg. Next 5 yrs

Cost of Replacement unit

(New)

Exp. % Current vs.

New

Proj. Exp. % Current vs.

New

RR5220-35 $39,223.15 $392.23 $9,373.18 $48,596.33 $357.33 $38,750.00 101% 125%

RR5220-35 $36,443.55 $364.44 $9,905.60 $46,349.15 $340.80 $38,750.00 94% 120%

WAV50-118 $26,650.17 $266.50 $8,911.91 $35,562.08 $261.49 $16,345.00 163% 218%

WAV50-118 $23,315.16 $233.15 $4,890.29 $28,205.45 $207.39 $16,345.00 143% 173%

SP3410-30 $28,721.09 $287.21 $6,547.25 $35,268.34 $259.33 $31,795.00 90% 111%

PE4000-60 $15,516.76 $155.17 $2,824.30 $18,341.06 $134.86 $13,995.00 111% 131%

WAV50-118 $22,214.59 $274.25 $4,341.59 $26,556.18 $226.98 $16,345.00 136% 162%

WAV50-118 $18,424.76 $227.47 $4,345.84 $22,770.60 $194.62 $16,345.00 113% 139%

WAV50-118 $20,818.85 $257.02 $4,526.35 $25,345.20 $216.63 $16,345.00 127% 155%

SP3420-30 $26,331.38 $1,880.81 $5,045.00 $31,376.38 $627.53 $31,795.00 83% 99%

Totals $257,659.46 $4,338.25 $60,711.31 $318,370.77 $2,826.94 $236,810.00 109% 134%

RESTRUCTURING THE WAREHOUSE

In October 2013 three companies were invited to submit bids/concepts to improve our productivity, flow, and storage capabilities. The following slides are their envisions and the benefits they bring.

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4 2.58 64 43.52 57 38.76 17 11.56 30 14.10 189 88.83 128 60.16 0 0.00 0 0.00 0 0.00 0 0.00 0 0.00 489 $259.51

Staged container

load is then verified for

QC/Accuracy

Individual Break-down of Costs & Processes with Crown's Layout

Total Spent


moved to "Wrap


Pallets are transported

to appropriate

aisles for putaway

Travel time for returning

to aisle for staged pallets

Additional time spent

to move staged

pallets for access to pick loc.


pallets


staged pallets


to move staged

pallets for access to O/S loc.

Cont. / Trlr.

arrives at LM

New Layout Operating

P rocedures

Unloading Process Receiving Process Picking Process



Product is then

unloaded onto pallets

by item & color



for QC/Accuracy

New pallets placed at

tail & process

repeats until container is

emptied

COMPARISON OF CURRENT VS. NEW PROCEDURES

We conducted a time study to see to what extent our current storage issues have on our performance, capacity, and percentage of overtime. What we discovered was an eye-opening observation of how much our storage issues affect our picking and receiving performance. What can we do to improve performance, create a better flow and reduce the amount of overtime/labor hours used. We need to be able to, increase storage capacity, create a single staging zone for “Prep” that doesn’t hinder performance, and re-design a better arrangement of

flow in the Q.C. area. How much unnecessary/wasted effort is there in the chart above?

We would achieve; a dramatic reduction in O/T labor by approximately 30% along with providing room for growth and making the warehouse flow a lot smoother and more efficient.

These figures are based on a 8 hour time period which would result in approximately a savings of $487.32 per day or $10,721.04 per month.

