By investing in some new conveyors and a pop-up sorter, online grocer Peapod eliminated a notorious bottleneck in its DC operation and boosted capacity by 50 percent.
David Maloney has been a journalist for more than 35 years and is currently the group 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.
You may not be thinking about what you'll be eating on Thanksgiving, but the logistics executives at Peapod have already given the matter a lot of thought. The day before Thanksgiving is the busiest day of the year for the online grocer's distribution facilities, and the preparations get under way early. By now, the planning process has become a pretty routine affair, with little in the way of variation from one year to the next. But this year, there's one important difference: the planners no longer have to worry about bottlenecks at the company's Gaithersburg, Md., DC.
Up until it was renovated last fall, the Gaithersburg facility had been a largely manual operation with serious capacity limitations. Most of its woes could be traced to logjams in the staging and shipping areas, where customer orders are sorted and staged for delivery.
The problem lay in the way the facility was set up. Peapod had acquired the distribution center from failed dot-com grocer Streamline.com in 2000, but it wasn't properly configured for Peapod's operations. Streamline had designed the facility for sequential order picking; Peapod's distribution model calls for batch picking. Because the staging and shipping areas weren't designed to accommodate large-scale sorting and order consolidation activity, they invariably became the operation's chokepoint. "It was taking forever to stage and load," recalls Thomas Parkinson, who is Peapod's senior vice president and chief technology officer as well as one of the company's founders.
Anxious to eliminate the bottlenecks and increase throughput, Peapod called Inther Integrated Systems, a Dutch-based design and systems integration firm that has been working in the United States for about four years. After looking over the operation, Inther concluded that it was high time that Peapod automated the staging and shipping operations.
On Inther's recommendation, Peapod installed 1,320 linear feet of new conveyor to whisk products from various picking areas of the building to the staging area, as well as a pop-up sorter to divert order totes to staging zones. (Both the conveyors and the sorter were supplied by New Berlin, Wis.-based HK Systems.) Along with designing the system and integrating the components, Inther provided the warehouse control system that allows Peapod's homegrown warehouse management system to communicate with the conveyor and sorter PLC controls. In addition, a new pick area was set up on a mezzanine for the batch picking of slower-moving items.
fast facts about Peapod
Since it was founded in 1989 by brothers Andrew and Thomas Parkinson, Peapod has delivered more than 10 million orders. The Skokie, Ill.-based company, which is growing at a 25-percent annual rate, is now the nation's largest online grocer.
International food company Royal Ahold acquired Peapod in 2000. Ahold also operates U.S. food chains Giant Food Stores, Stop & Shop, Tops, and Martin's Food Stores.
Also in 2000, Peapod purchased two distribution centers from defunct Internet grocer Streamline.com: one in Lake Zurich, Ill. (which serves the Chicago and Milwaukee metro areas) and one in Gaithersburg, Md. (which serves customers in Washington, D.C., and Baltimore). The Gaithersburg, Md., distribution center occupies 100,000 square feet and has 300 employees. It processes an average of 1,200 orders per day.
In addition to the two DCs, Peapod operates 16 "wareroom" facilities in New England. These smaller warehouses, which measure about 8,000 to 10,000 square feet, are attached to Stop & Shop stores.
Currently Peapod has 280,000 customers, serving markets in Chicago, Milwaukee, and Washington, D.C., as well as parts of Maryland, Virginia, New York, New Jersey, Massachusetts, Rhode Island, and Connecticut.
Picking more than just peas
Today, the new conveyors and sorter have all but eliminated the logjams. As workers pick products from locations throughout the 100,000-square-foot building, the new takeaway conveyors whisk them to the central staging area. There, the items are fed into the sorter, which swiftly diverts them into the appropriate delivery lanes.
In all, four new conveyor lines were installed, each serving a different picking zone. One is used to transport products picked in the DC's freezer area, where ice cream and other frozen goods are stored at a frosty minus 20 degrees Fahrenheit. Workers equipped with handheld radio-frequency (RF) terminals batch pick items—six orders at a time—into foam coolers packed with dry ice to keep items frozen during the journey to customers' homes.
Other takeaway conveyors serve the refrigerated area, where workers pick items like milk, meats, and cheeses into foam containers, and the fast-moving dry goods area. The fast-movers zone, which is located at floor level immediately below the mezzanine where slower-moving items are picked, is equipped with flow racks that hold items like Diet Coke and Tide laundry detergent, which are among the top 20 percent of SKUs by velocity at Peapod.
