Dairy Crest's national distribution facility in the United Kingdom could be described as Europe's largest dairy case.
At Dairy Crest's national distribution center in Nuneaton, England, the cream literally rises to the top. Or at least, sometimes it's the cream. Other times, it's the milk, the cheese, the butter or the yogurt. A quarter of a million cases of milk, cheese, yogurt, butter and other dairy products pass through the Nuneaton facility's high-bay storage and fulfillment systems each day. The highly automated facility, which operates 24/7 every day of the year except Christmas, represents Dairy Crest's central distribution point for goods coming from 10 different production facilities in the U.K. and four facilities in France.
The DC's vast storage systems feature 17 automated cranes that store and fetch products in the high-bay areas. One automated storage and retrieval system (AS/RS) is even used to age cheddar cheese. The facility also boasts a sophisticated monorail system that swiftly glides pallet-loads of products throughout the climate-controlled building, which measures 20,000 square meters (roughly 215,300 square feet).
Dairy Crest opened the Nuneaton facility to accommodate the galloping growth it has experienced over the past decade, as it acquired various product lines and expanded its own brands. The building's central location in England's Midlands, just east of Birmingham and 100 miles northwest of London, makes it ideal for reaching its retail and foodservice customers nationwide.
"Our business just grew very, very quickly and we did not have the room to store everything," recalls Andrew Watson, the company's distribution director. "Before we built the Nuneaton national facility, our customers were ordering product from a central point, but receiving it from five or six points. Being in one place now allows us to receive everything in one place and allows our transportation to also come entirely from here. It just provides better customer service."
In addition, the building has space enough to house two important functions that up to now have been scattered elsewhere—cheese maturation and packaging. Cheddar cheese is currently aged in the building, and Dairy Crest expects to bring its packaging operations to Nuneaton in the near future.
Having everything in one place also allows Dairy Crest to speed up its deliveries, a process known there as "day-one for day-two." In the past, customers might place an order for cheese on one day, but with the required cutting and packaging, the order might take as long as 10 days to reach the customer's DCs or stores. Now, orders are taken each day until 5:00 p.m. (day one), picked overnight until 6:00 a.m., and then shipped by mid-day (day two). Nuneaton has now given Dairy Crest the ability to regularly ship products within six hours of order receipt.
Today, Dairy Crest is able to respond to customers' demands more quickly. And as a result of that fast response, customer orders are getting smaller and much more frequent. This is a trend that is now considered the norm in the British dairy industry and allows customers to crossdock their orders once they hit their distribution facilities.
"Our customers do not hold any stock anymore," reports Watson. "We deliver our goods to their depots in the morning, and they then deliver it to their stores by the evening."
Obviously, handling 50 million cases a year takes a lot of coordination. That's where the material handling equipment (from Dematic) comes in. Unlike many DCs, the material handling systems at Nuneaton were designed first, then a building was created around them.
The automated storage and retrieval systems represent the heart of the facility and are used to hold products at several stages of their journey. Finished goods are placed in high-bay racks with a capacity to hold 12,000 pallets. Five storage and retrieval cranes, each equipped with forks capable of handling double pallet loads, operate in this area. Only about five days' worth of stock is held in the facility, which means turnover rates are high. Most items reside in finished-goods storage for only a few days before they are used to fill full pallet orders or to replenish the forward picking areas. Only 20 percent of stock will ship as full pallets; the remaining 80 percent of items ship as multiple SKU pallets created for individual customer orders.
These split-SKU pallets are built in the multi-level picking hall, which is served by another AS/RS area equipped with five more storage and retrieval cranes. When needed for order filling, pallets of goods are brought to the 980 pick faces for selection, with each crane servicing about 200 pick locations. About 1,200 different SKUs are picked regularly here, dynamically assigned in their pick locations based on upcoming order profiles.
Workers directed by handheld radio-frequency devices select cases from the product pallets to build orders on customer-specific pallets. Only full cases are processed, as the quantities involved never require split-case picking. The workers then move along the rows of pick faces, transporting their order pallets on walkie-rider trucks. Once a pallet is full or all cases for an order have been gathered, the pallet is placed onto a conveyor and fed through a stretch-wrapping machine and past automatic labeling equipment before heading to shipping.
Dairy Crest – Nuneaton, U.K.
