Grocery retailers and food distributors are finally catching up with the rest of the food industry in the use of automation in their warehouses.
Despite the hefty price tags of the solutions, these companies are employing a variety of automated and semi-automated storage retrieval systems (AS/RS)—including horizontal and vertical carousels, stacker cranes, conveying and sortation systems and automated guided vehicles—throughout their facilities.
In recent years, a number of grocers and distributors such as The Kroger Co., C&S Wholesale Grocers, Sobey’s, HEB and Stop ‘n Shop have gone high-tech in their warehouses—and experts expect that trend to continue. Faced with the increasing complexity of receiving, storing, picking and shipping product, many are looking for new ways to improve logistics performance levels at a lower cost, according to Ken Ruehrdanz, warehousing and distribution market manager for Dematic Corp., Grand Rapids, MI, which leads them to automation.
“The drivers in food distribution include SKU proliferation, servicing multi-format retailing, building mixed case pallets, space utilization, transportation costs, inventory and order accuracy and labor costs, as well as health and safety issues for employees,” says Ruehrdanz.
According to the Material Handling Industry of America (MHIA), sales of automation equipment reached a record low last year. However, because the recession did not hit the food industry as hard as it did others, food companies did not put the brakes on automation investments. Vendors report seeing a growing number of new projects, retrofits and system upgrades for their food as well as beverage customers.
The good news for grocery distributors is that a number of automation solutions providers are targeting the industry. “This is where the real arms race is in terms of automation for material handling—it’s all focused on food and beverage right now,” says Tom Coyne, president and CEO of System Logistics Corp., Lewiston, ME. “And in the grocery space, there have been a couple of companies that have been willing to make the long term investment and take the risk.”
“There’s been a huge increase in the interest in automation across the board in the industry—from the food and beverage manufacturers and distributors to the retailers,” agrees Paul Moore, director of MS systems sales of Mason, OH-based Intelligrated Inc. “One of the big drivers is the consolidation of the industry—it’s creating scale. In grocery, you’ve got retail giants such as Walmart and Target, in beverage you’ve got Anheuser-Busch and we’re seeing a lot of acquisitions in the snack food arena. The larger these companies get, the more automation makes sense for them. Their size helps them get a good return on investment on these types of solutions.”
Another big driver is the need for store friendly deliveries, according to Dematic’s Ruehrdanz.
“The traditional method was to replenish the store once or twice a week, with the inventories being stored in the backroom of the store. As consumers purchased items, the stores would replenish the items from the backroom and invariably stock outs would occur,” says Ruehrdanz. “As companies strive to reduce stock-outs within stores, there is a focus on smaller, more frequent replenishments from the DC to the store. With this strategy, rather than replenish the backroom, the received shipment is replenished directly to the store shelf.”
Advances in automated case picking is also driving the trend, say the experts. “Retailers are looking for systems that can automatically pick cases and palletize cases in aisle sequence at the distribution center for store friendly delivery, allowing quick replenishment on the shelf,” says Sean O’Farrell, business development manager for Witron, Arlington Heights, IL. “Besides the obvious savings within the warehouse, many of our retail customers point out that automation is also saving labor in their stores. This is a direct result of our ability to automatically build store-friendly and aisle-ready mixed SKU pallets within the warehouse.”