Proce

ss

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d Proce

ss

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inate

d

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Eli

mina

ted

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ss

Elimina

ted

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ss

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inate

d

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4 2.58 64 43.52 57 38.76 17 11.56 30 14.10 189 88.83 128 60.16 64 30.08 64 90.88 47 66.74 38 53.96 173 245.66 875 $746.83



for QC/Accuracy


tail & process


emptied

Current Layout



staged pallets

Pallets are moved from staged area

to "Wrap Machine" for

wrapping

Individual Break-down of Costs & Processes with Current Layout

Total Cost

Cont. / Trlr.

arrives at LM



Product is then


by item & color


to appropriate

aisles for putaway

Unloading Process (3 employees @ combined $.68/min.)




to move staged


Receiving Process (4 employees @ combined $.47/min.) Picking Process (9 employees @ combined $1.42/min.)Additional time spent

to move staged



pallets

Staged container


QC/Accuracy

“NEW” WAREHOUSE’S MONTHLY COSTS BREAKDOWN

Warehouse’s % of lease amount (45% of building) $47,958.75 Electricity costs (20% of facility’s total monthly usage ) $2,460.00 Equipment costs (5yr. Monthly avg. of repairs & maintenance) 4,338.25 Hr. personnel labor exp. (Mo. avg. over 12 mo. period) $29,152.96

Total Monthly Warehouse Expenses $79,571.71

COMPARISON OF CURRENT VS. NEW PROCEDURES

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4 2.58 64 43.52 57 38.76 17 11.56 30 14.10 189 88.83 128 60.16 64 30.08 64 90.88 47 66.74 38 53.96 173 245.66 875 $746.83



for QC/Accuracy


tail & process


emptied

Current Layout



staged pallets

Pallets are moved from staged area

to "Wrap Machine" for

wrapping

Individual Break-down of Costs & Processes with Current Layout

Total Cost

Cont. / Trlr.

arrives at LM



Product is then


by item & color


to appropriate

aisles for putaway

Unloading Process (3 employees @ combined $.68/min.)




to move staged


Receiving Process (4 employees @ combined $.47/min.) Picking Process (9 employees @ combined $1.42/min.)Additional time spent

to move staged



pallets

Staged container


QC/Accuracy

Man hrs in min.

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4 2.58 64 43.52 57 38.76 17 11.56 30 14.10 189 88.83 128 60.16 0 0.00 0 0.00 0 0.00 0 0.00 0 0.00 489 $259.51


to move staged


Cont. / Trlr.

arrives at LM

New Layout Operating

P rocedures

Unloading Process Receiving Process Picking Process



Product is then


by item & color



for QC/Accuracy


tail & process


emptied

Staged container


QC/Accuracy

Individual Break-down of Costs & Processes with Crown's Layout

Total Spent


moved to "Wrap



to appropriate

aisles for putaway




to move staged



pallets


staged pallets

CURRENT LAYOUT

Rack Layout Proposal Occupied SqFt

Warehouse Side "A" Warehouse Side "B"Total # of

Pallet Loc. Main Racking Outer racks TunnelTotal Pallet

Loc. In Whse "A"

Main Racking Outer racks TunnelTotal Pallet

Loc. In Whse "B"

Current 49,147 4,344 0 120 4,464 1,944 480 216 2,640 7,104


Warehouse Side "A" Warehouse Side "B"

Total # of Pallet Loc.

% of increased storageMain

Racking Outer racks TunnelTotal Pallet

Loc. In Whse "A"

Main Racking Outer racks TunnelTotal Pallet

Loc. In Whse "B"

Crown 49,147 6,375 0 312 6,687 1,680 750 312 2,742 9,429 32.73%

CROWN’S LAYOUT

CROWN’S TURRET LIFT TRUCK

TOYOTA LAYOUT

Rack Layout Proposal

Occupied SqFt

Warehouse Side "A" Warehouse Side "B"Total # of

Pallet Loc. % of increased

storageMain Racking Outer racks Tunnel

Total Pallet Loc. In Whse

"A" Main


Loc. In Whse "B"

Toyota 49,147 5,625 0 216 5,841 2,565 705 342 3,612 9,453 33.07%

TOYOTA’S FLEXI LIFT TRUCK

YALE LAYOUT OPTION 1


Warehouse Side "A" Warehouse Side "B"Total # of Pallet

Loc. % of increased

storageMain Racking Outer racks Tunnel Total Pallet Loc. In Whse "A" Main Racking Outer racks Tunnel Total Pallet Loc.

In Whse "B"

Yale opt 1 49,147 5,430 0 180 5,610 1,944 480 216 2,640 8,250 16.13%




Loc. % of increased


In Whse "B"

Yale opt 2 49,147 6,135 0 189 6,324 1,944 480 216 2,640 8,964 26.18%




Loc. % of increased

storageMain Racking Outer racks Tunnel Total Pallet Loc. In Whse "A" Main Racking Outer racks Tunnel Total Pallet Loc. In

Whse "B"

Yale opt 3 49,147 6,135 0 189 6,324 2,430 795 324 3,549 9,873 38.98%

YALE’S “BENDI” LIFT TRUCK

STORAGE COMPARISON OF LAYOUTSRack Layout

ProposalOccupied

SqFt



% of increased storage

Main Racking Outer racks Tunnel


"A" Main


Loc. In Whse "B"

Current 49,147 4,344 0 120 4,464 1,944 480 216 2,640 7,104 0.00%

Crown 49,147 6,375 0 312 6,687 1,680 750 312 2,742 9,429 32.73%

Toyota 49,147 5,625 0 216 5,847 2,565 705 342 3,612 9,453 33.07%

Yale opt 1 49,147 5,430 0 180 5,610 1,944 480 216 2,640 8,250 16.13%

Yale opt 2 49,147 6,135 0 189 6,324 1,944 480 216 2,640 8,964 26.18%

Yale opt 3 49,147 6,135 0 189 6,324 2,430 795 324 3,549 9,873 38.98%

COST COMPARISON OF LAYOUTS

Rack Layout

Proposal

Monthly Expenses

(Exclud. Equip.)

$ of project

Labor $ savings

per year

Mo. $ of project

(5yr span)

Time (yrs) until project has paid for

itselfEquipment Roster

Current Equipment $ Required vs. New

Equipment $ Required for layout

Mo. $ of equip. / projected maint.

Req. for layout (5 yr span)

Time (yrs) until Project +

Equipment has paid for itself

Current (No Chng) $79,739 $0 $0 $0 N/A 2 RRs (Current), 2 SPs (Current ), 1 PR (Current),

5 Waves (Current), + 1 RR (Encore/Used) $166,402 $2,773 N/A

Current Opt 1 $79,739 $0 $0 $0 N/A 3 RRs (New), 1 SP (New), 1 PR (New),

5 Waves (New) $246,270 $4,105 N/A

Current Opt 2 $79,739 $0 $0 $0 N/A 3 RRs (Encore/Used), 2 SPs (Encore/Used),

1 PR (New), 5 Waves (New) $208,975 $3,483 N/A

Current Opt 3 $79,739 $0 $0 $0 N/A 3 RRs (Encore/Used), 2 SPs (Encore/Used),

1 PR (New) $152,500 $2,542 N/A

Crown $73,204 $298,257 $78,420 $4,971 3.80 2 TSPs (Demo/Used), 2 SPs (Encore/Used), 1 PR (New) $227,000 $3,783 6.70

Toyota $77,561 $139,237 $26,136 $2,321 5.33 2 Flexi (Sit-down), 2 Stk Pickers, 1 Pallet Rider $145,635 $2,427 10.90

Yale opt 1 $77,561 $103,349 $26,136 $1,722 3.95 3 Reach Trucks, 2 Stk Pickers, 1 Pallet Rider $146,389 $2,440 9.56

Yale opt 2 $75,382 $167,453 $52,284 $2,791 3.20 2 Bendi, 3 Stk Pickers, 1 Pallet Rider $146,389 $2,440 6.00

Yale opt 3 $73,204 $293,535 $78,420 $4,892 3.74 2 Bendi, 3 Stk Pickers, 1 Pallet Rider $187,110 $3,119 6.13