Yet another new conveyor serves both the slow-moving dry goods zone, which is located on the upper level of a mezzanine, and an area known as the "banana room." Workers assigned to the slow-moving dry goods area pick items like spices and health and beauty products into reusable waxed-corrugated totes, nine totes at a time (each of those totes represents a customer order). As they pick, they deposit the items into a plastic grocery bag inside each tote. The bags make delivery of the goods easier once they reach customers' homes.
When workers have completed the picks in the slowmovers area, the tote is pushed off onto a new takeaway conveyor that spirals down to floor level, where it enters the banana room. As the name implies, this area is a cool room that houses bananas and other fruits as well as perishable items like onions and bread. Here, workers pick additional items into the same totes.
As orders are completed, workers place the totes onto a takeaway conveyor that merges with the conveyors from the freezer, the refrigerated area, and the fast-movers pick lines to form a single lane. All totes then enter the new pop-up sorter, where they are diverted according to delivery route onto the 15 lanes in the staging area.
Roll 'em in and move 'em out
As the totes for an individual customer's order arrive in the staging area, workers look them over for consolidation opportunities. "In the end, we want to reduce the number of totes per order so that we can get more orders onto a truck," notes Parkinson. (The average customer order totals $150 and consists of about four totes' worth of items.)
The stager loads the totes into rolling racks that hold 36 totes apiece, scanning both the tote and a bar code at each rack slot to confirm that the tote was placed on the correct rack. This information is also used to create a delivery manifest for the driver. Once the racks are filled, they are rolled directly onto delivery trucks, eliminating the need to transfer the totes into other storage systems inside the trucks. Each truck carries four racks and a total of 144 totes.
Along with the racks, workers load up the trucks with carts full of what Parkinson calls "uglies." Uglies are hard-to-handle products that will not fit into totes—like large bags of dog food, and multiple rolls of toilet paper and paper towels—which are picked from a bulk area directly onto the picking carts.
Peapod uses bread trucks for its deliveries. Anywhere from 50 to 65 trucks fan out from the Gaithersburg facility each day for home deliveries. If the customer is at home when the truck pulls up, the driver simply pulls the grocery bags out of the totes and hands them to the customer. If no one's home, the driver leaves the totes at the house and picks up any empty totes from previous deliveries.
Mission accomplished
The $1.4 million project, which was completed in October, has both increased capacity and improved accuracy. Since installing the new conveyors and sorter, and setting up the new picking zone, Peapod has been able to increase accuracy to well above 99 percent. "We had a big missing tote problem that we resolved when we [automated] the … sorting," says Parkinson. "The changes have just made everyone's life easier," he adds. "Before, we were so constrained by space at the docks. Now the process there is much simpler."
The new system has also reduced labor requirements in the staging and shipping areas. The number of workers assigned to those sections has dropped from 21 people to eight—and those eight employees now handle 20 percent more volume. On a typical day, Gaithersburg processes about 1,200 orders, up from 1,000 orders before the upgrade. It also has the ability to handle as many as 1,500 orders and should have no trouble handling peak holiday demand.
Supply chain planning (SCP) leaders working on transformation efforts are focused on two major high-impact technology trends, including composite AI and supply chain data governance, according to a study from Gartner, Inc.
"SCP leaders are in the process of developing transformation roadmaps that will prioritize delivering on advanced decision intelligence and automated decision making," Eva Dawkins, Director Analyst in Gartner’s Supply Chain practice, said in a release. "Composite AI, which is the combined application of different AI techniques to improve learning efficiency, will drive the optimization and automation of many planning activities at scale, while supply chain data governance is the foundational key for digital transformation.”
Their pursuit of those roadmaps is often complicated by frequent disruptions and the rapid pace of technological innovation. But Gartner says those leaders can accelerate the realized value of technology investments by facilitating a shift from IT-led to business-led digital leadership, with SCP leaders taking ownership of multidisciplinary teams to advance business operations, channels and products.
“A sound data governance strategy supports advanced technologies, such as composite AI, while also facilitating collaboration throughout the supply chain technology ecosystem,” said Dawkins. “Without attention to data governance, SCP leaders will likely struggle to achieve their expected ROI on key technology investments.”
The British logistics robot vendor Dexory this week said it has raised $80 million in venture funding to support an expansion of its artificial intelligence (AI) powered features, grow its global team, and accelerate the deployment of its autonomous robots.
A “significant focus” continues to be on expanding across the U.S. market, where Dexory is live with customers in seven states and last month opened a U.S. headquarters in Nashville. The Series B will also enhance development and production facilities at its UK headquarters, the firm said.
