Achieving greater efficiency and integrating supply chain operations will be accomplished in a number of ways next year, from implementing new warehouse management systems to using multitemperature trucks to haul a variety of products in one trip.
Several distributors also cited the increased importance of cross docking to their operations in 1998. Spartan Stores, Grand Rapids, Mich., for example, plans a cross-docking interface with its billing system that will allow the wholesaler to bill cross-docked merchandise automatically.
In addition, bringing systems into Year-2000 compliance looms over all aspects of operations for the coming year. Meanwhile, personnel issues -- including hiring, training and developing good people -- continue to be a focus for several distributors as unemployment rates dip around the country. Following are highlights of top supply chain initiatives among retailers and wholesalers in the new year.
Grand Rapids, Mich.
Further integration of our warehouse management systems is a big priority in 1998.
These systems already exist, but our plan is to interface them into various other systems, such as a cross-docking interface to the billing system.
With this interface, we will be able to bill cross-docked merchandise. This will affect two distribution sites with multiple warehouses.
We also have an ongoing project, which will carry over into 1998, and that is the creation of what we call Super Combo loads -- multiple-temperature single delivery loads, with all commodities in the same truck. Instead of going to the store once for frozens, once for produce and once for grocery, we go once with all the commodities on the truck.
We are now handling upwards of 200 loads a week this way, and the back-room savings at the store are substantial, not to mention the savings in transportation costs.
Another continuing project is people development. Obviously the job market has changed substantially, if in no other way than availability. There are other dimensions to the job market, too. Certainly the education, experience and expectation levels of a new hire coming into the job market today have changed. All of those issues are substantially different than they were five years ago.
We want to become an employer of choice in a distribution center which is not necessarily viewed as a good place to work -- it's physical labor, it's most often nights, it's weekends, it's holidays. So there is that continual ongoing process.
Al Van Luvender
VP, information systems
Riser Foods Bedford Heights, Ohio
Our major focus right now is the Year-2000 initiative and getting our computer systems and distribution systems Year-2000 compliant. This is a major priority for 1998 and probably 1999.
In the distribution area, all of our computer systems, including warehousing, distribution, billing and receiving, were affected by the Year-2000 issue. The warehousing system has already been replaced, but procurement and billing systems are in process.
For the most part, we're replacing our systems with new systems; not modifying existing systems. We didn't want to put a lot of money into old systems that weren't going to provide us any enhancements or ability for future enhancements. If we are going to invest the money, we want to invest it in newer systems that can give us more capabilities.
One of the major benefits of the new warehouse system is the use of radio frequency technology for receiving and putaway in our distribution center, which is broken into four different warehouses.
This is the first time we've had RF. It's more of a productivity issue than an accuracy issue, though it does improve accuracy and that's another benefit. Productivity gains are where we felt the real benefits would be.
The new procurement and billing system will provide us with better inventory management and better forecasting. We've always had these functions, but the new systems coming in will improve on them.
Our top priority is productivity in our eight distribution centers, which are located from, Plant City, Fla., to Green Castle, Pa. We plan to reach this goal by applying engineered standards and labor management and control.
The second priority is maximizing the use of our fleets for backhauls and deliveries to our stores. Our goal is to be able to pick up 30% to 40% of our inventory requirements. We'll backhaul all kinds of products, including dry grocery, frozens and produce, from suppliers. We're trying to expand into more produce areas. Because our distribution centers are spread out over several states, we think we have a lot of opportunity.
The third priority is expanding our safety programs. We're working to make sure that our distribution centers are safe and that we create a safe work environment for all of our employees. Safety with our fleet drivers on the road is part of our efforts in this area. We are initiating a safety program for our drivers this next year to re-emphasize professionalism and safe driving.
One area we'll cover in this program is the fact that there have been a number of speed changes, including higher speed limits. Like most people in the grocery industry, we're going to maintain our 55 miles per hour corporate speed limit for our fleet. We have about 600 tractors on the road and our fleet goes about 1 million miles a week.
We are in the process of implementing an inbound logistics system that will go live in early 1998. This will allow us to control more of the inbound freight of all commodities -- including grocery, perishables, frozen food and general merchandise -- at our four distribution centers. Our goal is to control as much inbound freight as possible.
We are also continuing implementation of a warehouse management system, which is essentially a two- to three-year project. This will be completed by the end of 1998.
This system is already in place at the grocery and perishables distribution centers, both in Schenectady, N.Y., and will be installed in frozens and general merchandise, both in Albany, N.Y., during 1998. It enables us to control movement of freight in and out of the facilities and add labor management in those facilities.
Seaway Food Town
We are in the process of consolidating two warehouses in Toledo, Ohio. One of them is our forward-buy warehouse and the other is our health and beauty care and general merchandise warehouse. We are going to close the HBC warehouse and reopen it in the former forward-buy warehouse, combining the two functions in one facility.
We hope to have this done by April 1. We found we can get the same job done with less asset investment, and can also save space.
We're also discussing the best ways to expand activity-based costing. Right now, we use it to better understand costs in certain warehouse operations, such as receiving and selection, as well as purchase quantities and slotting. By doing this, we have found we have been able to reduce costs.
Another big area of emphasis is finding ways to attract and retain the type of people we'd like to hire. In today's labor environment, with the type of work we do and the hours we do, it's difficult.
Attracting and retaining good people as well as getting them interested in the type of work we do, has been a real challenge. This has taken up quite a bit of our time this year and will continue to take up time over the next year.
Danny Bisgard director, warehousing
Hy-Vee Food Stores
West Des Moines, Iowa
We are upgrading our warehouse management system, which will enable us to do a broad range of activities, including more cross docking and flow through of product.
We will also be able to implement radio frequency technology, which will allow us to be more real time in the warehouse. We are going to try to improve efficiencies and accuracies with all of these technologies. This upgrade will monopolize our time in 1998.