Photo: Dr. Jean-Paul Rodrigue, 2013.
The grocery sector is characterized by a particular set of challenges for freight distribution. Demand is constant and of high volume, but since each store meets a local demand (different incomes and preferences), distribution centers of large grocery chains must meet complex orders of hundreds of separate items for each delivery. As a result, grocery freight distribution can be a highly labor-intensive operation, which, coupled with lower profit margins (often less than 2%), provide an incentive to improve its operational efficiency. A growing number of grocery distribution centers are being automated.
The above photo depicts the Kroger distribution center located in Paramount in the Los Angeles metropolitan area. Kroger is America’s largest grocery retailer (the world’s fourth-largest) with southern California stores under the Ralphs and Food 4 Less banners. The Los Angeles metropolitan area and Southern California represent substantial markets that the chain is servicing with more than 250 stores. The 500,000 square foot facility was completed in 2008 and is a strategic regional warehouse and distribution facility. It acts as a cross-docking facility that only handles dry grocery goods (specific distribution centers for cold chain goods such as produce, dairy, and meat are operated elsewhere in the metropolitan area).
The automated facility receives full pallets of only one item (SKU) on the inbound side (this means that suppliers must abide by a set of rules concerning pallet dimensions and load configuration). The pallets are then loaded into a conveyor where its contents will be automatically de-palletized, put on individual trays, and then stored in high tray or bay warehouses (bays are for full pallets stored until needed to be depalletized). Once receiving individual store orders, the operations center will build a model of a delivery pallet and then order individual trays that are brought to a palletizing machine. Pallets can be composed to optimize the shelving since the composition process takes account of the grocery store layout. The pallets containing a wide array of goods are then conveyed to the loading docks, where they will be loaded into delivery trucks bound to the receiving store(s). The current facility is running close to capacity (around 85%) and higher throughput involves extended hours of operation.
Distribution center automation, including high bays, is effective when there are land constraints with limited room for horizontal expansion in accessible (central) areas. It is also suitable in the context of high volume throughput, where the demand is stable and predictable. However, such facilities are capital intensive and require a high level of technical expertise to manage. It is expected that as the automation technology matures, a growing number of distribution centers will become partially or fully automated.