For a wholesale grocery cooperative to succeed at the goal of supporting the profitability of its members, every activity must aim at a single target — maximizing outbound shipping to provide the lowest cost of goods to member stores. When shipping and receiving share the same warehouse doors and dock, advanced technology can greatly improve the chances of hitting that target every time.
The situation imposed by a warehouse that ships and receives at the same time through a common set of doors is fairly simple, says Glen Keysaw, logistics manager for Associated Food Stores in Salt Lake City, Utah. Effectively, every door on the warehouse has to do double duty, because every carton the company ships out through a door has to move into the warehouse through the same set of doors.
Although Associated Food Stores operates from a corporate headquarters in Salt Lake City, all but a small portion of distribution moves from a relatively new warehouse in Farr West, Utah, a small community on the outskirts of Ogden, about 50 miles north of Salt Lake City. That location actually puts the distribution center in closer proximity to many of the cooperative members spread throughout the Intermountain West with locations throughout Idaho, Montana, Nevada, and Utah as well as parts of Colorado, Oregon, Washington, and Wyoming. This widespread membership represents almost explosive growth for the group founded in 1940 by Donald P Lloyd, president of the Utah Retail Grocers Association and 34 other retailers who contributed $300 each to start the organization. With all the growth in the area, AFS still claims to be the only independent wholesale distributor headquartered in the Intermountain West.
Major warehouse renovation
Growth caused the warehouse move to Farr West after the group with its more than 700 members had operated in Salt Lake City for more than 50 years. With the Salt Lake City warehouse bursting at the seams, the company began looking for a new location in 1997 with the initial intent to purchase land and build a distribution center. However, just before making the real estate purchase the current warehouse in Farr West was put up for sale by the previous owner, the Rite Aid Company. Following a year of renovation to customize the facility for wholesale grocery distribution, AFS moved in on April 29, 2001, in the process saving more than $15 million compared to building a new warehouse from scratch.
Compared to the previous AFS facility, the present warehouse is huge, stretching 590 yards — more than one-third of a mile — from end to end, sitting on 65 developed acres with an additional 45 acres available for expansion. It provides 1.25 million sq ft of storage space, including 305,000 sq ft for perishables in eight temperature and humidity zones. The warehouse is served by 149 dock doors used for almost constant receiving and shipping seven days a week. In fact, receiving goes on all day and night except for three hours between 5 pm and 8 pm.
The Farr West distribution center runs with a staff of more than 500 and receives more than 600 loads weekly from a mix of more than 1,000 vendors. Farr West dispatches 628 routes weekly to make between 1,800 to 2,000 stops. With a heavy reliance on doubles for shuttle service to satellite locations and remote drivers, the 628 routes utilize 1,149 trailers in an average week.
Distribution division consolidation
Adding to the workload at Farr West is the fact that AFS recently consolidated to three distribution divisions, down from four. Prior to the change, the company used Farr West as the primary warehouse with satellite operations in Boise, Idaho, along with Billings and Helena, Montana. In the consolidation, Boise was closed and all its distribution responsibilities moved to Farr West. For scheduling efficiency, 10 drivers and eight tractors remain in Boise to deliver loads shuttled north from Farr West. Closing Boise actually provides a more diverse product mix to members in the area, because Farr West has so much more capability, Keysaw says. The slightly increased transportation cost as a result of dispatching routes from Farr West is more than offset by the lower cost of goods available from the large warehouse, he says.
Coordinating the movement of loads into Farr West requires the use of two advanced management systems from BGI International, a logistics software firm based in Olathe, Kansas. Inbound scheduling runs on BGI's TMS-2000 traffic management system, while dock scheduling and performance runs on SmartDock. One of the primary benefits available from TMS-2000 is its ability to drive the buying and receiving functions closer together and help eliminate buying done without coordination with receiving, Keysaw says. This is helpful, because buying does not operate on a stable, seven-day cycle like the warehouse. Without careful coordination, buyers can alter receiving requirements by 30% to 40% from one day to the next. At AFS, TMS-2000, SmartDock, and an automated yard management system are all integrated with the warehouse management system to help provide a seamless process in which products, labor, and delivery equipment all arrive at the appropriate place in the distribution chain in a timely manner.
Now almost 20 years old, BGI was founded by two experts in food distribution and logistics — Tom Bauer who had been manager of traffic operations for Kroger and Richard Gramza whose previous experience was as operations manager for Arcadian Motor Carriers, a truckload carrier of refrigerated freight. BGI is an outgrowth of their experience of providing third party logistics to the food distribution industry.
Synchronize buying with outbound
Instability in the buying cycle places a burden on receiving, which, in turn, affects shipping. The goal behind inbound traffic management is to encourage buying based on outbound demand, because everything in the company needs to be outbound-driven, Keysaw says.
