Golden Pallet Award

McLane New Jersey serves just one customer—the Wawa convenience store chain.

McLane New Jersey is a rather unique facility. Out of McLane Co.’s 20 grocery distribution centers, it is the only one to serve a single customer—the Wawa Inc. convenience store chain.

The distribution center was built in 2004 after McLane teamed up with Wawa to create an innovative way to streamline operations and improve customer service. In just five short years, the start-up DC has matured into a full-fledged model of efficiency, with outstanding on-time delivery and order fulfillment rates.

The success is due to the hard work and commitment of the employees of both companies, says Jim Tidmore, president of McLane New Jersey. “McLane and Wawa have a lot of beliefs and values in common. We both believe in taking care of our employees, creating an environment to work in.”

Tidmore, who started out with Fleming Cos., is a 22-year McLane veteran, having worked in a number of McLane divisions throughout the U.S. He’s been at the New Jersey DC for two years.

The McLane Co., headquartered in Temple, TX, is a $30 billion wholesale distributor, providing grocery and foodservice supply chain solutions for thousands of convenience stores, mass merchants, drug stores and military locations, as well as thousands of chain restaurants throughout the United States.

For its ground-breaking relationship with Wawa, McLane’s New Jersey DC has received Food Logistics’ Golden Pallet award in the convenience store wholesaler category. The Golden Pallet Awards, sponsored by Food Logistics, are the first industry awards to recognize excellence in warehousing. The award for foodservice distribution will be featured in our October issue.

IN IT TOGETHER

Wawa, based in Wawa, PA, opened its first food store in 1964 and over the years became a regional market leader by differentiating itself from its competitors.

Already well known for its award-winning freshly-brewed coffee, the retailer was expanding its fresh and prepared foods lines, serving up products such as breakfast items, hoagies, sandwiches, hot dogs, salads, soups and wraps. These products—as well as outstanding customer service—helped Wawa build a loyal customer base and continually increase sales.

But with this growth came a complex, disjointed supply chain and by 1999, Wawa found itself facing delivery challenges. At that time, the company was working with two McLane distribution centers—the Mid-Atlantic division in Frederickburg, VA, and the Northeast division in Baldwinsville, NY—as well as with another wholesale distributor.

“We were making deliveries to their stores once or twice a week,” says Tidmore. “In addition, Wawa was handling some of their own distribution. They had a lot of trucks on their sites each day and the stores were getting multiple deliveries. They wanted that one-stop truck that covered the majority of their products.”

Wawa began looking for a vendor that could consolidate its supply chain and be flexible enough to quickly adapt to changing customer needs. And with fresh and prepared foods being such a high priority, the retailer needed a partner that could manage its cold chain, which called for multiple temperature zones in the warehouse as well as on the truck.

After evaluating a number of vendors, Wawa decided to work with McLane. “We had been servicing Wawa stores for more than 10 years, so there’s been a long relationship between the two companies,” says Tidmore.

In addition, with McLane being one of the largest supply chain providers in the country, Wawa knew it could rely on McLane’s distribution prowess for dependability and a high level of customer service—as well as the commitment of its employees.

By 2003, the companies had defined a business model that would accommodate all of Wawa’s needs. They decided to build a custom distribution center in New Jersey. McLane would build, own and run the facility for Wawa. “This was a first for McLane,” says Tidmore.

Because Wawa’s stores are not franchises, the company has control over the types and amount of items that need to be warehoused. This enabled McLane to design the DC—as well as its systems and automation—to specifically meet Wawa’s product mix.

“When you have multiple customers going through a DC, you can wind up with as many as 13,000 SKUs in a typical warehouse,” says Tidmore. “With one customer, we’re only carrying the product that Wawa wants—we have less than 2,000 items in this distribution center. And Wawa is very efficient at turning product quickly.”

Instead of the typical retailer and wholesaler roles, Wawa and McLane entered into more of a third party type of relationship, with McLane running the facility on behalf of Wawa. “Wawa owns the inventory and pays all the bills,” says Tidmore, “At this distribution center, we have a huge stake in this relationship because they are our only customer.”

A FACILITY THAT NEVER SLEEPS

The state-of-the-art 220,000-square-foot facility opened in 2004. Located in Carneys Point at the southern end of New Jersey, it’s just a stone’s throw away from Delaware and Pennsylvania and is strategically located within easy reach of the majority of Wawa’s stores and suppliers. Wawa has 580 stores throughout Pennsylvania, Delaware, Maryland, Virginia and New Jersey.

The DC handles a broad line of products for Wawa that range from motor oil and health and beauty aids to fresh fruit cups, produce, luncheon meats and a host of frozen products. More than 60 percent of the facility is 34 degrees Fahrenheit or colder, including the 50 docks doors. The DC is divided into five temperature zones, from ambient-temperature areas for paper and dry goods to freezer zones kept at minus 10 degrees.

With 400 team mates, this is the only McLane division that operates seven days a week, 365 days a year. “Everybody does a rotating schedule here, from the drivers to the selectors to management,” says Tidmore.