- Facility size: 215,300 square feet
- Employees: 250 in DC, 100 drivers
- Throughput: 250,000 cases/2,500 pallets daily
- Operations: 24/7, 364 days each year
- Milk distributed: 600 million gallons/year. 350 million bottles home delivered
- Other goods distributed: butter, cheese, yogurt, dairy spreads
- Storage systems: 17 AS/RS units
Cheddar cheese is aged in another large storage area consisting of free-standing racking that occupies 50,000 square feet of floor space. The racks reach 17 pallet positions high, or nearly 100 feet. In all, the AS/RS has 35,000 pallet locations in seven aisles. The entire area is kept at a cool 9 degrees Celsius (about 48 degrees Fahrenheit). The cheddar cheese arrives in block form from the production facility and is then placed onto pallets to age an average of 10 months in the AS/RS. Some cheeses may actually mature there for 18 months before being picked for orders. Since products reside in the AS/RS for such a long time, only two storage and retrieval cranes with the capability to change aisles are needed to handle the work load, which amounts to only about 20 pallet moves an hour. Selected cheese is transferred to an output conveyor using a shuttle car. The cheese is then sent to Dairy Crest's separate cheese cutting and packaging facility. Watson says the cutting and packaging processes will be transferred to Nuneaton within the next two years.
Going my whey
Connecting the receiving, storage, picking and shipping areas is a monorail pallet transport system. This 150-meter (or nearly 500-foot) system has the capability of hauling 200 pallets an hour on its 28 suspended pallet carriers. It is fed by conveyors from various processing and storage areas of the building and discharges pallets onto other conveyors to head to their intended destinations. It also interacts with five vertical lifts that move pallets between various levels of the building, such as the multi-level mezzanine used in the case picking areas.
Inbound products arrive from the company's 10 manufacturing sites around the U.K. One factory produces the spreads, butter comes from another facility, and liquid milk from yet another. Yogurt is produced at four factories in France and shipped daily to Nuneaton. When all of these various products arrive at the national DC, they are placed onto the monorail system, which takes them to the finished-goods automated storage system. Items are then pulled as needed and taken by monorail to replenish the picking AS/RS and forward selection stations in the picking hall. Once orders have been gathered, the monorail then carries pallets of customer orders to shipping.
In addition to being efficient and dependable, the equipment in the building must be able to tolerate cold, as the entire area housing the monorail, automated storage systems, picking and shipping is maintained at a crisp 2 degrees Celsius (about 35 degrees Fahrenheit).
Keeping all of these complex systems running in sync is the job of the warehouse management system (WMS), also supplied by Dematic. The customized WMS coordinates all processing tasks, including storage, dynamic replenishment of picking areas, order selection, pallet configuration and load building.
Information processing starts at receiving, where each pallet's EAN 128 bar code (a symbology commonly used in Europe) is scanned as the product is brought into the building. From the scan, the WMS recalls the advance shipment notice of the product and associates it with a purchase order received electronically prior to the product's arrival. The pallet can then be immediately loaded onto the conveyor and monorail systems for transport to assigned storage.
The WMS also provides real-time visibility to inventory and integrates with Dairy Crest's sales order software, creating a seamless flow of data throughout the entire order and fulfillment process. Orders can be adjusted for last-minute changes on the fly to meet specific customer requirements, providing tremendous flexibility.
"Every time the system moves a pallet, the action is reported," says Watson. "The power that information has given us has been significant in managing this facility."
Another task handled by Dematic software is yard management. All movement of trailers in the yard is choreographed and monitored by the software, as two shunting vehicles working in the yard relay information using on-board data terminals. Transportation management has also been improved now that it is integrated with the warehouse management system. Having stock under one roof instead of at scattered points around the U.K. now means that trucks can be filled to capacity instead of being only 60 to 70 percent full, as they had often been in the past.
Accuracy has also improved. In the past, accuracy stood at 99.2 percent; it now stands at a nearly perfect 99.98 percent due to the automation and software systems. That may seem like a minor improvement, but, as Watson explains: "When you process 50 million cases, even a 0.6 percent increase in service levels is rather significant."
About the Author
David Maloney has been a journalist for more than 35 years and is currently the editorial director for DC Velocity and Supply Chain Quarterly magazines. In this role, he is responsible for the editorial content of both brands of Agile Business Media. Dave joined DC Velocity in April of 2004. Prior to that, he was a senior editor for Modern Materials Handling magazine. Dave also has extensive experience as a broadcast journalist. Before writing for supply chain publications, he was a journalist, television producer and director in Pittsburgh. Dave combines a background of reporting on logistics with his video production experience to bring new opportunities to DC Velocity readers, including web videos highlighting top distribution and logistics facilities, webcasts and other cross-media projects. He continues to live and work in the Pittsburgh area.
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