Fast-paced automated DC meets growing grocer's need for speed
For a Japanese wholesaler, automated storage systems and other sophisticated technology speed up the distribution of food and household goods to the nation's biggest grocery chain.
David Maloney has been a journalist for more than 35 years and is currently the group editorial director for DC Velocity and Supply Chain Quarterly magazines. In this role, he is responsible for the editorial content of both brands of Agile Business Media. Dave joined DC Velocity in April of 2004. Prior to that, he was a senior editor for Modern Materials Handling magazine. Dave also has extensive experience as a broadcast journalist. Before writing for supply chain publications, he was a journalist, television producer and director in Pittsburgh. Dave combines a background of reporting on logistics with his video production experience to bring new opportunities to DC Velocity readers, including web videos highlighting top distribution and logistics facilities, webcasts and other cross-media projects. He continues to live and work in the Pittsburgh area.
The distribution business rarely stands still for long, especially when your major clients alter their own distribution patterns. Growth often spurs change. Requirements for greater accuracy and throughput can also be drivers. So can concerns about the availability of a suitable workforce. And sometimes, it is all of the above.
Such was the case with Itochu-Shokuhin Co. (ISC), a Japanese wholesaler founded in 1886. Among its leading clients is Seven & i Holdings, which is the largest retailer in Japan and fifth largest in the world. In addition to department stores, grocery stores, and restaurants, Seven & i owns convenience stores, including Japan's 7-Eleven stores, a familiar brand in the United States. Seven & i also added the U.S. 7-Eleven stores to its fold in 2005.
As Seven & i has grown over the years, ISC has had to adjust its network to keep pace. One example of that is the upgrade ISC made to the facility it manages in Sagamihara City in Kanagawa prefecture. The building, a grocery distribution center dedicated to the supermarket chain Ito-Yokado (a company within the Seven & i Holdings group), is relatively new, having opened in 1999. Nonetheless, it has already undergone a renovation. A few years back, the center was outfitted with new automated systems to accommodate its client's rapidly growing volume demands.
"We were stretched before, and we knew we needed the automation to maintain quality while handling more customer orders and a wider range of products. Automation reduces the risk," says Logistics Manager Shintaro Kakoi.
The multilevel facility covers a footprint of nearly 22,000 square meters (237,000 square feet) and serves 80 grocery stores in the Tokyo area. The new technologies have increased speed and accuracy, but they were also implemented to address the shortage of available labor in Japan's aging population.
"Automation makes the work simpler, so it opens jobs up to a wider range of workers," says Kakoi. It also makes the work easier—especially in the case of jobs that would normally require significant physical strength. "We can now hire people who are older to do that work because of the automation," he adds.
The Sagamihara building's automation, supplied by Daifuku, is quite extensive. The facility boasts five different automated storage systems, including three pallet automated storage and retrieval systems (AS/RS), a miniload for cases, and a shuttle storage system. A fleet of sorting transfer vehicles that ride on rails connects many of the storage areas to order fulfillment areas. Other operations in the building are fed by more than 5,500 meters (approximately 3 1/2 miles) of conveyors. A sliding shoe sorter with 42 diverts serves the shipping area, and a number of vertical lifts raise and lower products to the building's different floors. On average, the automated system holds nearly 400,000 cases at any given time.
The facility also relies on technology to direct picking, using both pick-to-light and radio-frequency (RF)-directed systems. All together, the automation allows the facility to process over 145,000 lots daily, composed of both food and non-food products.
TAILOR-MADE STORAGE
Although the Sagamihara facility does not handle fresh foods, many of the goods it distributes do have a short shelf life. As a result, products typically remain in the facility no longer than 10 days. The operation processes goods on a first-in/first-out basis to assure freshness. About 13,000 stock-keeping units (SKUs) are housed in the building at any given time—about 9,600 food items and 3,400 non-food products.
The facility has a total of 105 truck positions used for receiving and shipping. Products typically arrive in the morning, while orders are filled in the afternoon and delivered to stores that evening or the next morning.
