Foodstuffs, New Zealand’s largest food and liquor retailer, has transformed its South Island supply chain with the opening of a new 46,000 m<sup>2</sup> ambient distribution centre (DC) at Hornby in Christchurch.
While Foodstuffs South Island Ltd (FSSI) was looking for a site for its new ambient DC, a 13 ha parcel of land adjacent to its existing 13,000 m2 ambient DC and 14,000 m2 temperature-controlled DC at Hornby became available.
FSSI’s Logistics Operations Manager, Kris Lancaster, said: “We had been trying to find an appropriate site with suitable transport connections for our new ambient DC for a long time.”
“We had our eye on the site next door for several years, but the land was not approved for development, so the timing could not have been better and we acquired the land in early 2011.
“However, before we could start planning for the new DC, a large number of our stores were extensively damaged as a result of the devastating earthquake which struck Christchurch on February 22, 2011.”
“This meant planning for the new DC went on hold as all efforts went into getting the retail stores that had been damaged rebuilt or repaired,” explained Mr Lancaster.
Because of this, planning for the new DC didn’t commence until late 2012, with construction beginning in July 2013 and completion in September 2014.
FSSI supply chain challenges
Mr Lancaster, said: “In recent years as our business grew, our supply chain had become a bit fragmented.”
“The opportunity to build a new DC gave us the ability to create a state of the art DC designed specifically to serve our operations and meet our store delivery requirements.”
Prior to the construction of the new ambient DC, FSSI was operating three DCs in the South Island: its original DC in Christchurch at Papanui, which was more than 40 year’s old; a second DC located in Dunedin; and the most recent addition to its South Island distribution network, its 13,000 m2 DC at Hornby in Christchurch, which commenced operations in 2007.
“Our Papanui site was an older style DC design and its location in a rapidly growing residential area meant the site had become landlocked with limited scope for expansion, and we also had a strong desire to consolidate our Christchurch operations onto one site,” said Mr Lancaster.
“As luck would have it, our dilemma was solved when the land adjacent to our Hornby DC became available.”
The new ambient DC in Christchurch covers nearly three times the area of the previous DC at Hornby, and has enabled the business to increase centralised distribution to its South Island stores through the expanded facility. FSSI’s DC at Papanui has been closed and its operations transitioned to the expanded DC at Hornby, while the Dunedin DC has been retained to support the retailer’s stores in the southern region of the South Island with fast moving high volume SKUs.
The Hornby DC services around 150 New World, PAK’nSAVE, Four Square, Henry’s BWS stores and a further 1,000 foodservice and convenience customers throughout the South Island.
Introducing new order fulfilment strategies
“All three of our South Island DCs were manual operations and a key priority for our new DC was to introduce automation for our high volume split case items and small bulk picking requirements, which typically account for around 25% of our total order volume,” said Mr Lancaster.
FSSI began assessing options from various materials handling systems suppliers to establish who offered the best combination of integrated order fulfilment technologies and logistics software solutions, with the business selecting Dematic to be its partner for the project.
“We have had a close working relationship with Dematic for several years and its extensive experience in delivering supply chain solutions for the retail industry was a key factor in our decision,” added Mr Lancaster.
Key project objectives
Sean Ledbury, Dematic’s Sales & Business Development Manager responsible for the design of the new ambient DC’s logistics systems, said the key project objective was to implement integrated order fulfilment systems (OFS) that would enable FSSI to increase productivity, improve accuracy and raise service levels.
Key design initiatives included minimising the site footprint to reduce travel time between picks and optimising systems flexibility to enable the efficient handling of various SKUs and order types, said Mr Ledbury.
Seismic-design high density storage systems
A feature of the DC is its space-efficient, seismic-design ColbyRACK pallet racking system, which has the capacity to store more than 43,000 pallets to a height of 10.7 m.
“As well as supplying our new racking, Dematic also provided us with invaluable advice about how the location of pallets of different weights throughout the racking can affect the performance of storage systems during a seismic event. We now have very clear guidelines regarding the weight limit of pallets within different levels and locations within our racking,” said Mr Lancaster.
“Dematic also improved our awareness of the potential impact that any damage to racking can have during an earthquake.
“To prevent any accidental damage at the ground floor pick faces, our racking uprights are equipped with Dematic’s Colby Protect-a-RACK system, including front and rear upright guards and end-of-aisle protectors,” he said.
Split case and small bulk picking module
A key feature of the DC’s order picking systems is a two-level split case and small bulk picking module.
Controlled by Dematic IQ order fulfilment software, order totes travel through the pick module by conveyor, automatically diverting only into zones where picks are required. Operators equipped with voice-directed terminals batch pick individual items and small bulk packs from thousands of shelving and carton live storage locations into the order totes, which are transported through the system until all items required for an order have been picked.
Orders begin on the ground level of the picking module and are transported to the mezzanine level by an incline conveyor.
When all of the items for an order have been picked, the order tote is pushed onto a take-away conveyor which transports the tote to a spiral conveyor which returns the order tote to the ground floor, after which it is conveyed to the DC’s despatch area, where a 12-lane Dematic conveyor sorting system automatically sorts the totes to the relevant lane for palletising and despatch.
An interesting feature of FSSI’s split case and small bulk picking process is the use of Chep collapsible totes, which also function as the shipping container for orders. After the totes have been delivered to stores, they are folded flat for return to the DC for reuse or de-hired.
Designing the interface between the existing and new DC
The two-level split case picking module spans across an area that traverses FSSI’s existing Hornby DC into the newly built section. Because of this, Dematic designed the pick module as two separate interconnected structures with a sliding bridging plate.
Dematic’s Sean Ledbury explained: “To cater for the fact that the pick module straddles both the existing DC slab and the new DC slab, we felt it would be safer to split the pick module into two separate elements and connect them with a sliding bridging plate so that the structure can accommodate any differential movement between the two slabs.”
Dematic iQ Order Fulfilment Software
Dematic iQ OFS optimises operational processes from planning to order fulfilment and shipping within a single flexible, scalable and modular platform, and offers visibility and insight into system performance across a wide range of mobile devices.
The OFS drives voice-directed picking and RF-directed replenishment, and enables automated conveyor routing technologies to facilitate the fulfilment of orders supplied by FSSI’s WMS.
The installation of the DC’s storage, logistics and order fulfilment systems was completed by late 2014 with the DC progressively ramping up capacity in early 2015.
The ambient DC, which is staffed by a team of around 400, distributes an average of around 450,000 cases (8,500 pallets) per week, with the site’s temperature-controlled DC distributing a further 200,000+ cases (5,000 pallets) per week.
FSSI’s Kris Lancaster said the business was very satisfied with the performance of the new DC and expected it would have no trouble in achieving its throughput targets during peak periods.
“The DC has been designed to accommodate growth in our business for several years. We have the people, the technologies and the systems in place to handle throughputs of up to 1,000,000 cases per week or more during peak periods and, as we gain more experience in utilising our new order fulfilment systems, we expect to further increase our productivity.”
The new DC was officially opened by New Zealand’s Prime Minister John Key on February 12, 2015.