Bigger is not always necessarily better, but in the case of one of Safeway Inc.’s distribution centers, the biggest is the best.
Safeway is the fifth largest food retailer in North America. The company operates 1,739 stores in the United States and western Canada and posted annual sales of $44.1 billion in 2008. The retailer has 12 retail operating areas each served by a regional distribution center. In all, Safeway has 17 distribution centers (13 in the U.S. and four in Canada) that provide the majority of all products to all of its stores.
The Tracy, CA, facility is the company’s largest DC—in fact, it’s one of the largest distribution centers on the West Coast. The DC services 271 stores in California and Nevada, as well as 19 locations in Hawaii—shipping some 14 million cases each 28-day cycle.
For its outstanding success at handling such a huge volume—with a 99.9 percent accuracy rate—Safeway’s NorCal division has received Food Logistics’ Golden Pallet award in the self-distributing retailer category.
The Golden Pallet Awards, sponsored by Food Logistics and CHEP USA, are the first industry awards to recognize excellence in warehousing. Two more winners will be profiled in upcoming issues of FL.
“The distribution center is 2.2 million square feet,” says Jack Mixey, the director of distribution of NorCal. “It’s like a small city.”
Mixey, a 25-year industry veteran, joined Safeway about 18 months ago. But he’s no stranger to the company—he started his career with the retailer in its Phoenix division in 1982. He’s also worked for U.S. Foodservice and CoreMark, so he brings a well-rounded perspective to his current position.
Mixey oversees the huge distribution center. Under one roof, there’s a produce warehouse (464,000 square feet), meat/seafood warehouse (100,000 square feet) and a frozen warehouse (253,000 square feet). Then there’s a dry grocery warehouse (678,000 square feet) and a general merchandise warehouse (390,000 square feet). There’s also a recycling center and a truck repair shop, as well as an administration building.
The facility, which operates two shifts, has 1,650 employees, including 200 part-time. Mixey attributes a number of factors to its impressive throughput—the adoption of lean operating principles, technology and, most importantly, the employees.
“This is a world-class facility and we have an excellent group of employees,” says Mixey. “Everything here has to be well orchestrated and on time and our employees understand that.”
NorCal is using an EXE warehouse management system to run its operations (EXE is now part of Atlanta-based Infor). The WMS integrates inventory data at the distribution center with store inventories in real-time. “Store orders are downloaded into our order management system, which in turn are routed through Manugistics (now part of Phoenix-based JDA Software) and the routes are uploaded into the WMS and CAMS Software,” says Mixey.
The company is using CAMS, a Canadian supplier of transportation management solutions, for setting up backhauls and its activity-based driver payroll system.
NorCal has adopted the 5S lean distribution principles, which has enabled it to efficiently handle the huge volume and complexity of its orders. These principles aim to reduce waste and optimize productivity through maintaining an orderly workplace and using visual cues to achieve more consistent operational results. This method “cleans up” and organizes the workplace in its existing configuration.
“It’s about sustaining our facility in a like-new condition,” says Mixey. “This distribution center was built in 1992 and it was beginning to show its age, so a few years ago we began to operate under the 5S philosophy and we continually improve its appearance and upkeep.”
The five pillars of the principle are: