Case Study: GAC banks big on VAS

With its new distribution centre in Dubai South, GAC is preparing for a future in which value-added services become the defining feature that sets 3PLs apart in the contract logistics space.
Gac, Dubai south, Contract logistics, 3pl

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GAC Dubai has opened its newest contract logistics facility, in the Logistics District of Dubai South. It is the company’s first dedicated contract logistics hub and will add to the company’s existing 120,000-pallet contract logistics capacity in Dubai.

The 45,900-pallet, two-chamber temperature- and humidity-controlled facility is designed to handle a diverse range of product categories, primarily fast moving consumer goods (FMCG) such as food and beverage, and beauty products.

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It is also classified to handle dangerous goods (DG) of classes 2, 3, 5.1 and 8 and features a 2,400sqm dedicated (VAS) facility, offering an extensive range of value-added services to meet customers’ requirements and international quality standards.

“This is a general warehouse that’s had an immense amount of thought put into it,” says Neil McMaster, general manager, contract logistics, GAC. “We’ve designed it to meet a number of different picking requirements, and our WMS has been designed to allow pick by unit, pick by case, or pick by pallet. We’re installing split beams for a client that wants to pick by unit because they deal a lot in export of perfumes, and the price is such that you don’t sell in bulk.”

The dangerous goods classification is more for the storage and distribution of household chemical products, rather than industrial goods.

“When we built this new warehouse we wanted to be able to store chemical class products, but for domestic consumption, so body sprays, perfumes, bug sprays. We didn’t want to get into industrial chemicals, but a lot of our business is based on FMCG products and so we wanted to be able to cater to it in its entirety,” explains McMaster.

In order to cater to FMCG logistics in its entirety, GAC has had to invest in additional systems and equipment that a general warehouse would not feature. “We’ve had to put in Interact Sprinklers, which was because of the chemicals as well as the height, we’ve also had to put in chemical spill kits and chemical catchment tanks,” says McMaster. “We have a DM1 super flat floor so nothing flows on it anyway. We have a caged area for spray products and another caged area for pharmaceuticals.”

The warehouse has been designed around a racking configuration with four pallet bays for a Euro pallet and a mezzanine level being developed that will be configured for the requirements of a very large travel retail client.

“Some of our clients sell in bulk, others sell large quantities of products, but a large number of SKUs,” says McMaster. “One perfume retailer for example will ship more than 100 units at a time, but there’ll be 50 different products in the crate.”

“There’s a separate area where those pick and pack operations can be done, we also have 2,500sqm of Value Added Services space on the mezzanine, where labelling, promotional packaging, barcoding etc can be done,” McMaster adds.

GAC’s Value-Added Services have become the standout growth area for the company, with 20% growth over the last year. “Traditionally you would do value add as part of warehousing, but often now we’re doing warehousing as part of the value add,” says McMaster. “We have around 900 people working in GAC’s contract logistics operations in the region, of that, 150 people are dedicated permanently to value added services.”

According to McMaster this is largely down to the changing nature of the regional retail market. “There’s a lot more pressure now as the retailers turn to a retail logistics model rather than a distribution model, and also the retail market is under pressure, so they’re changing the way they market products, the way they promote them and so on,” he says.

Dubai in particular has matured considerably and GAC is now seeing a lot of the multinationals going from a distributor model to a traditional retail model, which requires more value-add from the 3PLs. “On a retail model stock is on a pull through model, whereas a distributor model stock is pushed through regardless of whether it is needed. So a retail model is more just in time,” says McMaster.

This is coupled with the fact that each GCC market has its own requirements regarding labelling, packaging and a host of other factors. “This is the greatest challenge in retail logistics right now, and only a handful of 3PLs can mitigate those challenges effectively for the client,” says McMaster.

“Every retailer in every territory wants something different,” he explains. “The manufacturer produces a generic product and then the distributor or the 3PL is expected to get it customer ready for Dubai, Saudi Arabia, Egypt, Bahrain etc, and all of them have different labelling, packaging, and any other number of other needs. So that’s where our value added services really come into their own.”

The new warehouse has also been designed to be environmentally-friendly, with a more efficient cooling plant and advanced building management systems. It uses 100% recycled water, LED lighting with motion sensors and solar power. There is also has a black water treatment plant that recycles water for use in cooling towers.