The “series B” funding round was led by DTCP, with participation from Latitude Ventures, Wave-X and Bootstrap Europe, along with existing investors Atomico, Lakestar, Capnamic, and several angels from the logistics industry. With the close of the round, Dexory has now raised $120 million over the past three years.
Dexory says its product, DexoryView, provides real-time visibility across warehouses of any size through its autonomous mobile robots and AI. The rolling bots use sensor and image data and continuous data collection to perform rapid warehouse scans and create digital twins of warehouse spaces, allowing for optimized performance and future scenario simulations.
Originally announced in September, the move will allow Deutsche Bahn to “fully focus on restructuring the rail infrastructure in Germany and providing climate-friendly passenger and freight transport operations in Germany and Europe,” Werner Gatzer, Chairman of the DB Supervisory Board, said in a release.
For its purchase price, DSV gains an organization with around 72,700 employees at over 1,850 locations. The new owner says it plans to investment around one billion euros in coming years to promote additional growth in German operations. Together, DSV and Schenker will have a combined workforce of approximately 147,000 employees in more than 90 countries, earning pro forma revenue of approximately $43.3 billion (based on 2023 numbers), DSV said.
After removing that unit, Deutsche Bahn retains its core business called the “Systemverbund Bahn,” which includes passenger transport activities in Germany, rail freight activities, operational service units, and railroad infrastructure companies. The DB Group, headquartered in Berlin, employs around 340,000 people.
“We have set clear goals to structurally modernize Deutsche Bahn in the areas of infrastructure, operations and profitability and focus on the core business. The proceeds from the sale will significantly reduce DB’s debt and thus make an important contribution to the financial stability of the DB Group. At the same time, DB Schenker will gain a strong strategic owner in DSV,” Deutsche Bahn CEO Richard Lutz said in a release.
Transportation industry veteran Anne Reinke will become president & CEO of trade group the Intermodal Association of North America (IANA) at the end of the year, stepping into the position from her previous post leading third party logistics (3PL) trade group the Transportation Intermediaries Association (TIA), both organizations said today.
Meanwhile, TIA today announced that insider Christopher Burroughs would fill Reinke’s shoes as president & CEO. Burroughs has been with TIA for 13 years, most recently as its vice president of Government Affairs for the past six years, during which time he oversaw all legislative and regulatory efforts before Congress and the federal agencies.
Before her four years leading TIA, Reinke spent two years as Deputy Assistant Secretary with the U.S. Department of Transportation and 16 years with CSX Corporation.
Serious inland flooding and widespread power outages are likely to sweep across Florida and other Southeast states in coming days with the arrival of Hurricane Helene, which is now predicted to make landfall Thursday evening along Florida’s northwest coast as a major hurricane, according to the National Oceanic and Atmospheric Administration (NOAA).
While the most catastrophic landfall impact is expected in the sparsely-population Big Bend area of Florida, it’s not only sea-front cities that are at risk. Since Helene is an “unusually large storm,” its flooding, rainfall, and high winds won’t be limited only to the Gulf Coast, but are expected to travel hundreds of miles inland, the weather service said. Heavy rainfall is expected to begin in the region even before the storm comes ashore, and the wet conditions will continue to move northward into the southern Appalachians region through Friday, dumping storm total rainfall amounts of up to 18 inches. Specifically, the major flood risk includes the urban areas around Tallahassee, metro Atlanta, and western North Carolina.
In addition to its human toll, the storm could exert serious business impacts, according to the supply chain mapping and monitoring firm Resilinc. Those will be largely triggered by significant flooding, which could halt oil operations, force mandatory evacuations, restrict ports, and disrupt air traffic.
While the storm’s track is currently forecast to miss the critical ports of Miami and New Orleans, it could still hurt operations throughout the Southeast agricultural belt, which produces products like soybeans, cotton, peanuts, corn, and tobacco, according to Everstream Analytics.
That widespread footprint could also hinder supply chain and logistics flows along stretches of interstate highways I-10 and I-75 and on regional rail lines operated by Norfolk Southern and CSX. And Hurricane Helene could also likely impact business operations by unleashing power outages, deep flooding, and wind damage in northern Florida portions of Georgia, Everstream Analytics said.
Before the storm had even touched Florida soil, recovery efforts were already being launched by humanitarian aid group the American Logistics Aid Network (ALAN). In a statement on Wednesday, the group said it is urging residents in the storm's path across the Southeast to heed evacuation notices and safety advisories, and reminding members of the logistics community that their post-storm help could be needed soon. The group will continue to update its Disaster Micro-Site with Hurricane Helene resources and with requests for donated logistics assistance, most of which will start arriving within 24 to 72 hours after the storm’s initial landfall, ALAN said.