Exceeding The Standard

Hershey and Exel create a winning formula at the candy maker's Eastern Distribution Center III.

“When an operator needs a battery change, an email is sent to the battery room to get a new battery ready,” says Vince Koleck, Hershey’s distribution operations manager. “The person in the battery changing room controls the flow and they always have a battery ready, so there’s never a waiting line. We’ve conservatively estimated that it saves five minutes for every battery changed, which works out to about 350 to 400 hours per month.”

The WMS is also tied into the company’s welcome center, an area outside the building where the trucks enter. “The drivers don’t have to get out of their cabs,” says Koleck. “Everything is handled electronically. Their trailers are loaded, pre-staged for the most part, and they can be in and out of this facility in less than an hour.”

The yard service is also tied into the WMS. All of the trailers are tracked via RF, and the yard jockeys know where the trailers are at all times.

Hershey’s carriers use an online service called Automated Carrier Equipment Status Report, which was developed by Exel. The service allows the carriers to check the status of any trailer at any time through a website, so they can dispatch their drivers as they are needed. The carriers can also get a status report via email.


Throughout the EDC III, the temperature is kept at 55 degrees to maintain product integrity. The docks are also maintained at 55 to 60 degrees—as are the trucks used to ship and receive the product. The building features 46-foot high ceilings and is racked seven high, double deep. There are 188,000 pallet positions and 163 dock doors.

One of the unique aspects of the EDC III is the co-pack operation, where product is converted into merchandising and promotional displays. Candy is transferred from intermediate shipping cases and re-boxed into promotional packaging. Unlike many manufacturers that ship product to a co-packer and then back for distribution, Hershey handles the entire operation under one roof, saving on freight costs and increasing response time.

“While warehousing and co-packing are separate operations, the interactions between them are very seamless to Hershey,” says Kurt Lowther, Hershey’s account manager, global manufacturing alliances. “If we get an order in today and we don’t have it in stock, we can produce it by tomorrow morning. It allows us to be very responsive and maintain an annual case fill rate for this facility at 98.5 percent.”

In addition, the EDC III can fill orders for other distribution centers throughout the Hershey network.

Another unique aspect of the EDC III is the pick tunnels, where the company handles less than full pallet cases. “Case pick productivity is one of our success stories,” says Richardson. “Case picking was one of the least desirable functions, but our associates were given the opportunity to be dedicated case pickers and make more money. Physically, it’s the toughest job but if you’re willing to do that, you can make out pretty well from the incentive plan standpoint.”

Richardson points out that engineered standards started in 2002 and every year since case productivity has gone up. “In 2002 we averaged 227 cases per hour and in 2008 the average number was 388 cases per hour. Over the six years, productivity has gone up about 71 percent,” he says.

The EDC III also serves as a test facility, where new concepts are tested and, if successful, rolled out to other DCs.

Looking to the future, Hershey is considering centralizing its co-packing operation at the EDC III. “We have several co-packing operations throughout the U.S. and we’re figuring out how to combine more into this facility. We’re looking into different technologies, such as robotics,” says Grap. “We rely heavily on Exel to come up with new ideas that would benefit the operation.”

And, of course, Hershey will continue to rely on the hard work and determination of its valued associates.

“Together, the people and the processes add up to performance for the Hershey Co.,” says Richardson.


Location: Palmyra, PA
Facility size: 1,285,000 square feet
Employees: 610, up to 900 at peak season
Locations served: 1,617
SKUs: 2,200
Dock doors: 163

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