If any industry lives by the proverb "A penny saved is a penny earned," it's the grocery business. Grocers operate on notoriously thin margins. Focusing on keeping costs low and operations swift and efficient is deeply embedded in their business makeup.

Supervalu is a case in point. One of the nation's largest grocery retailers and wholesalers, it operates such well-known stores as Albertsons, Jewell-Osco, Acme, and Save-a-Lot. The company traces its roots to a grocery wholesale business founded in Minneapolis some 130 years ago. It has been growing steadily ever since.

With its acquisition of the Albertsons chain in 2006, Supervalu gained a number of distribution centers, including a dry goods facility in Lancaster, Pa., that served Acme supermarkets in the Mid-Atlantic states. As part of its effort to integrate Albertsons into its overall supply chain, the company folded operations from an existing Supervalu facility in nearby Harrisburg into the Lancaster building.

While that consolidation reduced costs and overhead, it did not allow room for growth. "We needed to consolidate, but it was a tight. However, the utilization of the building was not what it should have been," recalls Beth Kroutch, general manager of the Lancaster DC.

The company chose to keep this facility rather than relocate because its proximity to major interstate highways provides efficient access to stores in key Mid-Atlantic markets. But it needed to make the building more efficient to serve the stores, as well as gain additional space to grow the business. It also sought to improve order filling accuracy, inventory accuracy, and product handling—and to do all of this with significant labor savings.

Company managers determined that automation was the key to attaining these goals. Supervalu had already completed a highly successful automation project with Witron Integrated Logistics at a facility near company headquarters in Hopkins, Minn. This system, installed in the Hopkins facility in 2006, features Witron's OPM (order picking machinery), a highly automated system for picking and palletizing cartons. The success of the Minnesota operation convinced Supervalu management that Witron's design and integration services, along with its OPM, would be an ideal fit for Lancaster as well.

"We have a great partner with Witron," says Jeff Fritz, senior director of operations in Lancaster. "They have logistics knowledge, not just systems knowledge."

Installation of the system began in the fall of 2008, and the automation went live in early 2009. The OPM system serves as the heart of the Lancaster operation. It consists of a large case and tote automated storage and retrieval system (AS/RS), connecting carton conveyors, automated palletizers, pallet conveyors, stretch wrappers, and more—all of which perform without human intervention. This complex system fits in the space that had previously been occupied by a labor-intensive pick-to-belt operation. The design also incorporated a 10-aisle pallet AS/RS, which feeds the OPM. This was the only structural addition made to the building for the project. The pallet AS/RS occupies a footprint of just 175,000 square feet, yet it holds more than 53,000 pallets in double-deep storage.

Together, the new automated systems have enabled the Lancaster DC to process some 1.1 million cases a week, feeding nearly 400 stores in the Mid-Atlantic region as well as some markets in the Northeast. "We were able to more than double the number of stores serviced and increase our outbound volume by 100 percent in grocery without adding more shipping space to the facility," says Kroutch.

No-hands handling
Products arrive at the facility at six receiving lanes. Lift trucks then take the loads to six induction stations, where they are placed onto a pallet conveyor supplied by Binder. Once deposited on the conveyor, products are not touched again until they're loaded onto outbound trucks.

The pallet conveyor transports the loads to the newly built high-bay warehouse that holds the AS/RS. This area serves as reserve storage at the Lancaster facility. The AS/RS consists of 10 70-foot tall aisles accessed by 10 storage/retrieval cranes supplied by Daubach. Over 90 percent of all products in the DC pass through the system. The exceptions are items that are not suitable for automation, such as bags of dog food and flour that can easily break and spill. Currently, about 19,000 SKUs can be stored within the technology.

Upon arrival at the AS/RS, each load is transferred from its shipping pallet to a system pallet that provides the uniformity needed for automation. This is important, as shipping pallets are not typically made from the best materials and may have broken stringers and deck boards that could jam the automated systems. Once the goods are loaded onto a system pallet, fixed scanners check each load to assure that it meets the tolerance for the automated system (ensuring that no part of the load overhangs the pallet, for instance). The facility's management software works with the AS/RS to determine storage locations for the various SKUs, with attention paid to placing faster-moving SKUs closer to the pickup and delivery stations. Storage decisions are also made with an eye toward seeing that SKUs are located in more than one aisle to cover times when a crane is down for service.