PRESENTATION RECAP ON WAREHOUSE OPERATIONSIn this presentation:

We identified various operational & storage issues.We recognized our aging equipment’s rising maintenance costs and need for new equipment

We compared our current labor costs incurred by our ops and storage issues vs. savings if we restructured the warehouse 3 companies submitted their solutions for what we were attempting to accomplish.Each concept was analyzed for cost, operational/storage benefits, and dedication to the

project. Out of the 3 companies' proposals, and although the most cost, Crown lifts provided the most

assistance, best over-all layout concept, and worked diligently to insure the majority of incidental additional expenses (permits, draft curtain removal, lighting improvements/upgrades, etc…) were included in their quote.Toyota & Yale did not entirely make the extensive effort that Crown has done.Toyota’s lack of effort was shown through their layout concept.

Yale’s layout concept was similar to Crown’s, and a little more detailed, however it lacked in the overall commitment to us. There were various expenses that were curiously omitted in the quotes initially, multiple occasions of meetings with us forgotten about or postponed last minute, and unpreparedness when presenting various layouts and quotes.

Both Toyota & Yale’s recommended equipment was determined to be high risk.

If a recommendation was to be given, our best choice would be to use Crown for this and any future projects. Crown has shown their loyalty and commitment to us and our endeavors.

CURRENT & FUTURE GROWTH

In mid-June it was determined that, due to current and projected future growth of the company it would be necessary to consider an alternate solution for increased production and storage needs.

The following slides are potential concepts for handling that growth with approximate costs and benefits.

CROWN’S LAYOUT OPT 2



Loc. % of increased


In Whse "B"

Current 49,147 4,344 0 120 4,464 1,944 480 216 2,640 7,104 0.00%

Crown Opt 2 49,147 6,394 0 234 6,628 797 165 126 1088 7,716 8.61%

CROWN’S LAYOUT OPT 3



Loc. % of increased


In Whse "B"

Current 49,147 4,344 0 120 4,464 1,944 480 216 2,640 7,104 0.00%

Crown Opt 3 49,147 5,764 0 234 5,998 0 0 0 0 5,998 -15.57%

CROWN’S LAYOUT @ DYER W/OPT 2 OR 3



Loc. % of increased


In Whse "B"

Current N/A N/A N/A N/A N/A N/A N/A N/A N/A 6,032 0.00%

Crown Opt 3 N/A N/A N/A N/A N/A N/A N/A N/A N/A 7,304 17.42%

STORAGE COMPARISON OF LAYOUTSRack Layout Proposal Occupied

SqFt




# of additional pallet

positions required @

new location

Size of Additional Warehouse needed (Min. Sqft. of whse.)Main

RackingOuter racks Tunnel Total Pallet Loc.

In Whse "A" Main

RackingOuter racks Tunnel


"B"

Current layout @ Bell 49,147 4,344 0 120 4,464 1,944 480 216 2,640 7,104 0.00% N/A N/A

Current Layout @ Dyer N/A N/A N/A N/A N/A N/A N/A N/A N/A 6,032 0.00% N/A N/A

Current Layout @ Bell & Dyer N/A N/A N/A N/A N/A N/A N/A N/A N/A 13,136 0.00% N/A N/A

Crown Opt 1 @ Bell 49,147 6,375 0 0 6,375 1,680 750 0 2,430 9,429 32.73% N/A N/A

Crown Opt 2 @ Bell 40,546 6,394 0 234 6,628 797 165 126 1,088 7,716 8.61% N/A N/A

Crown Opt 3 @ Bell 31,946 5,764 0 234 5,998 0 0 0 0 5,998 -15.57% N/A N/A

Crown Layout @ Dyer N/A N/A N/A N/A N/A N/A N/A N/A N/A 7,304 21.09% N/A N/A

Crown Opt 2 + Crown Layout @ Dyer N/A N/A N/A N/A N/A N/A N/A N/A N/A 15,020 29.73% N/A N/A

Crown Opt 3 + Crown Layout @ Dyer N/A N/A N/A N/A N/A N/A N/A N/A N/A 13,302 1.26% N/A N/A

Crown Opt 2 + Additional Warehouse (50% growth) N/A N/A N/A N/A N/A N/A N/A N/A N/A 19,704 50.00% 11,988 73,126.80




COST COMPARISON OF LAYOUTSRack Layout Proposal Occupied SqFt # of Pallet Loc.