“The key issue for us was to design and build a warehouse that would meet a higher standard than what is currently available in the market,” says McMaster. “And that approach has been carried over into the environmental systems as well.”

Not only is the warehouse extremely efficient, but it is also dynamic. “It’s designed specifically for FMCG in all its many variations. We can control temperate as well as humidity, which allows us to store a broader range of commodities,” says McMaster.

This is because flour, sugar, and pharmaceuticals, are particularly susceptible to humidity.

“We’ve also designed the warehouse to be forward-looking in terms of regulations and laws, we’re compliant with regulations that we foresee coming into effect in the next ten years for example,” says McMaster, referencing the various environmentally-friendly systems.

With its location in Dubai South GAC’s new warehouse links to the dedicated logistics corridor to Jebel Ali port, and has direct access to Al Maktoum International Airport and exit gates leading directly to the UAE’s main trans-Emirates highways. McMaster says this will help GAC maintain the fast standards of its “award winning” FMCG operation, which sounds like a PR platitude, but the company won the FMCG Supply Chain Management of the Year award at the recent Logistics Middle East Awards in Dubai.

FAMCO’s MHE solutions for GAC

GAC turned to Al-Futtaim Auto & Machinery Company (FAMCO) for its MHE needs for the new warehouse. GAC’s needs for the new facility’s MHE were very specific, they needed a machine that was efficient, fast, easy to maintain and capable of reaching the 16-metre heights that its racking goes to.

“The height of the racking is 16m, which is about as high as you can do in Dubai. The building itself is 22m. We’re at the limit of a man-up reach truck,” explains Neil McMaster, general manager, contract logistics, GAC. “We use Linde, we’ve been using them for many years. We could have gone higher with cranes, but we didn’t want to put in a crane system because we’re not dealing with full crates, it’s a mix of crates and unit picking.”

“Our focus is to provide the client with effective intralogistics solutions that are most appropriate for their unique requirements – our products are integrated into the solution, not vice versa,” says Deon Klerck, divisional manager of storage and handling solutions FAMCO. For GAC, FAMCO supplied Linde K man-up turret trucks.

The Linde K man-up turret truck enables high turnaround capacity for order picking and handling processes in high-shelving warehouses. The powerful drive trains make this possible: The truck can move and lift at the same time.

Also, even at high lift levels the speed remains high and a high level of residual lift capacity is available. Various assistance systems are available that help to navigate accurately through warehouse or to avoid obstacles.

The Linde System Control improves the process: Dependent upon the version, the system adjusts lift and travel speed according to the weight being transported. There are various versions or the mast, chassis, battery and cab for the very narrow aisle trucks that can be combined according to usage requirements.

SSI Schaefer’s racking for GAC

Neil McMaster, general manager, contract logistics, GAC, says that the new GAC Contract Logistics warehouse in Dubai South has been designed with a racking configuration that takes the dynamic needs of the centre into account.

“We’ve designed it to meet a number of different picking requirements, and our WMS has been designed to allow pick by unit, pick by case, or pick by pallet,” he says. “With the racking we’ve gone up to 16m, and we’re using VNA machines.”

GAC turned to its longstanding solutions provider SSI Schaeffer for the design and installation of the racking. The VNA Pallet Racking System has a ground +6 level high storage, that yields a total of 8,064 pallet locations, with a back mesh fence and column guard rails.

“The system facilitates good stock rotation, and 100% order picking selectivity and accessibility at a fast picking rate,” says Morten Kirch, regional manager, Middle East & Africa, SSI Schaeffer. “On the other hand, the ground +3 level mezzanine provides high-density storage for various combinations of SKUs while utilising the full plot size and height of the warehouse.”

The new multi-tier structure developed by SSI Schaefer enables GAC to store bulky items if necessary, with easy transport on all levels and the consolidation of orders from all three mezzanine structures due to the flash connections between them.

In short, SSI Schaeffer feels that its solution has enabled GAC to work faster and more efficiently. “The entire solution has optimised GAC’s warehouse footprint, yields flexibility, high selectivity and increased picking rate,” says Kirch. “Our solution matches what their clients require, a combination of VNA Pallet Racking with a multi-tier rack supported mezzanine.”

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