COPPELL, Texas -- In an effort to reduce inventory and labor costs in its supply chain, Minyard Food Stores here is preparing to kick off a cross-docking program. Though it will begin as a manual process, cross docking will eventually be controlled via electronic data interchange-delivered advance ship notices.
"Hopefully, we will have the cross-docking program functioning this time next year," said Prudencio Pineda, senior vice president of warehousing and distribution for Minyard. Minyard originally expected to be live with cross docking this year, but the program will launch later due to the retailer's current implementation of a warehouse management system and engineered labor standards.
"By the end of 1998 we should be using EDI to communicate ASNs between us and our vendor partners," he explained.
"Manufacturers we have discussed the process with would like us to have EDI in place -- in some cases we need EDI to qualify for certain programs," he added.
According to Pineda, the ASNs will solve problems associated with knowing what products are expected at the warehouse.
"If we knew what to expect on each shipment rather than unloading the truck and being short of certain items, we could preplan our day and apply the correct amount of labor at the dock," he said. "ASNs will also allow our buyers to have more reaction time," to keep abreast of what will be shipped to which stores.
Initially, the 82-store chain will be cross docking grocery products. "We will focus on products like cereal, canned goods, detergents and some slow movers to start with," said Pineda. "We will expand the program from there.
"Not storing as much product in our warehouse will diminish our inventory level," Pineda added. "We are looking for a 10% to 15% inventory reduction within the first year of using the program." He said this number could reach 20% once the program is tweaked and running smoothly.
In addition to cutting its inventory, Minyard predicts it will see significant labor reductions in its warehouse.
"By reducing the handling of pallets in and out of the warehouse, we will be cutting our labor costs," he explained. "Some [retailers] have reported labor cuts up to 30%. If we can achieve a 10% reduction right off the bat we will be satisfied. Then we will improve on that."
Minyard is preparing for challenges as well. "Ultimately, we are hoping to unload an inbound truck, then ship those pallets out to our stores the same day. Knowing that nothing is perfect, however, we may have to hold some products overnight," he said.
Minyard began its cross-docking troubleshooting during its 280,000-square-foot warehouse expansion, which was completed earlier this year. The retailer, expecting some cross-docked products to require temporary storage, dedicated an 80-foot-deep bay in the front of the depot.
By keeping the products in the front of the warehouse, "we can still cut our labor, since our put-away selectors do not need to move the products to the middle or the end of the warehouse for later picking," said Pineda.