Witron's warehouse management software triggers release of products from the AS/RS to replenish the tray AS/RS system that's used for order filling. The software selects SKUs based on sophisticated algorithms that consider SKU velocity, order history, forecast data, and upcoming sales promotions. This assures that ample product will be available in the tray AS/RS to fill the day's orders.

The cranes are summoned within the pallet AS/RS to collect the needed pallets from their storage locations. These are deposited onto conveyors for transport to the tray AS/RS. Eight Qubiqa layer picking machines depalletize cases, utilizing suction to remove layers from the incoming pallets. The cases in each layer are then deposited onto a conveyor, where they are singulated into a line and made ready for transfer onto trays. A second conveyor carrying empty plastic trays of two sizes travels in line directly below the case conveyor. The system assigns a tray of the appropriate size to each case. As the products reach the termination of the upper conveyor, the cases are gently dropped off its end onto a passing tray below. A vision system monitors the activity to assure that the transfers onto the trays have been completed without error.

The trays holding cartons of products are next conveyed to the large automated tray system. This mini-load AS/RS consists of 44 cranes (supplied by TGW Systems) and holds more than 400,000 trays. The cranes, which are designed for speed and efficiency, are engineered to handle either two larger trays or four smaller trays at a time. The cranes take the loads to assigned storage positions, with each position also able to hold either two large trays or four small trays.

Made to order
Products remain within the mini-load for two to three days until they are required for fulfillment. At that time, the system gathers trays of products needed for orders and conveys them to a system containing 44 sequence buffers. This buffer system contains 44 cranes (also supplied by TGW Systems) that act as elevators to move the trays into temporary holding positions, where they remain until the order is ready for release. At that time, each tray is released in sequence for building pallets. The sequence of cartons assures that the pallet load is built to be stable and with items grouped by family for ease of putaway at the stores.

Pallet building is completed in an area known as the COM (case order machine). This system employs a pushing mechanism as opposed to the common practice of using robotic grippers to remove cases from the trays. As trays bearing products enter one of the system's 22 COMs, they pause on the conveyor. Metal fingers then rise from the conveyor below, poking through the small holes on the tray to gently lift the case above the tray surface. An arm then sweeps the product off the tray and onto an inline palletizing system. Heavier products typically are used for the bottom layer of the pallet, with cartons of different sizes added on top to create mixed-SKU pallets in layers that produce a stable load. Reusable plastic pallets are used for shipping.

Pallet loads next go to one of the facility's four wrapping machines, supplied by Strema. The pallets built at the Lancaster facility are taller than typical pallet loads in order to improve cubing within the system and reduce transportation costs. The wrapping process makes sure they're secure. A label is added to the wrapped pallet and the load is picked up at the end of a spur by a lift truck that takes it to an assigned outbound dock.

One of the benefits of automation is that Supervalu has better knowledge of the cube of its products. And since the system is picking products in sequence, the company can build fuller pallets and better optimized loads. "We now cube our loads better than in the past and have since seen a reduction in the total number of outbound loads, which has resulted in transportation savings," explains Kroutch.

Overall, the automated system can handle some 10,000 cases an hour. It operates for 20 hours a day, seven days a week.

While the automated systems handle the majority of products flowing out of the facility, some piece picking is also performed using labels. These items are picked into totes. RF picking is also utilized in the picking of products not suitable for the AS/RS systems. These are stored in conventional pallet racks.

Room for growth
Since moving to the OPM, Supervalu has been able to feed nearly 200 Acme Supermarkets with three to four deliveries a week and another 200 company stores with two to three deliveries weekly. The Lancaster operation, which with the high-bay addition now totals 1.7 million square feet, is among the most productive of Supervalu's 29 facilities nationwide. And orders are leaving the facility accurately and on time.

"Our fulfillment accuracy has been outstanding," says Fritz.

Since the OPM takes only about 60 percent of the space required for conventional picking systems, space has been opened in the facility for future growth, including eventual expansion of the Witron systems. The OPM can handle more than 91 percent of the current SKUs, and Supervalu is looking at increasing that percentage as it works with vendors to package products in ways that are automation-friendly. Because of the smooth handling of the automation, safety has improved and product damage and shrinkage are down, as is the amount of labor needed for the Lancaster operation. Since the system picks in sequence, labor has also been saved at the store level in restocking shelves.

"Customers say they are amazed—that is the word that comes out all the time," says Kroutch. "They see the efficient movement of our products, the smoothness, and how well the system handles the products without any damage. They also see the quality of the loads as they arrive at their back doors. The facility is now meeting our expectations and getting the ROI we need. And it is designed to give us the ability to grow."