In food distribution warehouses these days, the name of the game is speed.
Retailers and wholesalers are looking for ways to expedite the movement of products -- especially fast-selling or seasonal merchandise -- through the distribution center and on to stores. Some products are able to flow directly through the DC without spending any appreciable time there. For products that are checked in, distributors are trying to minimize the time spent in warehouse racks, as well as the labor required to put them there and pick them for delivery.
The upshot? Less likelihood that fast movers will be out-of-stock at the store.
No less a player than Wal-Mart Stores, Bentonville, Ark., already famous for its supply chain efficiency, is preparing to roll out a new program, called "Remix." It is aimed at speeding the delivery of fast-turning items like paper products and bottled water, according to Christi Gallagher, a Wal-Mart spokeswoman. Remix will be implemented starting this fall at warehouses designated as "high-velocity," where fast movers will be put on pallets that can be rolled onto stores' floors for quick restocking. DCs in Florida have already been configured for Remix, said Gallagher.
Dollar General, Goodlettsville, Tenn., is also rolling out an "EZ Store" program, using "roll-tainers" to speed up the unloading of trucks at stores (see story, Page 49).
Some conventional retailers are also trying to add speed to their warehouse processes. Many are doing so by means of their warehouse management systems (WMS), which are being upgraded to accommodate more real-time handling of products and to promote "flow-through" in the DC.
In April, Giant Eagle, Pittsburgh, implemented a WMS from Manhattan Associates, Atlanta, at an HBC facility in Washington, Pa. The WMS allows Giant Eagle to introduce procedures like RF receiving and "put-to-store" that accelerate the movement of goods through the warehouse. "We needed to change our supply chain so that we're not just receiving product, storing it and shipping it," said J.A. Hilvendeger, Giant Eagle's director of retail support center operations and systems.
With a put-to-store process, products are immediately put in slots designed for store delivery. "If it's a seasonal or perishable product, it can go right to the store; you don't have to keep much inventory in the warehouse," said Scott Gillies, solutions consultant, Manhattan Associates. "Grocers would typically store products in the warehouse for 14 days, but we're seeing a lot of them try to change that. They're getting away from a 'batch' mentality and looking to react in real time."
Unified Western Grocers, Los Angeles, has been rolling out the Triceps WMS, now marketed by Retalix, Plano, Texas. In 2003, the system went live in Unified's Portland, Ore., facilities; last year it was installed in its mechanized warehouse in Commerce, Calif., near the company's headquarters.
This past July Triceps was installed in Unified's grocery warehouse in Stockton, Calif., and it just went live in a perishables facility in Stockton. Next June the system will be used at a perishables facility in Santa Fe Springs, Calif., and it will be employed in Fresno and Hayward, Calif., facilities in 2007.
The Triceps WMS has enabled Unified to speed up replenishment and selection of slots through the use of real-time radio-frequency and voice technology.
ON THE BLEEDING EDGE
Giant Eagle was the first U.S. food retailer to sign on to use Manhattan Associates' WMS, which has been used widely in other channels of retail. "We're on the bleeding edge," Hilvendeger said.
The system effectively takes Giant Eagle from a "batch" scenario, in which orders were processed in large groups, to a real-time process in which orders are continuously processed. The overall goal of the WMS deployment is to "reduce the number of touches and travel in the conventional setup by not slotting in the building all the time," Hilvendeger said.
Another food retailer known to have implemented the WMS system is Raley's, West Sacramento, Calif., which deployed it in two DCs in Northern California in March.
One of the significant new changes the WMS brought to Giant Eagle is the RF-based put-to-store process, with cases assigned to slots earmarked for immediate delivery to specific stores. The chain has targeted specialty items like Halloween candy, Christmas items and general merchandise for put-to-store slots, Hilvendeger said. "You can build store-ready pallets for different products," Gillies added.
Giant Eagle had tried put-to-store on a paper-based basis, but has found the new RF system far more effective, Hilvendeger said. The chain is also using RF handhelds now to create "license-plate" bar codes for incoming shipments, which speed the process of putaway compared to the old paper-label process. Warehouse receivers "don't have to play the matching game of going through [hundreds of] labels to find the right one," Hilvendeger said.
To make the receiving process even faster, Giant Eagle plans to implement another Manhattan Associates module called Trading Partner Management (TPM). This allows vendors to use the Web to get information from retailers to generate UCC-128 bar code labels and advanced shipping notices (ASNs). "Then we don't have to [apply labels] at our end," said Hilvendeger, adding that TPM will improve overall visibility in the supply chain.
Giant Eagle expects to deploy TPM in the spring of 2006, in concert with implementing the Manhattan Associates WMS at a grocery/produce/dairy facility. "We need to first understand what format we want to see the [ASN] information in," Hilvendeger said.
John Sidell, principal of ESYNC, Toledo, Ohio, observed that when a retailer goes from a paper-based receiving process to an automated one using RF and ASNs, it's important to define the new "process flows" so "you agree that this is how it's going to work in the DC" and ensure that the software selected "works in this specific environment."
