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Clockwork of Product in Motion

Case studies in great logistics: steel, medicine, autos and iced tea

Barges, trains and trucks are all fundamental elements in the Nucor Steel logistical chain.

Living In Logistics Heaven — Nucor Steel Tuscaloosa

The scenery at Nucor Steel Tuscaloosa Inc. isn’t pretty. The landscape is covered in dust, dirt and heaps of twisted scrap metal. But the plant is on the banks of the Black Warrior River and is close to both Interstate 20/59 and the rail lines. And if your job hangs on how fast you can move tons of steel across the country every day, then this property is a little piece of heaven.

Nucor’s Tuscaloosa facility is a coiled plate mill that makes pressure vessel steel coils, discrete plate and cut-to-order plate products that are used to make items like heavy construction equipment, storage tanks and railroad cars. It’s one of about 200 operating facilities owned by the North Carolina-based Nucor Corp. The corporation enhanced logistics at Nucor Tuscaloosa — formally, Corus Tuscaloosa — after purchasing the mill in 2004, says John Guin, Nucor Tuscaloosa’s materials handling manager.

“From a purely logistical standpoint, being a part of Nucor, which is a large corporation with facilities all over the country, allowed us to leverage that,” Guin says. “A lot of the truck lines, rail lines and barge lines are more prone to do business with them than they were when we were a stand-alone company. They [Nucor] had steel mills in multiple states. We’re a known commodity, more so than we were in the past.”

Nucor’s logistical system is straightforward. Customers place their orders for steel plates and rolled coils over the phone or by e-mail. Nucor’s customers, in fact, request up to 25,000 tons of steel each week, Guin says.

On the manufacturing side, dump trucks deliver scrap metal to the mill. The David J. Joseph Co., a Cincinnati-based scrap metal broker, purchases the metal from scrap yards around the nation, says Guin. Workers sort and categorize the metal, removing wood, plastic, dirt and other nonmetal contaminants.

The scraps are then carried to the melt shop and placed into a furnace. The molten steel is eventually transformed and shaped into flat plates and coils. Nucor, on average, produces 150 steel plates a day, says Guin.

With forklifts, workers load the steel plates and coils onto flatbed trailers that Guin says are designed to carry up to 20 tons of payload. Once loaded, the trucks transport the steel throughout Alabama and the rest of the lower 48 states.

Nucor also utilizes the rail system to transport its steel. But the deadly tornadoes that struck Tuscaloosa last April temporarily left Guin and his team scrambling to find alternative routes.

“The tornado tore a CSX railroad bridge in Brookwood, and we had to work with the railroads to be able to keep our shipments up without the bridge,” he says. “We talked with other railroads to allow the CSX traffic to be rerouted, so we could get the steel to our customers without a major delay.”

Rerouting of their railroad traffic continued for about a year until the bridge was repaired, he says.

Besides the railroads, Nucor also uses barges along the Black Warrior River. The river, says Guin, gives the company a logistical advantage, with access to domestic and international waterways.

“The barges can go around the Mississippi River, up the Tennessee-Tombigbee Waterway and up to the Tennessee and Ohio rivers,” Guin says. “From here, we can go to any major waterway in the states, or we can export to anywhere in the world.”

Precision automated equipment enhances the accuracy of the Tem-PCR at Diatherix. Because Tem-PCR uses very small quantities of liquids, automated pipettes play an essential role.

One-Day Diagnoses Turnaround — Diatherix Laboratories

In healthcare, poor logistics can mean the difference between life and death. Every day physicians make diagnoses, such as whether a patient’s illness is caused by virus or bacterium. But when they send samples to a laboratory for testing, it can take days to get the results. Now Diatherix Laboratories Inc. has found a way to speed up the process and get answers to doctors faster.

Diatherix is a molecular diagnostic laboratory located in the HudsonAlpha Institute for Biotechnology in Huntsville. The company, which opened in 2008, specializes in testing for infectious disease organisms using a diagnostic technology called Tem-PCR, which stands for Target Enriched Multiplex Polymerase Chain Reaction.

