Smart Foodstuffs warehouse
automates grocery picking
The new $70 million Foodstuffs Wellington dry grocery distribution centre is a smart operation that makes clever use of next-generation computer technology. Its automated system for handling small grocery items has already doubled productivity in what has traditionally been the most time-consuming operation of Foodstuffs’ warehousing.
The new Foodstuffs Wellington Roberts Line distribution centre in Palmerston North services 170
member stores in the lower North Island
The distribution centre, on the corner of Roberts Line and Railway Road in Palmerston North, began operating in January this year, and has been designed to meet the current demands and future expansion of Foodstuffs – a company that stands out for operating one of the most effective and unique business models in the Southern Hemisphere.
Foodstuffs is a cooperative society representing well-known brands of owner-operated food and liquor stores, wholesalers and transport operators nationwide. It is New Zealand’s largest supermarket company, divided into three independent regions – Auckland (servicing the upper North Island), Wellington (servicing the lower North Island) and the South Island.
The Foodstuffs Wellington cooperative supplies 170 member stores in the lower North Island. Among these are large Pak’nSave food barns and Liquorland stores, full-service New World supermarkets, neighbourhood convenience Four Square stores, and business- to-business provider Toops Wholesale.
Automated picking system
Foodstuffs Wellington operations group general manager David Couper says the Roberts Line centre is the most significant venture undertaken by Foodstuffs Wellington and caters to the widely varying demands of its owner-operator members throughout the lower North Island.
The distribution centre is huge. People are dwarfed by the size of the place which is the largest in Palmerston North and one of the biggest in the country south of Auckland. The warehouse is an open space with a floor area the size of three football fields, a ceiling four storeys high, and towering racks full of pallets and boxes of packaged foods and other household grocery items that don’t need storing in a fridge or freezer.
But the feature that rivets the observer is the huge complex that dominates the centre of the building. This is Foodstuffs’ automated picking system – APS to the insiders. The 10 m tall, steel lattice storage system for loose groceries is a computer-operated machine that was designed and installed by Australasian logistics solutions company, Dematic.
High-speed ‘intelligent’ cranes are installed between each row of racks, and they zoom in and out at high speed. They pick up totes from conveyor belts to store them and retrieve others for delivery to workstations. A shuttle system of conveyor belts runs along three sides of the APS to steer totes to and from the put and pick workstations where people are packing or unpacking groceries. Computer programs sort grocery orders into the correct sequence, and the cranes and conveyor systems use scanners to read bar codes on the totes to ensure everything goes where it should.
Goods-to-person delivery
The people at the workstations don’t have to move around to find items – the items come to them. A computer screen tells them how many of each product to pick from the totes, and lights show which supermarket’s box to put them in. This ‘goods to person’ (or GTP) automated system is designed for the efficient use of people and the movement of small amounts of goods from a large variety of product ranges – a process known as ‘broken case picking’. It specifically caters for small orders from small stores and large orders from large stores – with some stores ordering several times a week.
Broken case orders account for just 15 percent of the volume that comes out of the distribution centre, but it is the operation that has always required the most time and people to action throughout the cooperative’s history.
The other 85 percent of goods sent out are those ordered by the large box or pallet-load, like toilet rolls and canned goods. These are stored in the regular rows of racks in the warehouse. Even so, battery-powered forklifts and pallet trucks with onboard computer screens instruct their drivers which racks to go to and which pallet to retrieve.
Centralisation
The decision to centralise the Foodstuffs dry goods storage and distribution centre in one place came about when the cooperative had to resolve a pressing problem. It had five comparatively smaller warehouses around the lower North Island, and they had become unable to handle the expanding number of Foodstuffs supermarkets and the increasing volume of imported goods.
David says Palmerston North is the ideal central geographic choice for distributing goods throughout the lower North Island. Centralisation reduces operating costs – such as staffing requirements and travel times – that were incurred by the multiple distribution lines from Foodstuffs and Toops warehouses in Taranaki, Manawatu, Hawke’s Bay, Wellington and Upper Hutt. “The Roberts Line distribution centre positions us for growth in the next 20 years, with world-class smart technology, systems and processes,” David says.
Planning process
The company started a major planning process in August 2005 that included a report on population spread and changes, major arterial roading routes, location of labour and education facilities, origin of the stock that is supplied to the distribution centre, and lastly the availability of land. Once the best physical location was found, a further report was done by PricewaterhouseCoopers looking at the total supply chain, including buying, inventory management, distribution methodology and the design of a distribution centre.
The shape of the corner site placed some constraints on the overall design and modelling of the interior. “Because of the site, we have a building that is longer and narrower than normal. We then went through several iterations of placing the various interior components in different positions,” David says. “This was enhanced by the input of Dematic whose expertise was invaluable in determining the optimum layout of racking, automation, secure room storage and all the other general warehouse equipment.
“By splitting off the very timeconsuming broken case picking from other orders and automating the process, we were able to reduce the travel time within the warehouse for this process by over 40 percent. This has resulted in an overall doubling of picking productivity.
“Stock control is also significantly improved because the units are not on display and are held in a secure racking area,” he continues. “Every tote is effectively stockcounted every time it is emptied, which greatly improves stock accuracy.”
Efficiencies gained
The major efficiency to date is the reduction in labour required to pick the orders. Additional efficiencies have resulted from inventory reduction, increased order accuracy and relocating peripheral functions – retail advisory staff, replenishment buyers, Toops call centre and health and safety management – into the one location.
The number of people employed at the centre is 235 and includes people relocated and retrained from other centres that have closed. With two years up its sleeve to opening date, Foodstuffs was able to implement an extensive relocation, retraining and employment counselling programme to ensure staff made redundant would either be gainfully reemployed within the company or assisted to find alternative employment.
Getting the new distribution centre up and running hasn’t been without its headaches. Everyone, from supermarket owners placing orders to the staff onsite to suppliers and truck drivers, has had to adapt to a new way of operating. “There was inevitably going to be some ironing out to do,” David says.
“For example, such a huge operation requires strict timetables to ensure everything happens when it should. We can’t deal with trucks turning up a day early to unload when we’ve already got all the loading bays full of trucks and others coming in on schedule during that day. That impacts on the decisions that suppliers and the truckies that work with them have to make on organising their operations.”
Fine-tuning of the centre’s operations is happening constantly, and that was the expected outcome of such a major development.
Implementing a new concept
Dematic Australasia, the developer of the automated picking system, has two maintenance operatives onsite to ensure that their state-of-the art system works the way Foodstuffs wants it to. Dematic Australasia project and sites manager Graham Lawrence says the GTP automated system is relatively new in Australia and New Zealand.
“It’s not so much that it’s new technology, but it has required the integration of several technologies to make it happen,” he says. “There is a company in Australia with a similar concept. In Europe they do this more often. The main benefits are that you don’t have people moving around; they work within their own stations and they can pick items at faster rates. The system saves on labour and time, and it also saves on space because of the high-density storage system.
“One of the main challenges for us was to develop racking to the tolerances required for an automated system that could handle New Zealand’s earthquakes.” Dematic has become very much a part of the Foodstuffs business at the distribution centre because of its long-term commitment from the design to the maintenance phase of this major project.
Foodstuffs expects the efficiencies and productivity made possible by the automated system to increase markedly as refinements are made. This will have benefits for all involved in the supply chain – from suppliers through to the supermarkets themselves – as they become familiar with the new way of operating.