SUPERVALU TO ROLL OUT VOICE TOOL AT 28 DCS

MICHAEL GARRY

ATLANTA -- As a result of a reduction in mis-picks and other savings at test sites, Supervalu has decided to implement voice-directed order-selection technology in all of its 28 distribution centers, according to Greg Heying, senior vice president, distribution.

Heying described the wholesale giant's evaluation of the voice technology, from Vocollect, Pittsburgh, at the 2002 Food Industry Productivity Convention & Exposition here last week. He spoke in a session called "Voice Recognition Technology -- Why It Makes Financial Sense." The convention took place at the Georgia World Congress Center.

Minneapolis-based Supervalu, which began testing the voice recognition system in July 2001 at its Fargo, N.D., distribution center, found that it reduced mis-picks there by 80%, which translated into a $302,860 annualized cost savings, said Heying. At another Supervalu distribution center in Green Bay, Wis., mis-picks were cut by 62.5% with the system, accounting for a $149,000 savings.

This boost in picking accuracy "carried the bulk of the justification for the project," he said. "This is not cheap technology, so there has to be a payback." At Fargo, he estimated the pay-back at one year.

Supervalu now has the voice system in about nine DCs, with plans to add another 11 facilities by the end of the year, said Heying. All remaining Supervalu DCs will be equipped with the technology by the end of 2003, he added. He said Supervalu has been looking at this technology over the past five years.

Voice-directed systems were one of the most talked-about technologies at the Productivity Show. In addition to Vocollect, other voice vendors include Voxware, Princeton, N.J.; Lucas Systems, Wexford, Pa.; and OMI International, Dallas.

Another factor in cost-justifying the Vocollect system, said Heying, was the increase in picker productivity at the Fargo and Green Bay facilities. At Fargo, Supervalu observed a 6.54% reduction in selection hours, which equated to an annualized savings of $149,677. At Green Bay, the company experienced a 4.8% reduction in selection hours, leading to an annual savings of $100,836. "That's a significant win," said Heying.

Productivity is achieved via the voice system by a reduction in "start-up time" as pickers receive their assignments right away rather than going through an order desk, said Heying. The other boost in productivity comes from the hands-free operation, eliminating the handling of pick tickets. The system is integrated into Supervalu's in-house-developed warehouse management system.

The elimination of picking labels (except in backup situations) resulted in an annualized paper savings of $12,000 at the Fargo DC and $18,000 at the Green Bay DC, said Heying. In addition, he said that the reduction in clerical activity associated with pick tickets and keying variable weight information accounted for annualized reductions of $13,301 at Fargo and $33,000 at Green Bay.

According to Heying, at Fargo mis-picks were reduced more in grocery than perishables, but productivity gains were greater for perishables than grocery.

Heying said that the response of Supervalu DC workers to the system was "very good." They see the system as "an enhancement to their job, making it easier." The hands-free design of the system also improves the safety of workers, he said. The system is available in multiple languages.

The system also helps supervisors manage employees more effectively, Heying said, by providing real-time information on their activities. The voice system is also easier to teach new employees than the legacy pick-ticket system.

With all factors included, Supervalu estimated an internal rate of return of 131% for the voice technology at Fargo, Heying said, adding, "There are not many projects with that kind of IRR." The IRR at Green Bay came to 53.27%, which he expects will improve.

The implementation of voice technology has not been without some issues, Heying noted. The most important one had to do with its retail customers accepting the changeover to voice from the long-time practice of using case labels, especially for pricing information. Retailers in states with item pricing requirements were particularly concerned. "We had some push back on that issue, which in most cases we've overcome," he said.

Still, most retailers have received the voice system favorably, Heying noted. Supervalu conducts audits of the system to reassure retailers of its effectiveness.

In addition, he said, voice has been found to deter selectors from building the most optimal pallet in some cases. Supervalu is changing its slotting arrangement to address that, he said. The company is also looking at the best way for selectors to retrieve cases not available on initial picks.

Overall, "voice technology has improved dramatically over the last several years," Heying said. "We're persuaded it's the right approach."