2009 Innovator: Smart & Final #5

Smart & Final Streamlines Supply Chain Operations

With a total of 282 locations, Smart & Final Stores LLC operates 247 non-membership warehouse stores for food and foodservice supplies under the “Smart & Final” and “Smart Foodservice” in California, Oregon, Washington, Arizona, Nevada, Idaho and northern Mexico.

Headquartered in Los Angeles, Smart & Final’s customer base includes caterers, food service professionals, small businesses and individual consumers. Following its October 2007 acquisition of 35 stores from Whole Foods, Smart & Final also operates farmer’s market-style stores under the “Henry’s Farmers Markets” and “Sun Harvest Markets” banners in California and Texas.

Smart & Final wanted to consolidate all of its supply chain operations into a single system in order to streamline company operations, save money and position itself for growth.

Because the company stocks each of its stores from five California warehouse locations—in Commerce, Rancho Cucamonga, Modesto, Brea and Riverside, as well as a sixth location in Phoenix, Arizona—Smart & Final knew that it could easily unite its siloed buying merchandising with warehouse and store operations. In turn, Smart & Final would be able to create a streamlined, unified supply chain to serve all of its stores and accommodate any acquisitions.

An example of the importance of this strategy was made apparent in 2008 when Smart & Final integrated 35 stores and a warehouse, acquired from Whole Foods in 2007, into its existing IT system.
Smart & Final re-engineered its supply chain operation—including the location and design of distribution centers, the product flow channels and the system infrastructure—to create a streamlined, agile supply chain. Key to the success of the new network was the design and implementation of a cube movement segregation philosophy. Step one was uniting siloed buying, merchandising, and warehouse and store operations departments.

Smart & Final also implemented several initiatives designed to decrease costs, reduce waste and increase efficiency in its warehouses. For example, by implementing wireless processes in the warehouse, including wireless picking, Smart & Final was able to create paperless warehouses.

Elimination of paper order forms are part of a larger green campaign created by Smart & Final geared towards reducing waste, further streamlining warehouse operations and reducing transportation. Smart & Final also implemented systemic cross-docking, enabling warehouses to increase efficiencies, reduce unnecessary movement of fast moving and/or seasonal goods and move merchandise more quickly from the warehouse to the store.

Smart & Final implemented the G.O.L.D. Retail Suite, from Atlanta-based Aldata Solution. Retail Suite, which includes the Aldata warehouse management system (WMS), helped to re-organize the company’s supply chain.

By leveraging G.O.L.D.’s replenishment capabilities, Smart & Final was able to greatly reduce the amount of base turn inventory Smart & Final had to carry in order to satisfy the service level demands for each of its stores. This helped to reduce unnecessary overhead expenses.

The introduction of G.O.L.D. Vocal has also enabled Smart & Final to eliminate paper order forms, taking the company one step closer to its larger green campaign to create paperless warehouses. In addition to reducing costs, the wireless system helps to further reduce waste by cutting down on the amount of paper and labels used in the warehouse.

Overall, Smart & Final’s initiative to consolidate its supply chain operations into a single system has helped to streamline company operations, save money and position the company for growth. It has also helped the company to introduce other innovations throughout the supply chain including:

• Green IT: The introduction of wireless processes into the Smart & Final warehouses has enabled a move toward paperless warehouses. Smart & Final has been able to reduce waste and create green warehouses. Using wireless technology, warehouse order takers receive picking directions via a wireless, hands-free headset that eliminates paper order forms. After implementing several green projects, Smart & Final has seen a significant decrease in expenses as a result of not having to buy forms and labels for its warehouse operations.

Smart & Final’s green IT initiative has also extended to include its logistics operations.

“As gas and all the costs in the transportation industry continue to rise, we [went wireless] for a business reason, but it’s also a very green thing to do because we’re using a whole lot less petroleum,” says CIO Marie Robinson.

“We’re pulling trucks off the road, and we’re not contributing to smog and congestion. Smart & Final is not only able to make sound environmental choices, but also very smart business decisions.”

• Systemic cross-docking: Smart & Final can now bring pre-palletized freight in pre-allocated for a store. Instead of driving pallets around the warehouse, putting them in slots, then pulling them down again, Smart & Final is able to send each pallet directly out to the appropriate stores.

For example, this past Halloween season, Smart & Final was able to cross dock all of its Halloween candy pallet shipments, which was about 59 truck loads of candy.

“For a medium-sized company like us, that was a lot of candy,” concluded Robinson. “We were able to ship it in six days and tie up none of our warehouse space. We’re really beginning to do those things because we know we are going to grow.”

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