“Tem-PCR allows us to test for many different organisms all at the same time and tell doctors what we’ve found,” says Randy Ward, president and COO of Diatherix Laboratories Inc. In general, microbiology laboratories, he says, can only test for one organism at a time. But with the Tem-PCR technology, Diatherix’s technicians can grow and identify multiple pathogens more quickly.

Diatherix’s clients include 1,300 doctor’s offices, clinics and hospitals in 26 states.  Doctors send test samples to Diatherix using mailing materials provided by the company that includes sample collection tubes, biohazard bags, labels and shipping boxes that must meet International Air Transport Association standards for shipping biohazardous materials, says Ward.

“We have a shipping department with three people and a supervisor who ship boxes and tubes to doctors around the country,” Ward says. “They send out between 8,000 to 10,000 sample tubes alone every month.”

Clients can place orders for shipping supplies online or by phone, Ward says. The company ships the boxes and supplies to clients within three days unless the client needs the supplies immediately. “In those cases,” says Ward, “we’ll ship overnight.”

Diatherix also uses a courier network to pick up samples directly from doctors’ offices in Chattanooga, Memphis, Atlanta and throughout Alabama, he says.

“We have almost 200 packages that are shipped to the laboratory every morning containing as many as 400 samples,” says Ward.

And every morning, everyone in the organization, from the billing, client services and human resources staff, to the laboratory technicians gather to open the packages, he says.

“We look at all the requisitions, labels and tubes to make sure everything is filled out and labeled properly,” says Ward. “The biggest challenge is dealing with incomplete requisitions. For instance, we ran about 550 samples last week and had more than 400 requisitions with missing information. That’s a tremendous logistical problem.”

To keep production flowing, the client services department places calls to the physicians’ offices to collect the missing information, he says.

A team of sorters then places barcodes on the samples and requisitions before delivering them to the company’s seven laboratory technicians. On a typical day, the technicians conduct as many as 10,000 PCR reactions, Ward says.

“What’s incredible about the technology is that we can grow all of these organisms in six hours that would take days to grow in a microbiology lab,” he says.

The results of the tests are sent to physicians by 4 p.m. each day through e-mail, fax through the company’s website, or even on physicians’ iPhones if they prefer, says Ward.

After about seven days, the sample tubes are destroyed, although the company keeps records of the test results.

While he’s pleased with how quickly Diatherix delivers test results, the company is now looking at ways to automate their sorting and laboratory processes, Ward says.

“People are always asking ‘Can I get one of your machines?’ he says. “Well, it’s not a machine. Because we’re the only ones that do this, we’ve had to use different pieces of machinery for this step and this step and this step. So, we’ve tried many things to get to this point. But now the next step is to look at automation.”

Bar codes and radio frequency tags help Hyundai keep tabs on 1,500 cars a day from the production line to rail car or truck.

Speed is King in Logistics — Hyundai Motor Manufacturing

Twenty-four hours a day, cars fly off the assembly line at Hyundai Motor Manufacturing Alabama in Montgomery.

“About 140 cars come off the assembly line in just one hour,” says Gary Johnson, manager of Hyundai’s vehicle processing center.

As each car rolls off the line, Johnson’s team moves in to inspect it, label it and drive it away to the vehicle processing facility that’s a half mile east of the factory. At the facility, each car is sprayed with undercoating, accessorized and placed on a truck or train for transport. Zip, zip, zip.

For Johnson, speed is the name of the game. He works with Glovis America Inc., a logistical arm of Hyundai, the Korean car company that has been producing vehicles in Montgomery since 2005. The plant manufactures about 1,500 cars every 24 hours, Johnson says.

Orders from car dealers come through Hyundai’s sales division, Johnson says.

“We’re connected to Hyundai’s computer system,” says Johnson, “and through that, we print the pricing labels that show all of the accessories ordered for each car.”

As cars roll off the assembly line, Johnson and his team give the vehicles a cursory inspection and attach the pricing labels before driving them to the 196-square-foot vehicle processing facility. The facility’s property also has a 276-acre parking lot, which also serves as a staging area where the cars are loaded for transport.