The use of SmartDock enhances dock efficiency by providing a graphic display of appointments and door availability. In addition, it allows everyone in the receiving process to see the dock schedule without making phone calls to determine which doors can be used. One big benefit is the ability to schedule dock labor without producing a lot of peaks and valleys, Keysaw says. Not only does this reduce labor cost for the company, it produces a better quality of life for warehouse workers. Asking crews to put in extensive overtime on one day and sending them home early the next day ruins their ability to schedule the rest of their lives, he says.
The dock scheduling systems also helps AFS determine who should perform the unloading function, because the company has two options. Some loads such as company backhauls and loads on carriers controlled by AFS are handled by company workers. AFS crews also handle inbound loads shipped by vendors who configure the freight for easy warehouse handling. However, most unloading is performed by LLL Inc, a local unloading service. Choosing which crew to use is based on the price of the product compared to the unloading charge. For some loads, vendor pricing makes unloading by AFS crews more attractive than paying an unloading charge.
Projecting receiving time
SmartDock also analyzes loads by vendor and predicts how long a delivery should take. The system maintains a six-week history of unloading performance by vendor. For instance, loads arriving with pallets stacked in a configuration that allows movement directly from the inbound trailer to a warehouse slot can be handled quickly. If freight must be restacked before slotting, receiving may take four hours or more, Keysaw says. If the actual time for receiving matches the SmartDock projection, AFS says the load has been handled efficiently. “We match projections about 90% of the time,” he says.
The scheduling system allows AFS to identify vendors that don't deliver on time as well as late-arriving carriers. In fact, SmartDock can produce up to 26 separate vendor- or carrier-specific performance reports. If vendor or carrier on-time performance falls below 80%, AFS files a claim for late arrival, putting both vendors and carriers on notice about being late.
Although the system will do it, AFS does not track door time by vendor. However, the amount of door time used for each inbound load is tracked internally, because doors must be shared between shipping and receiving crews. All managers have access to this performance data, an important fact, because receiving teams are paid a bonus for exceeding their 100% projections.
Large, diversified fleet
Once product gets into the warehouse, AFS faces its primary goal — delivering to its member stores. Serving eight states in the Intermountain West presents a large challenge with the vast territory and substantial distances between store locations. To reach all the stores in a timely manner, the fleet is divided among three locations plus remote drivers in two other spots: Boise and Pocatello, Idaho. Obviously, the largest fleet resides in Farr West followed by Helena and Billings, Montana. The Farr West fleet numbers 102 tractors and 250 trailers. Helena comes in second with 29 tractors and 43 trailers followed by Billings with 15 tractors and 28 trailers. When a warehouse still operated in Boise, it was home to 16 tractors and 48 trailers. With the closing of that warehouse, the fleet has been reconfigured to eight tractors for 10 drivers, while all the trailers were transferred to Farr West.
The two satellite divisions are hybrids in the AFS system. They stock inventory delivered as bulk loads from Farr West for order selection as well as a few cross-docked orders for close-in stores. Although the divisions get some direct delivery, most of their inventory comes from Farr West by intra-company shuttle using dedicated shuttle drivers or drivers from Helena and Billings who pick-up from the headquarters warehouse. The primary purpose of the divisions is to cut distribution mileage and speed service to customers. Orders for the entire cooperative membership are processed electronically through Farr West.
The majority of the trailer fleet uses multi-temperature refrigeration capable of handling frozen, meat and produce, and dry groceries, all in the same load with two temperature zones in the trailer. Groceries are loaded into the medium temperature compartment with the perishables.
Multi-temperature trailers are necessary to provide service to retailers spread across such a large area. Standard procedure is to load frozen foods in the front compartment and set the thermostat at -12° F. Dry groceries are then loaded behind the bulkhead separating the frozen compartment from the rest of the trailer. Produce is loaded behind the groceries; the entire compartment is held at 38° F. Meat and deli products are shipped as single temperature loads with the refrigeration units set for 30° F. That does not mean meat and deli loads go into trailers equipped only for single temperature operation; it means that only the host unit on a multi-temp trailer is used to keep meat and deli loads cool.
In order to match equipment to loads, AFS runs a wide variety of trailers, including 28-ft, 42-ft, 45-ft, and 48-ft reefers. Newer equipment in the fleet is a mix of trailers from Great Dane and Utility. Refrigeration units are primarily from Carrier Transicold.
Running trailers in combinations — turnpike doubles with two 42-ft trailers or Rocky Mountain doubles consisting of a 48-ft trailer followed by a 28-ft trailer — can produce total gross loads of up to 129,000 lb. Some of those loads must climb 8% grades, so high horsepower is standard in the AFS fleet. The company uses Freightliner and Volvo tractors with engines rated at 470 hp. In the past year, AFS has purchased 32 new Freightliner daycabs powered by Detroit Diesel engines.