Forklifts supplied by UniCarriers unload pallets from arriving trucks at ground level for transport to the vertical lifts, which raise them to the three AS/RSs located on the building's third floor. Two of the AS/RS systems store unit loads (pallets) of food products, while the third handles non-food pallets.
The largest of the food AS/RS units holds 9,792 pallets of faster-moving "A" products. Each of the nine aisles has two cranes that work in concert to deliver products to opposite ends of the aisles. Having more than one crane per aisle increases uptime and access to the storage positions, and also results in greater throughput for the system. Pallets that are discharged from the AS/RS are raised by pallet lifters to the fourth floor, where they are rolled onto 15 sorting transfer vehicles (STVs) that ride on rails. The STVs deliver the pallets to either the food miniload (case unit-load AS/RS) or one of six stations where workers batch-pick cases from the pallets, labeling them for Ito-Yokado's stores as they deposit them on an adjacent conveyor. Some of these cases will also be used to replenish the split-case picking areas.
Pallets that still contain more than two cases after picking go back onto the STVs to be returned to the AS/RS. If a pallet contains just one or two cases, however, the worker may be instructed to pick these items rather than return a nearly empty pallet to unit-load storage. In this case, the system will divert the cases to the miniload automated storage system to be held until needed.
The smaller food AS/RS holds 4,986 pallets and contains four aisles, with a single crane that has access to all nine levels of the system operating in each aisle. This area holds slower-moving foods and is served by the STVs, which also deliver pallets to the adjacent large AS/RS for case picking.
The third AS/RS holds pallets of "everyday products," which are household and non-food items sold in the grocery stores. The DC does not ship full cases of these products to the stores, so this system holds products used to replenish a separate split-case processing area.
Individual cases of slower-moving food items are stored in the 19-level automated miniload, which has the capacity to store 42,408 cases. The cases are removed from their pallets in receiving and automatically conveyed into this system, which features 12 rows equipped with cranes for putaway and retrieval. Cases are removed from the system when needed for an order that will ship directly to a store. The case is retrieved and its bar code scanned by a fixed reader. A label is generated and automatically applied, and the case is then conveyed to the shipping sorter. Cases needed to replenish picking areas are conveyed to the facility's pick modules.
Medium-fast-moving ("B") cases of food products are stored in yet another automated system—in this case, a shuttle system. The system contains four rows and 17 levels where 34 shuttles (two per level) store and retrieve goods. The shuttles discharge cases onto vertical lifters at each end. As with the miniload, products from this area can be sent directly to the shipping sorter.
SPLIT-SECOND PRECISION
The split-case picking area for food products is housed in a two-level module. The cases here are stored by food type in flow racks. Fifty manual pick carts are used to gather items into four staged totes that ride along on each cart. Totes holding food products are colored green to differentiate them from other totes in the facility.
A display mounted on the cart tells the associate the location of a needed item and the quantity to select. After selecting the specified number of items, the worker scans them to confirm the right product has been chosen. Lights on the cart indicate which tote should receive the items. The carts are designed so that each tote sits on a scale that tracks the weight of the gathered load and compares the total with the expected weight. Once picking is complete, the associate wheels the cart to a takeaway conveyor for transport to the shipping sorter.
A separate two-level picking area is used for split-case picking of non-food items. The process is identical to the procedure followed in the food picking zones, using the carts, displays, and indicator lights, except that non-food items are picked into orange-colored totes.
The fastest-moving items are selected as full cases on the first floor of the building in a separate area designed for this purpose. In this zone, known as the Food Case SA area, products can be picked in one of two ways. The highest-demand products are placed next to conveyors so they can be quickly picked onto a belt using pick lists. These products will later be transferred onto wheeled delivery trolleys that can be rolled right onto trucks. Slower-moving items that are not located near the belt conveyor are also selected using pick lists. They are then checked with RF devices and placed directly onto trolleys for shipping.
