DEPOT DECISIONS

LINDA PURPURA

Warehouse-management systems have become almost an operational necessity in the supermarket industry, especially for maximizing efficiencies in inventory control and labor management.

Many companies are seeking ways to maximize their investment even further, with incremental improvements such as employing radio frequency technology for more real-time tracking of product movement.

Longer-term, some distributors told SN they also would like to integrate their warehouse-management systems with automated systems throughout the supply chain, a process that would provide them with more accurate cost data as well as the potential for far smoother operations.

"Using a warehouse-management system has cut our cost of labor by about 15% and improved efficiencies for store ordering, store billing, store selection and shipping," said Ara Hakopian, systems administrator at Raley's Supermarkets' 400,000-square-foot distribution center in West Sacramento, Calif. "The warehouse-management system has facilitated all these functions tremendously."

Hannaford Bros., Scarborough, Maine, has also seen improvements in inventory and labor management because of its warehouse-management systems.

"Without a warehouse-management system, we couldn't maintain the high turns and low inventory levels we have in our system," said Gerry Greenleaf, director of logistics at Hannaford. The retailer has updated the warehouse-management systems used at its four distribution centers several times since it was installed in 1983.

"The system also enables us to have engineered labor standards, which lets us track what we're truly spending on distribution costs, and shows us where to focus to improve efficiencies," Greenleaf said.

Some distributors are seeking to multiply these efficiencies throughout the supply chain, by integrating their warehouse-management systems with automated systems for transportation, ordering, replenishment and a variety of other functions. Companies face a number of obstacles in reaching this goal, however, not least of which is the difficulty of getting separate systems to communicate with each other.

Wegmans Food Markets, Rochester, N.Y., "has some great warehousing, transportation and logistics programs," said Mike Bargmann, director of distribution at Wegmans. "But as far as integrating them together, we're just now crossing the line where we're trying to tie some of our logistics programs into our transportation program and make them talk to each other."

"This integration of processes across the supply chain is conceptual right now," said Tom Baldwin, director of warehousing at H.E. Butt Grocery Co., San Antonio. "We don't have it yet. But we're looking at a system that has business rules and logic in it that apply to the whole supply chain, including procurement, transportation and warehouse handling. "Our systems typically are good stand-alone systems but they really don't talk well with each other," he explained. "And we don't have an overriding business logic or business rules that they all apply to."

Such an integrated system would allow H-E-B to "actually have control of the product for best cost from the supplier to the retail store shelf," Baldwin said. "We are going to buy it, transport it, move it through a facility and deliver it through an integrated system. I don't know if it would be termed a warehouse-management system or more of a supply-chain management system."

Hannaford's Greenleaf noted that its warehouse-management system is just one component of supply-chain management, and there is nothing yet that links the entire supply chain together.

"That is where the future energy will be spent, but there is no easy solution out there," he said. "That's why companies do what we do, which is incremental change for improvement vs. radical change for improvement." Hannaford's latest incremental enhancement is a modification to its warehouse-management system to handle cross docking and flow through, which would allow the retailer to improve facility use and minimize handling at its distribution centers.

Wegmans is also pursuing a number of improvements to its warehouse-management system. The retailer is undertaking a project in optimized shipping, "where we're doing some case tracking in our mechanized systems to ensure that the stores are getting the best quality order," said Bargmann.

The retailer is also using radio frequency technology to ensure that pallets destined for a specific store are placed on the right truck, with the distribution center dispatcher receiving real-time updates of when the pallet load is matched to the truck trailer.

Product selectors in the nonmechanized areas of Wegmans' distribution center are given scannable labels for each pallet they pick. "These labels are attached to the pallet for the store that it's destined for. When those pallets get loaded by a loader, he scans the bar code on the label that has been affixed to the pallet, and then he scans another bar code on the side of the trailer."

The system recognizes that the loaded pallet is destined for a particular store, and updates the warehouse-management system in real time with this information. "All this ties back to dispatch, and they know what the status of a trailer being loaded is as we scan the pallets into the trailer," Bargmann said.

Wegmans also employs RF technology in its fresh-foods receiving operations, allowing real-time updates of incoming products to the warehouse-management system. Forklifts in Wegmans' distribution center also use RF for real-time control, said Bargmann.

While Wegmans does not use RF for its picking functions, the retailer will test voice-directed picking for selection in the fresh-foods area this fall. "This will be our first step into real-time selection," he said.

Raley's uses RF technology for selection in the meat, produce and deli areas of its distribution center. The retailer will begin implementing RF for the putaway and replenishment functions in those areas in September.

"The main benefit of radio frequency is the level of accuracy because the selector verifies the right location for picking," Hakopian said.

While RF is yielding benefits in improved accuracy, Raley's would like to upgrade its operations with real-time capabilities, not available with its current warehouse-management system.

This is one reason why the retailer is debating whether to enhance its current system with programs offering this feature, or scrap it altogether and put in a new warehouse-management system.

Both distribution-center inventory and replenishment of pick slots are currently updated in batch modes at Raley's, he said.

H-E-B uses RF technology for selection in its five San Antonio distribution centers, for all products but frozens. The retailer's goal is to remove paper and selection documents from its system and increase accuracy. H-E-B is also looking at voice-directed picking for the freezer area.