“We have radio frequency tags that are located in each parking spot,” says Johnson “We can scan the tags and the bar code labels that were placed on the cars during the manufacturing process. So we know a car’s location at any one time.”

All of their supplies, says Johnson, come from Hyundai Mobis, a company that also provides parts for car assembly.

“Our parts manager manages our supplies based on the production quantities that the plant shares with us on how many cars they will build each day,” he says. “We order enough for about a week or two at a time and they keep us resupplied that way. We account for inventory every morning and afternoon so we know how much we have at any one time.”

Johnson says Mobis can deliver the accessories from its Atlanta warehouse to Montgomery in less than four hours.

Once accessorized and after a final inspection, the cars are prepared for shipment. Johnson says they ship out around 1,350 cars a day to about 900 dealers around the United States and Canada.

Seventy percent of their cars are shipped by rail car on a CSX main line. On average, the  trains haul about 90 rail cars, which hold about 15 vehicles each, Johnson says.

“One of the biggest logistical problems right now is the number of available truck carriers that haul automotive product,” he says. “In 2008, during the downturn in the vehicle sales industry, a lot of trucking companies went out of business. But since the upturn in the economy, there’s been a lot of demand for truck carriers. Now they’re building tractor trailers to haul cars at a breakneck pace to catch up.”

The trucks travel along interstates 65 and 85 to places like Louisiana, Ohio, North Carolina, West Virginia and Florida, Johnson says.

“It’s a very challenging job that has a lot of twists and turns,” says Johnson, “but the more adaptive you can be, the better off you are.”

How Milo’s Moves Tea — From Plantation to Tumbler, Without Preservatives

At first glance, tea might seem like an easy product to manufacture: tea leaves, water and maybe a generous helping of sugar or sweetener. But talk to Jay Evers, executive vice president and COO of the Milo’s Tea Co. Inc., and you’ll hear about a multipart logistical process that begins in tea fields overseas and ends in refrigerated display cases in grocery, convenience and discount stores in 16 states.

“While the ingredient legend for Milo’s Tea is simple,” says Evers, “our processes are very complex.”

The Milo’s Tea Co. Inc. is a family-owned business that began manufacturing and bottling its “famous” sweet tea in 1989. Thirteen years later, in 2002, the company sold the Milo’s hamburger chain to focus exclusively on tea.

Manufacturing the tea begins in several countries overseas where the camellia sinensis plant is grown. Evers won’t say where exactly — it’s a trade secret. But he and other company officials regularly travel to the tea fields to monitor and evaluate the crops, rejecting those that don’t meet company standards.

The tea plants that make the cut are weathered, dried, packed and loaded onto ships and later rail cars before arriving by tractor trailer at the company’s processing plant in Bessemer on Dublin Lane.

“We have quick access to I-459, I-65 and I-59, and we have plenty of acreage for expansion,” Evers says.

In the plant, which has five production lines, the tea is brewed and blended in stainless steel tanks with piping that moves thousands of gallons of product per hour. Milo’s makes an estimated 100,000 gallons of tea in just one shift per day, says Evers.

“On the post production side, we test tea all day from start to finish in a laboratory that we have here on site,” he says, checking flavor, color and more.

The product is poured into holding tanks, bottled in plastic 12- and 20-ounce containers and gallon jugs, dropped into cases that are then grouped onto palletizers and placed in coolers to await shipping. The tea is soon loaded onto refrigerated tractor-trailer trucks and remains refrigerated for the remainder of the supply chain, Evers says. 

Milo’s now outsources its carrier services, which make direct-to-warehouse shipments.

“We realized that, although logistics was a vital component of our business, it was time to outsource with more efficient, 53-foot tractor trailers from Ryder and other carriers. This has not only allowed us the time to focus on our mission, but it has also allowed us to expand our service at reduced costs.”

Shipping tea involves “real science,” says Evers, “and it has taken us generations to innovate ways to do this naturally, without compromising our products with preservatives. It’s not the easiest or cheapest way to make and distribute tea, but it’s the best way.”

Gail Allyn Short is a freelance writer for Business Alabama. She lives in Birmingham.

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