An additional area on the first floor houses pharmaceutical items, which for security and tracking purposes are kept separate from the other product storage and picking areas. Between 200 and 300 different SKUs are typically processed in this area on any given day. By the end of the day, every item from the pharmaceutical area will be picked. Nothing remains for the next day.
Finally, a temperature-controlled area on the first floor holds products like sweets and chocolates, which are stored at a temperature of 55 degrees Fahrenheit. In this area, workers either pick full cases onto trolleys or gather single items into green totes sitting on the trolleys. Insulated blankets are draped over the trolleys to keep the items cool during transport.
All of these picking activities are timed to bring products together at the shipping area to meet a dispatch schedule. Items from the automated storage systems and the picking areas converge into the sliding shoe "surfing" sorter, which can handle 10,000 cases per hour. The sorter has 42 divert lanes to gather cases and totes. Each of the divert lanes is dedicated to collecting products for specific stores. Because there are 80 stores to serve, each lane must handle two or more stores. However, products are gathered for one store at a time.
Once diverted to the lanes, the cases and totes are manually placed onto trolleys. The worker hand scans each case as it is loaded as a final accuracy check. The trolleys are then rolled onto delivery trucks. When the trucks arrive at their destination, the trolleys can be rolled right into the stores for direct putaway on store shelves.
About 10 percent of the products that enter the facility are simply cross-docked upon arrival. These cases are placed onto conveyors in receiving and then pass through the sliding shoe sorter to the store divert lanes, where they are gathered with the rest of the cases and totes.
PRODUCTIVE AND ACCURATE
Each day, the facility ships between 100,000 and 120,000 cases with a high degree of accuracy, thanks to the scanners, weigh systems, and software that tracks them all. Without the degree of automation found in the Sagamihara facility, Itochu-Shokuhin would not be able to meet the growing demands of Seven & i Holdings.
"The facility has met our goals," says Kakoi. "From receiving to shipping, our productivity has doubled with the automation."
Kakoi says the automation in the Sagamihara facility will be the model for the company's future distribution operations. He adds that working with Daifuku through the years has been important to the company's success.
"They understand what we do and how our business works. And they know the best system for our operations. They were able to look at the greater picture to understand our needs," he says. "And we also have systems now that older associates can work with—without the heavy lifting."
There’s a photo from 1971 that John Kent, professor of supply chain management at the University of Arkansas, likes to show. It’s of a shaggy-haired 18-year-old named Glenn Cowan grinning at three-time world table tennis champion Zhuang Zedong, while holding a silk tapestry Zhuang had just given him. Cowan was a member of the U.S. table tennis team who participated in the 1971 World Table Tennis Championships in Nagoya, Japan. Story has it that one morning, he overslept and missed his bus to the tournament and had to hitch a ride with the Chinese national team and met and connected with Zhuang.
Cowan and Zhuang’s interaction led to an invitation for the U.S. team to visit China. At the time, the two countries were just beginning to emerge from a 20-year period of decidedly frosty relations, strict travel bans, and trade restrictions. The highly publicized trip signaled a willingness on both sides to renew relations and launched the term “pingpong diplomacy.”
Kent, who is a senior fellow at the George H. W. Bush Foundation for U.S.-China Relations, believes the photograph is a good reminder that some 50-odd years ago, the economies of the United States and China were not as tightly interwoven as they are today. At the time, the Nixon administration was looking to form closer political and economic ties between the two countries in hopes of reducing chances of future conflict (and to weaken alliances among Communist countries).
The signals coming out of Washington and Beijing are now, of course, much different than they were in the early 1970s. Instead of advocating for better relations, political rhetoric focuses on the need for the U.S. to “decouple” from China. Both Republicans and Democrats have warned that the U.S. economy is too dependent on goods manufactured in China. They see this dependency as a threat to economic strength, American jobs, supply chain resiliency, and national security.