In Whse "A" # of Pallet Loc. In Whse "B"



Pallet positions required @ new

locationMin. sqft. of Add.

Whse needed Equipment Roster Cost of Equipment Cost of Project(s) Total Expense

Current layout @ Bell 49,147 4,464 2,640 7,104 0.00% N/A N/A2 RRs (Current), 2 SPs (Current ), 1 PR (Current), 5 Waves (Current), + 1 RR

(Encore/Used)$166,402 $0 $166,402

Current Layout @ Dyer N/A N/A N/A 6,032 0.00% N/A N/A N/A $0 $0 $0

Current Layout @ Bell & Dyer N/A N/A N/A 13,136 0.00% N/A N/A

2 RRs (Current), 2 SPs (Current ), 1 PR (Current), 5 Waves (Current), + 1 RR

(Encore/Used)$166,402 $0 $166,402

Crown Opt 1 @ Bell (Original project) 49,147 6,375 2,430 9,429 32.73% N/A N/A 2 TSPs (Demo/Used), 2 SPs

(Encore/Used), 1 PR (New) $227,000 $383,249 $610,249

Crown Opt 2 (25% loss @ Bell) 40,546 6,628 1,088 7,716 8.61% N/A N/A 2 TSPs (Demo/Used), 2 SPs

(Encore/Used), 2 PRs (New) $243,500 $151,708 $395,208

Crown Opt 3 (50% loss @ Bell) 31,946 5,998 0 5,998 -15.57% N/A N/A 2 TSPs (Demo/Used), 2 SPs


Crown Layout @ Dyer N/A N/A N/A 7,304 21.09% N/A N/A 2 TSPs (Demo/Used), 1 SP (Encore/Used), 1 PR (New) $201,750 $234,269 $436,019

Crown Opt 2 (-25%) + Crown Layout @ Dyer N/A N/A N/A 15,020 29.73% N/A N/A 4 TSPs (Demo/Used), 3 SPs


Crown Opt 3 (-50%) + Crown Layout @ Dyer N/A N/A N/A 13,302 1.26% N/A N/A 4 TSPs (Demo/Used), 3 SPs


Crown Opt 2 + Add. Warehouse

(50% growth)N/A N/A N/A 19,704 50.00% 11,988 73,126.80 4 TSPs (Demo/Used), 3 SPs

(Encore/Used), 3 PRs (New) $445,250 $699,522 $1,144,772




476



(Encore/Used), 3 PRs (New) $445,250 $750,078 $1,195,328




MAP OF TUSTIN AREA

PRELIMINARY LAYOUT FOR 1231 WARNER AVE.

EQUIPMENT BUY-BACK OFFER FROM USED EQUIPMENT DEALEREquipment Buy-back offer from Crown

Unit Serial # Date Purch. Buy-back Amt. RR5220-35 1A293089 9/20/2005 $5,000.00 RR5220-35 1A293151 9/20/2005 $5,000.00 SP3410-30 1A294145 10/07/2005 $4,000.00 PE4000-60 6A229542 10/07/2005 $ 500.00 WAV50-118 9A139025 9/22/2005 $1,900.00 WAV50-118 9A139026 9/22/2005 $1,900.00 WAV50-118 9A150784 4/27/2007 $2,000.00 WAV50-118 9A155136 11/15/2007 $2,000.00 WAV50-118 9A150137 11/15/2007 $2,000.00 Total: 9 units Total Amount Offered: $24,300.00

EQUIPMENT COST COMPARISONCrown Equipment

Model # Cost of Replacement unit (New) 36 mo. Lease w/$1 B.O. 36 mo. Lease w/$1 B.O. &

"Full" Maint.36 mo. Lease w/$1 B.O. & "Comp."

