Kroger and Zenith Logistics Partnership Works Well

Woodlawn, OH Site Visit

By

Richard Armstrong

 

Key Personnel:

Bob Jacobson, COO Verst Group Logistics

Rick Grau, VP Zenith Logistics

Paul Sahm, IT Manager

Mike Lachey, Distribution Manager

 

 

Starting in 1995, Kroger began to restructure its logistics network to gain efficiency, lower cost and improve quality. Changes to logistics were viewed as necessary ingredients to competitiveness and customer satisfaction. At the time, there were 44 distribution centers. Today, there are 20 new and remodeled distribution centers.

 

A main group of 15 Tier 1 distribution centers support stores with dry groceries, perishables and frozen products, generally within 200 miles. These Tier 1 centers also serve as cross docks for short-shelf-life products such as bread.

 

Many of the Tier 1 distribution centers are run by 3PLs. One of these, Zenith Logistics, has been a 3PL partner of Sears since 1998 and has contributed heavily to the high-tech evolution of Kroger’s DCs.

 

Kroger DCs now have:

  • Real-time warehouse management and automatic systems.

  • Internet-based inbound freight management.

  • Voice-pick technology.

  • Labor management and scheduling technology.

  • Tight shrink management applications.

At the store level, point-of-purchase (POP) information is collected on all products sold. The POP information is aggregated and turned into store purchase orders issued the following morning. To make this process more efficient, Kroger has reduced its data centers from 18 to 2.

 

Along the way, Kroger has developed a high-powered warehouse information network (WIN) for real-time control of inventory and warehouse management. The WIN system is coupled with RedPrairie labor management and VoCollect units to provide highly efficient picking. Where it is not as critical for warehouse workers to have both hands free (put-away and loading), most radio frequency data collection is done by members with handguns. Zenith’s Paul Sahm participates as a member of Kroger’s technology improvement working group.

 

Zenith is a sister company in the Cincinnati-based Verst Group Logistics, which provides value-added warehousing and dedicated transportation services. When Zenith took over the Kroger Cincinnati DC in 1998, it kept the existing workforce and was able to attain significant productivity improvements by implementing dynamic task management and other industry best practices. Not surprisingly, this is now a highly productive, highly paid work force measured by solid industrial engineering methods.

 

The Cincinnati DC has 365,000 square feet in the main building. Two smaller buildings accommodate 1) overflow of slow moving products from Kroger’s five “Peyton” distribution centers and 2) returns. At the Cincinnati DC, there are 140 warehouse workers, 40 drivers, 12 mechanics, 22 supervisors and 10 clerks. Inbound is received and put away at night. Outbound picking starts at 6 AM and runs until 2:30 or 3 PM. The Cincinnati DC supports 132 stores, all within 90 miles (Cincinnati is Kroger’s headquarters and origin.) 27 tractors and 210 trailers are used for store deliveries.

 

Zenith Woodlawn Statistics

Location

Woodlawn, OH

Facility size

430,000 sq. ft.

Client

Kroger Food Stores

Full-time employees

140 dock workers, 40 drivers

Slot locations

4,100 pick faces

23,000 pallet positions

SKUs

4,100

Stores served

132

Inbound annual volume

634,000 pallets received

26,000,000 cases shipped

Store deliveries per week

550

Technology utilized

Voice activated, RF WMS with dynamic task management and cross-docking functionality

 

Nearly all orders are piece picked on pallets mounted on pallet jacks which are easily pulled by pickers. Warehouse locations are marked by aisle, quad and number within the quad. The picker proceeds to a location given verbally through a headset. The picker picks the cartons at that location, says the location number into the head set and is then advised the next location. After picking 150 cubic feet, the picker shrink wraps the two pallets and moves them to a loading location. Then they are tagged with a highly informative label. The label provides total cartons, shipment number, time of completion, location, store number (route) and other information. Using this high-tech approach, pickers average 214 cases an hour.

 

Orders to be picked are released by a controller (bus driver) in waves of 5 stores at a time.

 

Inbound shipments are controlled by advanced shipment notices (ASNs) and reception center notices (RSNs). When the receiver has checked inbound shipments and labels them, put-away locations are assigned.

 

Zenith Logistics’ operations for Kroger, in Cincinnati and Indianapolis, are run by Rick Grau, an experienced manager who maintains a good work environment for his close-knit staff and warehouse workers. Turnover is limited. Zenith’s warehouse workers have high quality, good paying jobs.

 

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Last modified: 10/21/14