Supply chain professionals, however, know that extricating ourselves from our reliance on Chinese manufacturing is easier said than done. Many pundits push for a “China + 1” strategy, where companies diversify their manufacturing and sourcing options beyond China. But in reality, that “plus one” is often a Chinese company operating in a different country or a non-Chinese manufacturer that is still heavily dependent on material or subcomponents made in China.
This is the problem when supply chain decisions are made on a global scale without input from supply chain professionals. In an article in the Arkansas Democrat-Gazette, Kent argues that, “The discussions on supply chains mainly take place between government officials who typically bring many other competing issues and agendas to the table. Corporate entities—the individuals and companies directly impacted by supply chains—tend to be under-represented in the conversation.”
Kent is a proponent of what he calls “supply chain diplomacy,” where experts from academia and industry from the U.S. and China work collaboratively to create better, more efficient global supply chains. Take, for example, the “Peace Beans” project that Kent is involved with. This project, jointly formed by Zhejiang University and the Bush China Foundation, proposes balancing supply chains by exporting soybeans from Arkansas to tofu producers in China’s Yunnan province, and, in return, importing coffee beans grown in Yunnan to coffee roasters in Arkansas. Kent believes the operation could even use the same transportation equipment.
The benefits of working collaboratively—instead of continuing to build friction in the supply chain through tariffs and adversarial relationships—are numerous, according to Kent and his colleagues. They believe it would be much better if the two major world economies worked together on issues like global inflation, climate change, and artificial intelligence.
And such relations could play a significant role in strengthening world peace, particularly in light of ongoing tensions over Taiwan. Because, as Kent writes, “The 19th-century idea that ‘When goods don’t cross borders, soldiers will’ is as true today as ever. Perhaps more so.”
Hyster-Yale Materials Handling today announced its plans to fulfill the domestic manufacturing requirements of the Build America, Buy America (BABA) Act for certain portions of its lineup of forklift trucks and container handling equipment.
That means the Greenville, North Carolina-based company now plans to expand its existing American manufacturing with a targeted set of high-capacity models, including electric options, that align with the needs of infrastructure projects subject to BABA requirements. The company’s plans include determining the optimal production location in the United States, strategically expanding sourcing agreements to meet local material requirements, and further developing electric power options for high-capacity equipment.
As a part of the 2021 Infrastructure Investment and Jobs Act, the BABA Act aims to increase the use of American-made materials in federally funded infrastructure projects across the U.S., Hyster-Yale says. It was enacted as part of a broader effort to boost domestic manufacturing and economic growth, and mandates that federal dollars allocated to infrastructure – such as roads, bridges, ports and public transit systems – must prioritize materials produced in the USA, including critical items like steel, iron and various construction materials.
Hyster-Yale’s footprint in the U.S. is spread across 10 locations, including three manufacturing facilities.
“Our leadership is fully invested in meeting the needs of businesses that require BABA-compliant material handling solutions,” Tony Salgado, Hyster-Yale’s chief operating officer, said in a release. “We are working to partner with our key domestic suppliers, as well as identifying how best to leverage our own American manufacturing footprint to deliver a competitive solution for our customers and stakeholders. But beyond mere compliance, and in line with the many areas of our business where we are evolving to better support our customers, our commitment remains steadfast. We are dedicated to delivering industry-leading standards in design, durability and performance — qualities that have become synonymous with our brands worldwide and that our customers have come to rely on and expect.”
In a separate move, the U.S. Environmental Protection Agency (EPA) also gave its approval for the state to advance its Heavy-Duty Omnibus Rule, which is crafted to significantly reduce smog-forming nitrogen oxide (NOx) emissions from new heavy-duty, diesel-powered trucks.
Both rules are intended to deliver health benefits to California citizens affected by vehicle pollution, according to the environmental group Earthjustice. If they pass the remaining requirements to become law, the rules mean that cars on the road in California will largely be zero-emissions a generation from now in the 2050s, accounting for the average vehicle lifespan of vehicles with internal combustion engine (ICE) power sold before that 2035 date.