Maint. 60 mo. Lease w/$1 B.O. 60 mo. Lease w/$1 B.O. & "Full" Maint.

60 mo. Lease w/$1 B.O. & "Comp." Maint.

Mo. $ "Full" Maint.

Mo. $ "Comp." Maint.

RR5220-35 $38,750.00 $1,151.51 $1,406.51 $1,431.51 $719.89 $974.89 $999.89 $255.00 $280.00

WAV50-118 $16,345.00 $487.43 $576.43 $586.43 $304.73 $393.73 $403.73 $89.00 $99.00

SP3410-30 $31,795.00 $945.37 $1,140.37 $1,170.37 $591.01 $786.01 $816.01 $195.00 $225.00

PE4000-60 $13,995.00 $417.78 $552.78 $577.78 $261.18 $396.18 $421.18 $135.00 $160.00

PR4500-60 $16,500.00 $493.51 $628.51 $653.51 $308.52 $443.52 $468.52 $135.00 $160.00

TSP6500 $101,870.00 $3,022.39 $3,347.39 $3,407.39 $1,889.50 $2,214.50 $2,274.50 $325.00 $385.00

Model # Cost of Replacement unit (New) 36 mo. Lease w/FMT. 36 mo. Lease w/FMT. & "Full"

Maint.36 mo. Lease w/FMT. & "Comp."

Maint. 60 mo. Lease w/FMT. 60 mo. Lease w/FMT. & "Full" Maint.

60 mo. Lease w/FMT. & "Comp." Maint.

Mo. $ "Full" Maint.

Mo. $ "Comp." Maint.

RR5220-35 $38,750.00 $831.00 $1,086.00 $1,111.00 $588.19 $843.19 $868.19 $255.00 $280.00

WAV50-118 $16,345.00 $416.72 $505.72 $515.72 $273.97 $362.97 $372.97 $89.00 $99.00

SP3410-30 $31,795.00 $682.23 $877.23 $907.23 $482.89 $677.89 $707.89 $195.00 $225.00

PE4000-60 $13,995.00 $362.52 $497.52 $522.52 $240.04 $375.04 $400.04 $135.00 $160.00

PR4500-60 $16,500.00 $421.91 $556.91 $581.91 $277.39 $412.39 $437.39 $135.00 $160.00

TSP6500 $101,870.00 $2,356.53 $2,681.53 $2,741.53 $1,583.59 $1,908.59 $1,968.59 $325.00 $385.00

Model # Cost of Replacement unit (Encore) 36 mo. Lease w/$1 B.O. 36 mo. Lease w/$1 B.O. &


Maint.Mo. Payment on 60 mo. w/$1

B.O.60 mo. Lease w/$1 B.O. &


Maint.Mo. $ "Full"

Maint.Mo. $ "Comp."

Maint.

RR5220-35 $28,500.00 $847.70 $1,102.70 $1,127.70 $529.96 $784.96 $809.96 $255.00 $280.00

WAV50-118 N/A N/A N/A N/A N/A N/A N/A $89.00 $99.00

SP3410-30 $25,250.00 $751.37 $946.37 $976.37 $469.74 $664.74 $694.74 $195.00 $225.00

PE4000-60 $9,899.00 $322.17 $457.17 $482.17 $211.98 $346.98 $371.98 $135.00 $160.00

PR4500-60 $11,750.00 $351.23 $486.23 $511.23 $219.58 $354.58 $379.58 $135.00 $160.00

TSP6500 N/A N/A N/A N/A N/A N/A N/A $325.00 $385.00

FUTURE BREAK ROOM

warehouse restructuring10

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