Giant Eagle also expects to eventually add radio frequency identification to its warehousing operation. "We're in the requirements gathering phase, trying to figure out where a good pilot would be," said Hilvendeger. "If you don't look at RFID now, five years from now may be too late."
The real-time WMS is "fully integrated" into Giant Eagle's other "batch" systems, including inbound and outbound ordering, accounting and logistics, Hilvendeger said. Data synchronization with suppliers will also be integrated into WMS, ensuring that product data such as dimensions are automatically updated as they come into the WMS.
Supply chain collaboration with trading partners, such as data synchronization, "has been a real eye opener for us," said Rik Schrader, vice president, AcquiTec, Chicago. "Web-based applications give different trading partners visibility into the data."
Hilvendeger noted that the ROI for the WMS will be enhanced by the higher percentage of employees who are working according to labor standards. At the HBC facility, the percentage of workers on labor standards has grown from 35% to more than 85%.
FIXING THE TIMING PROBLEM
Unified Western Grocer's Triceps WMS, working in concert with voice technology from Vocollect, Pittsburgh, has enabled the wholesaler to "eliminate the age-old timing problem" of when to replenish pick slots, said Greg Vick, Unified's director, distribution systems and Web development. That is, pallets are brought down into picking areas when the number of cases there is identified by the system as being near zero.
In the past, under a batch system, replenishment would be scheduled before selection, but "sometimes it would be too early and you'd have to hand-stock, or too late and you would have misses," Vick said. The real-time process now "directs the forklift to bring down a pallet when the selector picks the last case." The system continually adjusts slot inventory as voice communications go back and forth between the WMS and the selector. "It's tied to reality," he said.
In addition to a faster and more accurate picking process, the voice-based system reduces "mislabor" -- when selectors need to return to a slot because product wasn't there the first time, Vick noted.
If the selector does encounter an inventory discrepancy at the slot, he can report it to the system, which will alert a cycle counter "to figure out what's wrong and correct it," he said. Then the selector can return to complete the order "while it's efficient," Vick said. The system also ensures that "clean invoices" are produced automatically, eliminating the need for leftover-case label information to be manually entered.
Like Giant Eagle's WMS, Unified's WMS is integrated into other supply chain systems developed by the wholesaler, such as order management and shipping. Triceps also is linked indirectly to data synchronization via Unified's procurement system. "That fixes case dimensions and weight, so we can slot more efficiently," said Vick.
Data synchronization allows retailers to avoid "spinning their wheels trying to identify a product or its attributes, so they can focus on how to increase the velocity of inbound and outbound shipments," AcquiTec's Schrader said.
As for RFID, Vick said Unified is waiting for "an effective business proposition with our suppliers."
Unified's rollout of Triceps began before the company that created the software, OMI International, Dallas, was acquired by Retalix in January 2004. "Of course, we were concerned at first," said Vick. However, Retalix maintained the OMI installation team that Unified had been working with, and Unified has successfully installed Triceps at several warehouses since the acquisition. "We feel good about management support of Triceps and the transition to a new version," he said.
Todd Michaud, executive vice president, Retalix, said the company will continue to "sell, support and invest in" both the OMI Triceps system and the Power Warehouse WMS marketed by Retalix as a result of its acquisition of IDS, Omaha, Neb., in April.
In the first quarter of 2006, Retalix plans to come out with a new WMS called Retalix InSync Warehouse that will serve as a migration path for users of Triceps and Power Warehouse.
In addition to the Retalix acquisitions of OMI and IDS, in late 2003 SSA Global Technologies, Chicago, acquired Dallas-based EXE, another provider of WMS to food distributors.
Meeting the Bioterrorism Mandate
Last December, the U.S. Food and Drug Administration issued its final rule on the record-keeping requirements of the Bioterrorism Act of 2002.
The provision (section 306) requires both food manufacturers and retailers to identify the previous source of food received and the immediate recipient of food released within 24 hours of a request from the government. An important difference between retailer and manufacturer requirements is that manufacturers must also include the lot or code number of products if the information exists.
To meet the Bioterrorism Act's record-keeping mandate, Dawn Food Products, a bakery products manufacturer based in Jackson, Mich., has undertaken to roll out an internally developed warehouse management system (WMS) to its 17 facilities in the U.S., Mexico and Canada by December. The WMS had previously been used at one site.
The WMS will provide "complete lot control and visibility across the Dawn Foods supply chain network," according to a statement from ESYNC, Toledo, Ohio, which is leading the implementation of the WMS. Dawn chose ESYNC in part for its "comprehensive implementation and rollout strategy," said Charlie Massoglia, chief information officer, Dawn Food Products.
Dawn Food Products has been using a paper-based, key-entry system to track incoming and outgoing inventory, noted John Sidell, principal, ESYNC. "That was not a tight enough control for the Bioterrorism Act." Sometimes handwritten information would not be key-entered fast enough to meet the government requirements, he said.
The new WMS replaces that with radio-frequency (RF) terminals that create bar-coded "license plates" to track raw materials and some finished goods, Sidell said. The system then controls receipt, putaway and picking.