“This might read like checking a bureaucratic box, but EPA’s approval is a critical step forward in protecting our lungs from pollution and our wallets from the expenses of combustion fuels,” Paul Cort, director of Earthjustice’s Right To Zero campaign, said in a release. “The gradual shift in car sales to zero-emissions models will cut smog and household costs while growing California’s clean energy workforce. Cutting truck pollution will help clear our skies of smog. EPA should now approve the remaining authorization requests from California to allow the state to clean its air and protect its residents.”
However, the truck drivers' industry group Owner-Operator Independent Drivers Association (OOIDA) pushed back against the federal decision allowing the Omnibus Low-NOx rule to advance. "The Omnibus Low-NOx waiver for California calls into question the policymaking process under the Biden administration's EPA. Purposefully injecting uncertainty into a $588 billion American industry is bad for our economy and makes no meaningful progress towards purported environmental goals," (OOIDA) President Todd Spencer said in a release. "EPA's credibility outside of radical environmental circles would have been better served by working with regulated industries rather than ramming through last-minute special interest favors. We look forward to working with the Trump administration's EPA in good faith towards achievable environmental outcomes.”
Editor's note:This article was revised on December 18 to add reaction from OOIDA.
A Canadian startup that provides AI-powered logistics solutions has gained $5.5 million in seed funding to support its concept of creating a digital platform for global trade, according to Toronto-based Starboard.
The round was led by Eclipse, with participation from previous backers Garuda Ventures and Everywhere Ventures. The firm says it will use its new backing to expand its engineering team in Toronto and accelerate its AI-driven product development to simplify supply chain complexities.
According to Starboard, the logistics industry is under immense pressure to adapt to the growing complexity of global trade, which has hit recent hurdles such as the strike at U.S. east and gulf coast ports. That situation calls for innovative solutions to streamline operations and reduce costs for operators.
As a potential solution, Starboard offers its flagship product, which it defines as an AI-based transportation management system (TMS) and rate management system that helps mid-sized freight forwarders operate more efficiently and win more business. More broadly, Starboard says it is building the virtual infrastructure for global trade, allowing freight companies to leverage AI and machine learning to optimize operations such as processing shipments in real time, reconciling invoices, and following up on payments.
"This investment is a pivotal step in our mission to unlock the power of AI for our customers," said Sumeet Trehan, Co-Founder and CEO of Starboard. "Global trade has long been plagued by inefficiencies that drive up costs and reduce competitiveness. Our platform is designed to empower SMB freight forwarders—the backbone of more than $20 trillion in global trade and $1 trillion in logistics spend—with the tools they need to thrive in this complex ecosystem."
Global trade will see a moderate rebound in 2025, likely growing by 3.6% in volume terms, helped by companies restocking and households renewing purchases of durable goods while reducing spending on services, according to a forecast from trade credit insurer Allianz Trade.
The end of the year for 2024 will also likely be supported by companies rushing to ship goods in anticipation of the higher tariffs likely to be imposed by the coming Trump administration, and other potential disruptions in the coming quarters, the report said.
However, that tailwind for global trade will likely shift to a headwind once the effects of a renewed but contained trade war are felt from the second half of 2025 and in full in 2026. As a result, Allianz Trade has throttled back its predictions, saying that global trade in volume will grow by 2.8% in 2025 (reduced by 0.2 percentage points vs. its previous forecast) and 2.3% in 2026 (reduced by 0.5 percentage points).
The same logic applies to Allianz Trade’s forecast for export prices in U.S. dollars, which the firm has now revised downward to predict growth reaching 2.3% in 2025 (reduced by 1.7 percentage points) and 4.1% in 2026 (reduced by 0.8 percentage points).
In the meantime, the rush to frontload imports into the U.S. is giving freight carriers an early Christmas present. According to Allianz Trade, data released last week showed Chinese exports rising by a robust 6.7% y/y in November. And imports of some consumer goods that have been threatened with a likely 25% tariff under the new Trump administration have outperformed even more, growing by nearly 20% y/y on average between July and September.