Each day, the DC receives tens of thousands of perishable and grocery items, many with an extremely short shelf life—sometimes literally hours, says Tidmore. So its’s essential that the product move quickly and efficiently throughout the facility, and be kept at the proper temperature at all times.

At the heart of the DC is a sortation system from Mason, OH-based Intelligrated Inc., which helps McLane ship some 80,000 cartons per day—with an order accuracy rate of 99.8 percent.

“This is the first full-line sortation division that McLane built and it’s the only one in a cold environment,” says Tidmore. “We had some smaller sortation systems in other divisions, but this is the most complicated system. We actually have two sorters—a north and a south sorter—that operate independently of each other.”

The DC is running on a warehouse management system from RedPairie Corp., Milwaukee and is using a pick-to-light system from FKI Logistex for break pack items (FKI was recently acquired by Intelligrated).

On average, the DC fills about 285 orders a day. Store orders come in by 6 p.m. each night and product is selected in a wave sequence. Labels are printed and distributed by wave into each area that is being selected—ambient, freezer, cooler, etc. The product is then moved to the sortation system, where it’s sorted via barcodes into individual shipping lanes and loaded onto the trucks in reverse order.

McLane’s fleet consists of 70 42-foot multi-temp trailers. Product has to be loaded properly into the trailers because most make multiple stops and precise temperature and handling requirements need to be met.

“There is a lot of complexity in this distribution center that we don’t have at other McLane divisions,” says Tidmore. “We actually sort the truck twice. Frozen product goes in first, by hand. We put a bulkhead in. Then the ambient goes in and we put another bulkhead in for the perishable products in the rear of the truck.”

STREAMLINED DELIVERY

McLane’s delivery process is as well orchestrated as its warehouse operations, with a better than 98 percent on-time delivery rate. The Wawa stores receive an advanced ship notice from McLane, so they know what products are being delivered. Before the truck arrives, store associates often cone off a parking space so the driver can readily unload the truck. The drivers scan the cases as they come off the truck.

Product is placed at key locations throughout the store, with most cases being delivered inside the cooler. Wawa associates quickly put the items away to ensure temperature integrity. One idea that McLane and Wawa came up with was to chill water and Gatorade at the distribution center and deliver the product cold to the stores—so that customers wouldn’t get warm drinks.

“It takes about three days to chill down a load of water or Gatorade, so we always make sure we’ve got enough on hand,” says Tidmore.

“It’s more cost effective to chill down the product at the DC than it is at the store. Plus, those walk-in coolers are very small, so when you let in a big load of heat with warm products it impacts the other products as well.”

McLane and Wawa worked with Sterling Solutions LLC, a Memphis-based supply chain and management process improvement firm, to help it improve its cold chain.

Last year, McLane began delivering to each Wawa store every other day. “That way, the store manager knows when to expect the delivery,” says Tidmore. “And we typically deliver between 2 p.m. and 4 a.m., when they’re least busy, so we don’t have to worry about tying up parking lots.”

Tidmore points out that in recent years, McLane has made a lot of investments in fleet technology. “We’re using technology for routing and tracking. We’ve got onboard computers and service logs. It has certainly helped our drivers become more efficient. The last mile is critical.”

A LOOK AHEAD

While there are no immediate plans to expand the distribution center, Tidmore is anticipating growth in the future. “We designed the DC so that we can make the aisles longer to accommodate more product or add more shipping doors,” he says. “We’ve got a lot of options.”

And while the partnership between McLane New Jersey and Wawa has been a success, Tidmore isn’t resting on his laurels.

“The last two years have been great—we have matured as a division and have made great strides in our performance,” says Tidmore. “We’ve got a great relationship with Wawa, but none of us takes that for granted. The challenge is doing it right every day of the week—you can never take a short cut.”

Safety Is The Top Priority

At the New Jersey division of McLane, safety is the number one priority and the company regularly promotes, recognizes and rewards its teammate for working safely.

“Our safety programs are explained to each teammate on their first day of employment,” says Ron Hervi, the division’s human resources manager. “We cover our safety policy and our safety/performance reward policy. In addition, we explain our conveyor safety and ‘stretch and flex’ and ‘power and position’ programs.”

“Stretch and flex” is a set of stretching exercises completed at the start of each shift by all DC teammates. “Power and position” is the company’s method of using proper lifting techniques. Since most employees at McLane New Jersey perform some sort of physical labor, all teammates are required to learn proper lifting techniques.

“We have an active safety team that makes a big impact in our work environment,” says Hervi. “In addition, we have electronic message boards in our break room that displays safety tips and constant reminders of our daily progress to reach safety milestones.”

During orientation, each teammate is assigned a back belt and provided instructions on how to use it properly.

The company’s safety policy is covered in detail, and each teammate signs an acknowledgement statement regarding their understanding of it.

To support its commitment to a safe work environment, McLane provides financial and material rewards for its teammates. “At 100,000 safe hour increments, we celebrate the milestone with a cookout or catered meal and raffle prizes,” says Hervi.

“Our teammates want to work safe and everyone enjoys the food, prizes, enthusiasm and camaraderie created when the momentum builds,” adds Hervi. “Every McLane teammate embraces our safety culture and we are proud to promote a safe environment every day. ”

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