EVOLUTION IN DISTRIBUTION

Fleming's new 540,000-square-foot distribution center in South Brunswick, N.J., is versatile, modern and still evolving. The Dallas-based distribution giant and retailer took the wraps off the center just two months ago. Bill Merrigan, senior vice president, logistics, said the new DC will serve as a prototype for the future. This DC is unique in that it combines next-generation technology with design

Fleming's new 540,000-square-foot distribution center in South Brunswick, N.J., is versatile, modern and still evolving. The Dallas-based distribution giant and retailer took the wraps off the center just two months ago. Bill Merrigan, senior vice president, logistics, said the new DC will serve as a prototype for the future. This DC is unique in that it combines next-generation technology with design principles aimed at cutting costs and maximizing efficiencies, Merrigan said. It also makes use of an evolving "multitiered" approach to the distribution network. Merrigan told SN that the center is so far living up to high expectations, providing superior service to its primary customer, Kmart, Troy, Mich., over the past two months.

The building itself was fashioned with an eye toward structural efficiency, eliminating some improvident lapses in construction.

For example, the rack configuration was designed to accommodate product "as-is" when taken from the truck.

The company conducted intensive studies on product coming into the warehouse, he said.

The height of the racks was adjusted accordingly, eliminating the need to break down product on the dock and cutting labor costs.

In addition, the facility has 144 doors that are evenly divided on both sides of the building, simplifying the flow-through process while saving on space.

"Having all the doors on one side constrains the ability to be able to ship and receive at the same time," Merrigan explained.

"The proximity of the shipping and receiving tends to generate some confusion."

With doors on opposing sides, product literally comes in on one side and out the other in a clean, straight line contained within a smaller footprint, he said.

Merrigan placed the new facility neatly within Fleming's "multitiered distribution network," which operates on the premise that a single distribution center should not be all things to all products.

To that end, the company has begun redirecting product in a more targeted manner, making greater use of varied modes of distribution throughout the supply chain.

"We can continue to operate as we do today as a conventional grocer," he said. "We can incrementally increase productivity, incrementally increase our inventory turns. We can continue to get a little better at what we do.

"But in fact, you lose the race. You cannot dramatically affect your expenses and service just by tweaking what you do today."

In its current incarnation, Fleming's model works with four distinct tiers of distribution, although Merrigan was careful to stress the fact that this number is always subject to change as the network evolves.

The first tier involves a stepped-up focus on vendor-direct delivery, eliminating handling costs.

The next tier consolidates all slow movers into the company's six general merchandise facilitates.

The slow movers will be put on a delivery schedule similar to the GM products to be put through the main distribution center and cross docked out together, Merrigan said.

"The [general merchandise] facilities and transportation are already in place. When you condense the slow movers from multiple facilities into one, they become fast movers," he explained.

A third tier takes on a rapid flow-through operation, preventing bulky, low-dollar-cost items from taking up residence within the network.

The fourth tier is dedicated to normal, day-to-day merchandise, not greatly affected by event-driven sales.

All four tiers work together, making the network a nimble and highly compatible organism, he said.

For example, the South Brunswick facility will be housing day-to-day merchandise, while also using the opposing doors for a flow-through operation.

It's a mix-and-match type set-up, said Merrigan, and Fleming anticipates running 30 to 50 flow-through facilities within a year.

"Some may be right there with the main facility, some may be stand-alone, depending on our customers' needs."

While the physical features of the warehouse lay the groundwork for optimum logistical performance, the technological systems being put to use within those four walls flesh out the operation.

According to Merrigan, Fleming is committed to next-generation technologies across the board to ensure continuity throughout the entire information network.

At the South Brunswick facility, workers will be using third-generation radio frequency technology in the handheld scanners used to receive product and communicate the most advantageous position to the forklift operators.

"It does a great job of directing traffic as opposed to manually putting the product away and having to find it at a later date," Merrigan said.

When an operator is left to pick an empty slot without direction, it probably will not be the best spot for that particular item, generating additional labor costs in the end, he added. While Fleming currently uses an earlier version of radio frequency technology in its other distribution centers, the South Brunswick operation is the first to adopt the latest generation.

"We tend to look at South Brunswick as our test bed," Merrigan said. "As we prove systems there, we will roll them out into other distribution centers."

A state-of-the art, truck-routing system is also in the process of being rolled out on a companywide basis.

Merrigan said the new routing system being used at South Brunswick is fully operational.

The new system is also integrated.

"It is tied directly into our billing and ordering system," he explained. "It automatically routes trucks to the highest efficiency."

Merrigan was particularly excited about plans to roll out a new warehouse management system over the next year and a half.

Fleming will be using the latest generation software from EXE Technologies, Dallas, to control 100% of the movement of product for the entire network, he said.

The technology will be in all 35 distribution centers, implemented on a staggered basis with several facilities being brought online simultaneously.

The South Brunswick facility will be done in early spring of next year, he said.

The system effectively keeps track of every aspect of product selection and inventory, including the location of reserves and the most advantageous let-downs as products are selected throughout the day.

It also generates a labor standard to measure the efficiency of the workforce. The standard is calculated on a case-by-case basis using such variables as weight, fatigue and the location of a slot.

Workers can actually see the difference between the time it should have taken them to complete an order, and the time it actually took, providing them with individual productivity markers, Merrigan said.

Fleming currently uses the FOODS warehouse management system, a similar program designed by Fleming several years ago.

According to Merrigan, one of the primary benefits of the new system is a much more fluid and accurate order-by-order labor standard.

Taken together, the layout and technology of the South Brunswick facility represent an aggressive new approach toward supply chain efficiencies within a competitive market demanding a dynamic and vigilant stance, Merrigan said.

"Every morning, I wake up thinking about how we're going to improve efficiencies and stay competitive," Merrigan said.

"We are focusing our entire network on getting our customers their lowest cost of goods and the most efficient way to do so."