For most of us, the term "all-natural yogurt" evokes bucolic visions of cows grazing lazily in sun-dappled pastures. And indeed, those idyllic scenes can still be found in parts of rural America, including upstate New York, where Greek yogurt producer Fage USA has located its first North American production plant. In fact, Fage, which requires about 13 million gallons of milk a year for its production operations, chose the location in part because of the abundant supplies in the region.
But follow that milk on to the next stage of its supply chain journey and you quickly leave the pastoral scenes behind. In Fage's operations, the next stop is the kind of highly automated production facility you'd expect to find in a pharmaceutical or high-tech manufacturing environment.
After running its U.S. distribution operations manually since it established a presence here in 2000, Fage USA recently unveiled an $85 million state-of-the-art production and distribution facility in Johnstown, N.Y., just outside of Albany. With its U.S. business experiencing annual growth of 50 percent, it no longer made economic sense for the company to continue importing its yogurt, dips, and cheeses from Greece, says Ioannis Papageorgiou, Fage USA's president and COO. At press time, the manufacturing part of the operation was still ramping up (it was scheduled to go live in early April). At its peak, the facility is expected to produce 1,000 pallets of yogurt each week.
Adapting to a new culture
Though manufacturing is just getting under way at the new facility, the distribution portion of the building has been in operation for several months now, receiving product daily from Greece. Fage, whose Total Yogurt is the number-one seller in Greece and much of Europe, brings in 20 air containers a week in addition to ocean containers filled with some of its less time-sensitive items.
The centerpiece of the new distribution operation is an automated storage and retrieval system (AS/RS). Though the system's installation was a major step forward for the company's U.S. operation, which had previously been a strictly manual process, it was entirely in keeping with the parent company's corporate culture. The yogurt producer relies heavily on automation at the five plants it operates in Europe.
In fact, Fage's decision to go with an AS/RS was based partly on its experience with the equipment overseas, says Gary Frank, vice president of automated systems for York, Pa.-based Westfalia USA, which installed the AS/RS as well as a warehouse management system at the Johnstown facility. Automated equipment offers a number of advantages for a dairy company like Fage, including lower labor costs and sanitary operation.
The main benefit, however, is swift throughput. Given the short shelf life of the company's products (which is about 35 days for some items), Fage's need to whisk them through its supply chain cannot be understated.
"It's critical to get our product to the consumer as quickly as possible," says Papageorgiou. "This is not about reducing labor, but [about] having control over our inventory and being more efficient in getting our product to the final customer."
The ins and outs
When it came to designing the automated system, Fage had very specific requirements, according to Westfalia.What the dairy company wanted was a system that could handle the movement of buffer product from manufacturing, full pallet movement, case picking, and the movement of buffered pre-picked material back into the AS/RS for future retrieval/truck loading.
The design Westfalia came up with includes a high-density automated storage and retrieval machine, a complete pallet conveying system, and gravity flow pick lanes, as well as bar-code scanners, stretch wrappers, and label printing and placement equipment. The system also makes use of Westfalia's patented Satellite transport technology, a fully automated rack entry vehicle designed to move pallets of all shapes and sizes. The Satellite vehicle is used to store pallet loads five deep on one side of the aisle and 11 deep on the other side.
The four-level-high racks hold 1,638 pallet positions and include 23 gravity flow pick lanes on the first level. Twenty-two of the 23 lanes handle fast movers, while the last lane is designated as a replenishment lane. All pallets are supported on a three-rail system, which is designed to eliminate pallet damage.
Overseeing all the activity is Westfalia's modular warehouse management system (Savanna.NET), which controls both the case picking operations and the movement, storage, and order picking of pallets.When signaled, the system directs the AS/RS to move pallets into the rack or retrieve them from storage locations.
Pallets entering the AS/RS from manufacturing and the receiving docks travel on an accumulation conveyor system that includes a profile checking station and a load squaring station. The accumulation conveyors smooth out any throughput surges and ensure a streamlined flow of material between different processes.
"Everything is fully automated," says Papageorgiou. "There is no hand touch at all. Well, somebody does have to drive the forklift to bring the pallets inside the truck."
For Fage USA, the new automated system is already producing results, including a reduction in labor costs and a 30- to 40-percent increase in storage density. And as expected, the system has resulted in higher throughput, which helps the company move its product swiftly out to customers.
On top of that, the automated high-rise system has delivered both financial and environmental benefits. Compared to conventional warehouses, multiple-deep designs have lower construction and operating costs, says Papageorgiou. In addition, a high-rise warehouse design requires a smaller building footprint than a more traditional design does, which reduces the facility's environmental impact as well as its energy costs.Westfalia reports that in the case of temperature- controlled warehouses, automated sites use 30 percent less energy than their non-automated counterparts—savings that are sustainable for the life of the facility.
At Fage USA, automation is one strategy that will never be put out to pasture.