In ten year’s time, ES3’s grocery warehouse in York, Pennsylvania has steadily taken collaboration to new heights among food and CPG manufacturers and their retail grocery customers, yielding environmental and supply chain successes that are gaining recognition throughout the industry.
The facility, which features warehouse automation equipment and technology designed by SSI Schaefer, has not only garnered prestigious awards, but has established itself as a model for the future.
And while the initial response from some in the industry may have been tepid, many are taking a second look.
A vision in the making
One of the first components of ES3’s collaboration concept was its Consolidation program, which was launched in 2002.
“There are a lot of planned out of stocks in the industry,” explains Brenda Hambleton, ES3’s chief strategy and marketing officer.
For example, if a retailer is out of stock on a slow moving item like cocktail sauce, they typically wait to order a full truckload of ketchup to go with the cocktail sauce in order to make it cost effective to replenish that slow moving item.
According to Hambleton, the goal was to eliminate that constraint and allow product to flow from the manufacturer to the retail store when it was needed and in the quantity it was needed.
In response, ES3 created a multi-manufacturer operation and facility that boasts over 60 manufacturers with distribution throughout the Northeast U.S. Retailers place their orders with the manufacturers and ES3 simultaneously, and ES3 creates a full truckload comprised of multiple manufacturers’ products. Consolidated orders are delivered in less than 24 hours from the time the order was received.
Now, the retailer can order a pallet or a layer of cocktail sauce and it gets placed on a truck along with an array of products the retailer is ordering from multiple manufacturers.
Currently, ES3’s Consolidation program is unique to the York, Pennsylvania facility. However, the company is working on taking the program nationally, says Hambleton.
Although some manufacturers may have been slower to gravitate towards this model, many have come to appreciate the benefits. “For one, they see financial savings by sharing transportation and creating full truckloads. Secondly, they’re experiencing better fill rates on the retailers’ shelves, which means they end up selling more product,” says Hambleton.
Sustainability is also improved, she points out. “Trucks running out of the facility are very full; typically about 10 percent fuller than conventional trucks because we have the opportunity to mix it across more product, which ultimately means less trucks on the road.”
Two years ago, ES3 further enhanced its collaboration concept with the addition of D2S, or the direct-to-store program, which won the Council of Supply Chain Management Professionals’ (CSCMP) 2011 Supply Chain Innovation Award. With D2S, product flows from the manufacturer’s factory to ES3 and then directly to the retail store, saving manufacturers and retailers more than 30 percent of their supply chain costs. The program essentially eliminates a distribution center, a leg of transportation, and 50 percent of the associated energy usage for a more efficient supply chain.
ES3 is in the midst of growing the D2S program, says Hambleton. “We’ve been scaling it up to handle more and more retail stores.”
SSI Schaefer shares in the dream
The collaborative concept has many supporters, including Ahold, ES3’s biggest D2S retailer, and Del Monte too. Another partner has been SSI Schaefer, which provided ES3 with the warehouse automation and technology to make the dream a reality.
ES3 looked at a number of vendors’ automation solutions prior to settling on Schaefer for a major facility automation project several years ago, says Hambleton. The decision hinged on the ability to perform a “massive amount of case pick, including the ability to handle over 20,000 individual items for the D2S program,” she says. “Schaefer’s automation really helped us achieve SKU density. We took off a high number of SKUs that had lower case pick volume and used Schaefer to manage those SKUs, while faster movers were selected manually. So, the pick paths are more compressed and much more efficient.”