NEW C&S SIBLING IS GETTING SET AT PA. DC

SARAH MULHOLLAND

KEENE, N.H. -- A new logistics company here is building a 3 million-square-foot distribution center in York, Pa., that will feature some of the latest technological equipment and a unique business model, officials said.

The company, ES3, intends on outsourcing logistics for retailers, wholesalers and suppliers.

Once operated as a division of C&S Wholesale Grocers, Brattleboro, Vt., ES3 officials told SN the unit spun off early last year.

However, a "sibling"-like relationship continues to exist between the two companies, which are both owned by Rick Cohen.

Cohen is chairman and chief executive officer of each.

Moreover, ES3 will continue to feed the C&S network, while also providing outsourcing for others.

ES3 officials said they intend on opening the new DC by June 2002.

They also said the new DC will be the first in a nationwide network.

The company is poised to take advantage of an emerging trend toward outsourcing operations, Davis said.

Eliminating the step between the manufacturer and the distributor could prove to be quite "revolutionary," in the opinion of Richard Kochersperger, president of the Food Marketing Group, Wallingford, Pa.

"They're breaking new ground, which is refreshing," he said. "It's time to do something different."

Provided the benefit to participants throughout the supply chain supports bottom-line calculations, Kochersperger sees some real potential.

Geoff Davis, executive vice president at ES3, stressed the fact that his company does not sell product -- they sell a service.

"We are truly channel neutral," he explained. "We do not get involved in negotiating price. We do not take ownership of product. We simply move things for the manufacturers, retailers and distributors.

"We provide distribution and logistics services, information technology, and facility and transportation management to grocery manufacturers and retailers," said Davis.

For the past year, ES3 has been operating from a 450,000-square-foot DC test-bed in Harrisburg, Pa.

Coordinating with 10 manufacturers, the operation has been an experiment in consolidation savings by housing inventory from several manufacturers.

The pilot program has proven successful, reducing on-hand inventories for retail and wholesale operations while maximizing transportation efficiencies with blended pallets and fully cubed truckloads, officials said.

In addition, lead time from the Harrisburg site has been cut to an average 22 hours, working on the just-in-time model of grocery distribution, Davis said.

The Harrisburg site currently feeds C&S and an undisclosed retail operation, but Davis foresees an operation serving several distribution and retail networks throughout the northeast corridor from the regional center in York.

Within a year after the new DC opens, Davis plans on having sufficient variety of product to ship directly to retail outlets, using aisle-friendly pallets.

This first building will be housing dry grocery, but the company intends to build similar facilities in temperature-controlled areas as demand requires, Davis said.

At 110 feet high -- roughly three times the height of the average distribution center -- it will hold 140,000 pallet positions in 400,000 square feet.

The unit is being built in phases on 273 acres.

To contend with these exceptional proportions, ES3 will make use of robotics and cranes to take pallets from the tallest storage areas and move them to the locations where cases are selected and pallets built, Davis told SN.

According to Davis, ES3 is among the first companies to make use of this technology downstream of the manufacturers in the grocery industry.

Picking instructions will be communicated to radio frequency devices via updated and fully Web-enabled warehouse management software.

The software will also provide increased visibility to inventory, service level and other performance indicators of ES3's customers, Davis said.

While next-generation warehouse management technology and fully cubed loads may not be radical developments in and of themselves, it is the context that makes ES3 different.

"Since we don't buy and sell product, we are much more financially efficient," Davis said. "We do this on an activity basis. At the end of the day, we're accountable."