Sobeys Unveils New Warehouse

JON SPRINGER

STELLARTON, Nova Scotia — An automated warehouse capable of moving three times the product of a traditional grocery warehouse while using just one-third of the labor is now fully operational and serving Sobeys stores in Ontario, the company said last week.

The warehouse, located in Vaughn, Ontario, represents a “major leap forward in efficiency and productivity,” according to Perry Caicco, an analyst with CIBC Capital Markets, Toronto. Sobeys, based here, intends to use the 500,000-square-foot depot to serve its 343 stores in Ontario, replacing current distribution facilities in Whitby and Milton. Those warehouses are being transformed to handle perishables distribution.

Sobeys officials proclaimed the new facility as the most advanced in all of Canada and said it would provide cost relief and improved efficiencies throughout the supply chain.

“It is exciting for us to demonstrate to our stores, our wholesale customers, our suppliers, our employees and our shareholders that we truly have set the new standard for the most effective and efficient means of distribution in our industry,” Bill McEwan, president and chief executive officer of Sobeys, said in a statement last week.

Receiving, picking and shipping for the center is directed and controlled by computer “for near perfect accuracy,” Sobeys said, reducing store out-of-stocks.

After goods are received and checked into the facility, automation takes over, sorting and storing cases temporarily. Store orders are then received and processed by computer, with each store's order being assembled in the optimal sequence according to the physical layout of the store, facilitating faster and more efficient shelf stocking, Sobeys said.

The facility will also allow Sobeys to bring more direct-store-delivery volume in-house, reducing deliveries and associated labor at stores and allowing the company to utilize store labor to better serve customers.

The warehouse has the capacity to receive 320,000 cases per day — more than triple the capacity of its other warehouses — and ship 200,000 cases per day. It employs 160 people — as many as 600 would be required to process its volume in another facility, Caicco noted.

“As the savings accrue and as accuracy improves over the next couple of years, the company should be able to reinvest in price and service,” Caicco said.

Construction at the facility began in 2007 and was completed in 2008. It began limited operations in July. It was created in partnership with Witron Logistik, a Germany-based logistics firm that also manages the warehouse's technology.