Automating for efficiency

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Like many other retailers, SPAR faced a number of challenges in the late 1990s including ever-increasing SKUs, rising labour costs and a lack of available land to build on. SPAR’s marketing operation wanted the stores to carry a greater range of products but the retail outlets were already facing growing out-of-stock problems. At that time, the company was operating six regional warehouses in Austria, each handling about 5,000 of its fast-moving lines of dry goods, with the rest of the dry products being delivered directly to the stores by suppliers. The system was highly inefficient and badly needed an overhaul.

SPAR Austria decided that it would make sense to consolidate slow movers at a consolidation centre, separate from its existing warehouses. After considering retrofitting a solution into an existing site SPAR chose instead to build a new 13,020sq m facility. The location was Wels, selected for its excellent road and rail links.

As SPAR had specific retail challenges that its chosen logistics partner, the German automated handling specialist Witron had to address them. SPAR has four store formats:-

SPAR – franchise-based convenience stores, a format designed for independent retailers. lSPAR Supermarket – neighbourhood grocery stores (400-995sq m).

EuroSPAR Market – a larger, supermarket format (977-2,093sq m).

InterSPAR Market – a hypermarket (2,976sq m).

Thus, the company’s 1,500 stores throughout Austria are of various sizes and consequently present a variety of large, medium and small orders. SPAR looked into a number of automated solutions including semi-automated storage and pick-to-belt solutions but ultimately opted for Witron’s Dynamic Picking System (DPS). The retailer’s desire to achieve error-free picking and store sequencing for its roll-cages were key factors in this decision, along with the requirements for flexibility and use of space. The planning and design stage of the project took some nine months while construction took a further six months and testing four months.

Dynamic picking

With Witron’s DPS, fewer than 50 staff perform 150,000 picks of slow-moving items per day with 99.9% accuracy at the Wels facility. DPS is a picking solution based on the Pareto Principle that 20% of articles account for 80% of the order picking processes. Especially suited to applications requiring high picking levels and which have a wide range of products, DPS combines high-density storage and order picking in one system. The SPAR system features 93,000 bin locations and 12,500 pallet locations – in 11 aisles and on 18 levels, served by five Dambach Lagersysteme automatic pallet cranes. Pallets from suppliers are either broken down and placed in bins (the fast-movers) or transferred to an automated high-bay pallet store (the slow-movers).

The fastest-moving lines in bins are then assigned permanent picking channels within the DPS, whereas slower-moving items are dynamically assigned to picking locations and then returned to the store after completion of the picking process. Forty fully automatic mini-load cranes ensure replenishment of the DPS.

With picking carried out at the 40 pick stations using pick-by-light technology, the system is highly efficient and accurate – Spar boasts an error rate of just one case in 27,000. Some 24,000 bins are shipped every day in 35 lorries. All bins are tracked using barcode technology and the warehouse management system ensures first-in, first-out (FIFO). The control system also enables store sequencing of goods within the retail roll-cages. The DPS also allows Spar to accommodate last-minute orders from its stores – orders received by 7pm are shipped by noon the next day. Another key benefit has been the dramatic 25% reduction in out-of-stock figures.

Labour reductions

The DPS is proving very popular in a variety of sectors. Explains David James, branch manager for Witron in the UK: “Witron has now successfully installed around 20 DPS solutions around the world, since it was ‘born’ in Wels. Each system represents a multimillion pound investment. The predominant justification criterion for the investment decision is ‘cost per item handled’, demonstrating that highly integrated, automated logistics systems can indeed be effective and economic as well as highly productive and flexible.”

He continues: “What’s more, the ergonomic workstation design and overall environment actually makes it easier to attract and retain workers, reducing labour turnover quite significantly. Another important factor in retail distribution is the increasing importance of Efficient Consumer Response, with store-friendly sequencing of ‘shelf ready’ items being increasingly a standard essential requirement. All things considered, for operations which need to fulfil orders accurately and efficiently across a wide article range, DPS is hard to beat.” n

spar: the facts

The SPAR Group is one of the world’s largest food retail chains to operate under one name and logo.

SPAR was founded in 1932 by Adriaan van Well, as a voluntary chain of grocers under the name De Spar. He used the symbol of the fir tree Spar in Dutch to identify the organisation and for use as its logo.

With 16,000 stores in 28 countries – including the UK – across five continents, the national organisations operate independently. SPAR Austria has achieved a 30% share of the market. It serves eight million customers a day worldwide.

SPAR differs in each country. In Austria it is similar to Tesco and Sainsbury’s while in the UK it is known for its convenience stores.

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