NFI Reengineers Trader Joe’s Midwest Distribution for Increased Customer Satisfaction

Bolingbrook, IL – Midwest Distribution Operations

November 4, 2003

By

Evan Armstrong

NFI Personnel:

Tim McHale, Senior Vice President

Brian Tuck, Director of Implementation

Bruce Yahnke, Logistics Manager

In April of 2003 NFI was awarded Trader Joe’s Midwest Distribution business due to process improvements they identified in their bid. This marks the first multi-temperature grocery operation for NFI. The operations startup moved forward at an accelerated pace. Trader Joe’s, a top-end grocery chain, was previously supplying its Midwest stores from Massachusetts and needed a regional solution to ensure stores were getting the freshest quality products. The distribution operations startup began in May of 2003. By mid-July NFI was handling distribution of dry product and in October began distributing refrigerated product. Frozen product is coming on line in late November.

NFI-Trader Joe's Midwest D.C. dry storage racks.

NFI services 19 Midwest stores in four states and currently distributes 20,000 handling units of refrigerated and 7,500 individual cases of dry product per day. It also receives and processes 12,000 to 15,000 inbound cases per day. The distribution center operation has various shifts and employees 58 in the D.C. at its peak. The main D.C. operation runs seven days a week and consists of short-term storage and cross-docking of multiple items. Items comprising approximately 1,600 stock keeping units with specific handling requirements are stored, cross-docked, and distributed. NFI maintains full lot control for all products.

Orders of multiple items with various handling requirements are cross-docked for direct store delivery.

Of the 206,000 total square feet being occupied, a 20,000 square foot section is maintained at 55 degrees for candy, produce, and other items needing protect from heat service. There are also a 20,000 square foot room allocated for refrigerated products and a 40,000 square foot room allocated for frozen products. NFI is handling all related reverse logistics operations and pallet management for Trader Joe’s.

Fresh flowers and produce are some of the perishable items kept fresh in NFI's 55 degree room.

Store deliveries are completed using a dedicated fleet of 26 tractors and 38 refrigerated trailers. Stores have limited storage facilities and therefore the entire operation runs in a J.I.T. (just-in-time) environment. NFI uses its proprietary SCMS (Supply Chain Management System) to optimally build and route outbound loads.

NFI surveys each store every seven to ten days to obtain feedback. Thus far, Trader Joe’s stores greatly appreciate the ability to place “real-time” orders that can be filled quickly from the regional D.C. There have also been significant improvements in on-time delivery and after four months of operation, NFI is currently meeting store’s 15 minute delivery windows with 97.8% accuracy.

Additional key performance indicators (KPI’s) now being tracked are: units processed per hour, dock to stock, and order turnaround. NFI will be implementing its warehouse management system (WMS) EXE within the next year and it will allow for better inventory accuracy and utilization measurements.

In conclusion, NFI has implemented many process improvements for Trader Joe’s. Each has resulted in better inventory management, higher quality products for stores, improved transportation and order handling, and increased store satisfaction. Future improvements underway include implementing case picking labels with incorporated retail prices, deploying a WMS with RFI capabilities allowing for further efficiencies and inventory accuracy, and increasing the number of items being distributed to improve on supply chain network synergies.