Distribution executives are exploring specialized materials-handling equipment, including conveyers and automated sortation systems, to enhance productivity and efficiency in dealing with slow-moving products.
Such equipment proves most cost-effective when the distribution center has a large enough volume of slow-moving items to justify the initial investment, executives told SN. This can occur in a facility where slow-moving products are consolidated and then cross docked to other facilities that serve a large number of stores.
Slow-moving items are generally more labor intensive to pick than fast-moving items, which move in large quantities and in full pallets.
Supervalu, Minneapolis, employs a combination of conveyers and automated sortation equipment at two of its regional facilities, and some large wholesalers and retailers have considered purchasing similar equipment. However, most companies continue to rely on traditional materials-handling equipment, such as pallet jacks and forklifts, which have already proven their cost-effectiveness.
"We've done some 'window shopping' with new conveyer systems and carousel systems for a health and beauty care expansion, and they have a really big price tag," said Warren Frank, manager of warehouse productivity and equipment at Nash Finch, Minneapolis.
The wholesaler does use conveyer systems to pick HBC items at two of its 20 distribution centers, which range from 100,000 to 600,000 square feet.
"The price tag is so high that the productivity has to be very high," he explained. "From the looking we've done, the payoffs don't warrant the costs."
A materials-handling engineer told Nash Finch that a company has to be handling 30 cases per minute to achieve a return on investment for an automatic sortation system. "The conveyer system may have provided productivity gains, but the sortation system was too expensive because we weren't at 30 cases a minute in that application," Frank said.
One company that is getting a return on its automation-technology investment is Supervalu. The wholesaler's facility in Anniston, Ala., uses conveyers and sortation systems. This regional distribution center handles dry grocery and general merchandise, providing store-ready pallets that can be cross docked through Supervalu's distribution centers in the Southeast.
In addition, Supervalu will use conveyers and sortation systems for slow-moving items at its facility in Oglesby, Ill., scheduled to open in July. This regional distribution center will feed store-ready pallets of general merchandise to 12 other Supervalu facilities, which service 1,500 stores in the Midwest.
Once its operational operational, Oglesby may add slow-moving dry grocery products, such as ice cream toppings and gelatins, to the range of products it handles.
"It only makes economic sense to make the investment in this [automated] equipment if you're servicing hundreds of stores from a regional distribution center," said David Israel, general manager of the Oglesby facility. "The decision to have this type of technology is really driven by taking slow-moving items, consolidating them and getting enough volume to make the investment pay off."
One of the unique aspects of the Oglesby facility is that all of its order selection slots are four-level pick modules, with employees selecting orders on each of the four levels.
When a product is selected it is placed on a level's conveyer, Israel explained. The conveyers merge products from each level. The products are then sent through a high-speed scanner and from there to a sortation point. From there, the product is moved off the conveyer to a palletizing station, where it is loaded on a truck.
Supervalu's Oglesby facility will also be able to batch order select products, said Israel. If five cases of mouthwash are required for five different stores, a traditional, non-batch order system would require an employee to go to the same slot five different times.
At the Oglesby location, the individual goes to the slot once, picks all five cases and puts them on the conveyer, which sends the product through the scanning and high-speed sortation system. This system, which can scan 160 to 180 cases per minute, sorts the product out to the right store and truck.
Replenishment at this facility will also be done differently than in traditional distribution centers, according to Israel. The selection slots are case flow lanes and three-deep pallet flow lanes, and all replenishment takes place from the back of the slot. As a result, order selection and replenishment occur in two different places.
"We can have order selecting in the front and replenishment in the back, and that's more productive and less dangerous," Israel said.
Raley's Supermarkets & Drug Centers, West Sacramento, Calif., for example, explored using sortation systems for handling liquor and HBC products in 100,000 square feet of space at its Sacramento, Calif., distribution center, said Sherry Valli, distribution center manager at Raley's.
While it found the technology intriguing, Raley's ultimately did not move in this direction because its priorities changed with a 27-store acquisition. "We needed to concentrate on getting the new stores on line instead of using resources to revamp the liquor and HBC areas," said Valli.
The new stores needed to be supplied with perishable products such as produce, meat and packaged deli items. Traditional materials-handling equipment such as forklifts and pallet jacks are more efficient for these categories.
"We're moving bulky big boxes," Valli said. "Usually, when you think of mechanized distribution centers you think of liquor or HBC products, such as toothpaste and toothbrushes and aspirin, not 90-pound cases of meat."
Richard Reynolds, senior industrial engineer for warehouse operations at Fleming Cos., Oklahoma City, said that Fleming's interest in automated equipment has waned in favor of conventional materials-handling equipment such as forklifts, double-length pallet jacks and single-pallet jacks for moving products. Fleming has 36 facilities ranging from 100,000 to 1 million square feet in size.
At one point Fleming had six or seven automated facilities and still has a few in operation, he added. "The bottom line is we've found the conventional methods to be as productive as mechanized methods, with less cost involved," said Reynolds.