Wulfraat Says: A major benefit is that these fully automated case picking systems are engineered to select cases in the exact sequence that each individual store requires them based on their specific store planogram. What Do You Say? Click Here to Send Us Your Comments Click Here to See Reader Feedback

I asked my friend if he noticed any appreciable benefits since the startup of the automated Terrebonne facility. The feedback that I received is interesting because it highlights the most important benefits of this type of technology which have to do with supporting the retail store. After all, lest we forget, the purpose of a retail distribution center is to support the stores. He indicated that the quality of the incoming loads at the back room is by far and away superior to what they received in the past. When the pallets arrive, they are perfectly square with absolutely no overhang. They are built like solid Lego blocks and they never shift or go crooked on the truck. He indicated that in the past, the store would reject incoming loads if the pallets had collapsed inside the trailer because this sometimes happens when the truck turns sharp corners. "We would open the door of the truck, take one look at the mess inside and just close the door and say take it back".

The other major benefit is that these fully automated case picking systems are engineered to select cases in the exact sequence that each individual store requires them based on their specific store planogram. At my friend's store, the shelf replenishment process is done at night when the store is closed to customers. "Now we can bring the pallets directly out onto the floor and restock the shelves rather than breaking them down and sorting them to carts in the back room. We have eliminated the whole business of running around the store wasting time because the pallets were built based on the warehouse needs and not ours".

These observations are critical in understanding why companies like Sobeys have decided to invest in automated case picking technology. It all starts with the customer and a corporate philosophy that providing superior service is critical to enabling competitive advantage. For Sobeys, these automation investments are internally considered to be a fundamental enabler to remaining competitive for the next 10 - 20 years. In fact they were one of the main reasons that the Sobey's wholesale division inked a long-term deal with American retailer Target Corporation to supply Groceries to Target's new Canadian stores.

To be clear, a fully automated case picking distribution center is not a lightweight commitment. In my experience, the total budget for one of these buildings can be in the neighborhood of $150 Million (this figure includes the material handling systems and automation technology that can cost in the range of $80 - 90 Million). Not many firms can afford to make this type of investment and fewer still have the intestinal fortitude to make this all or nothing commitment. Once you go down this path there is no turning back and some firms fear being locked into an automated system that can cause a complete shutdown of their ability to service the stores.

With such a significant up-front financial commitment, this type of technology requires a high volume of case throughput to cost justify the investment. The numbers are subject to debate, but our analytics lead us to believe that a distribution center shipping 1 Million cases per week or more is a prime candidate for this type of automation technology. The higher the fully loaded wage rate the better the business case, which is why these types of buildings are showing up in Europe and in parts of the U.S. where warehouse labor expenses are higher than average. Of course the ROI formula is different for each firm so it is important to assess the store benefits as part of the overall story.

So who is investing in automated full case distribution systems?

In the North American market, the following firms have invested in systems from Witron:

Also in the North American market, SSI Schaefer USA has developed an automated case picking system which has been implemented by C & S Wholesale Grocers within its 1.5 Million Square Feet York, PA ES3 LLC Mixing Center. This facility services distributors throughout the Northeast with pallets, layers and cases.