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Seeing the Future State of Distribution at Future Electronics

Now attuned to the fast-and-getting-faster world of e-commerce, consumers have come to expect a much shorter time window between when they click “buy” and when that item will show up at their door. That’s true of the average person who’s buying laundry detergent on Amazon, but also of industrial and commercial customers who are ordering specialized parts and components from vendors and suppliers around the world.
Future Electronics is perfecting this practice from its crown jewel distribution center near Memphis, TN, a site visited by a group from the Manufacturing Leadership Council on May 1. With a goal of delighting their customers again and again, Future Electronics faithfully follows a hyper customer-centric and supplier-centric business model. With customers ranging from hobbyists to OEMs, and those customers ordering from around the world, Future Electronics services them seamlessly, while also giving them flexibility for their preferred carrier, shipment speed, and shipment type (for example, parcel vs. pallet).
That vision has paid off for Future Electronics, which  has grown to be the third largest electronic components distributors worldwide. Founded 51 years ago in Montreal, Canada by Robert Miller, the company now has 169 locations worldwide. The Memphis distribution center, which consolidated facilities in Bolton, MA, and Montreal, Canada, was built in 2004. The company choose Memphis to tap into its rich transportation network – its airport is the world’s second-busiest cargo airport, only behind Hong Kong. The Memphis  area is served by five Class I freight railroads; its location close to several major interstate highways puts it within an overnight drive of more than 150 metro areas nationwide.
What customers and suppliers see on the front end is enabled by what’s behind the scenes: the awe-inspiring technology integrated into the Future Electronics distribution center. Held up as a world-class model of advanced distribution, visitors come from around the world to see it for themselves. The Memphis DC holds copious amounts of inventory and every SKU is stored in a secure, strict temperature- and humidity-controlled environment. Upon receiving components from suppliers, they are sorted into totes to keep like parts with like parts, one product type per tote or pallet, with the same date code range and same country of origin. Kept in 50’ x 600’ racks and retrieved by a fully automated crane system, product storage location is optimized for peak retrieval efficiency based on demand.
Product totes are then automatically transported to pickers to be sorted into customer totes and prepared for shipping. Orders go out on the same day they were received up to 8:30 pm for domestic ground air and next day via air at midnight ET.  A seemingly small thing, but perhaps with larger cultural implications: product value is not displayed anywhere on inventory, nor is any customer information visible to employees in the warehouse. In that way, employees aren’t tempted to be biased  on how they handle components that have low value vs. high value, or shipments for high-volume customers vs. smaller ones. In total, the facility has the capability to ship more than 120,000 different part numbers overnight.
It should also be noted that in the entire facility, the company has only three forklifts – two in use at any given time, with one spare. The company carries an impressive array of certifications: ISO 9001 (Quality Management System); AS 9120 (Aerospace Certification); ANSI/ESD 20.20 (Electrostatic Controls); ISO 14001 (Environmental Management Systems); and CTPAT (Customs Trade Partner Against Terrorism).
Additionally, Future Electronics offers consulting services to its customers to share best practices for supply chain and Lean practices. The Memphis DC has been so successful that the company replicated a near-exact copy for its European operations in Leipzig, Germany.
Company leadership says that being privately owned has allowed them to do things that would be difficult if their primary business focus was creating shareholder value, vs. creating value for customers and suppliers. Because their growth has been  organic rather than through acquisition, they are able to operate with consistency throughout all their locations, including in their IT platforms for operations, warehousing, transportation, and exporting.
Even though the company is a world-leading model of advanced distribution automation, company leaders still see room for improvement. They spare no effort  hunting for technology that will help them operate more efficiently, with a current focus on improving KPI visibility for all employees. Like their manufacturing counterparts, they struggle with finding and retaining workers and are working with tech schools and community colleges to develop materials handling curriculum.
With a forward-thinking mindset, a constant eye toward improvement and a solid strategy for growth, it seems there are many more exciting developments to come from Future Electronics.

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