Maximum flexibility and cost-efficiency through mechanization
The Swiss food retailer Migros: Pioneering logistics processes through "FUTURE COM" project
Since 2011, the Swiss retailer Migros, has been operating one of the most advanced and largest high performance and logistics systems in Europe. A sophisticated process chain ensures that that their stores are replenished daily from an article range of more than 3,500 different groceries (dry assortment) - on time and in the best quality. The plant uses the patented OPM / COM technology from the German systems integrator WITRON Logistik + Informatik GmbH from Parkstein. On a peak day, some 315,000 cases are picked through 28 COM machines onto order pallets in a manner that is cost-efficient, store-friendly, and largely free from any pick errors.
By Thomas Woehrle*
Since 2000, Migros has been operating the national Swiss distribution center for dry goods in Suhr, which is independently led by the logistics subsidiary Migros Verteilzentrum Suhr (MVS) AG. More than 600 Migros stores of different types and sizes are replenished within 24 or 48 hours after order placement at individual delivery cycles according to the sale principle. Prior to OPM's installation, order picking at the distribution center in Suhr was carried out manually or semi-automated. In order to optimally adapt the logistics processes to future requirements in terms of store service, ergonomics, flexibility, and sustainability, the decision was made in 2008 to realize a leading-edge logistics plant.
"High quality and flexibility in the delivery process is of vital importance for our business", says Daniel Nussbaumer, Member of the Management Board at Migros with responsibility for Operation & Technology. "The purchase behavior of our customers has changed in the past years. For the future, we need to become more flexible and logistically more efficient than we had been before in order to be able to react quickly on fluctuations in sales". The Order Picking Machinery (OPM) solution that was just recently realized together with WITRON is capable of coping with these demands and dynamics along the entire process chain - starting with the suppliers, straight through to the distribution center, the transport process, and to the store - and it increases cost-efficiency at Migros considerably. With OPM, Migros has created an economic and highly attractive state-of-the-art system which is able to prove its cost-efficiency within an existing building structure or within limited space.
OPM/COM solution automatically produces order pallets
As general contractor for logistics, WITRON designed and realized all material flow, IT, control engineering, and mechanic components for this project. The conveyor system elements were designed and produced by WITRON's subsidiary, FAS. The innovative element of the fully automated storage and picking system known as OPM (Order Picking Machinery) is the Case Order Machine (COM) that stacks trade units of different types, weight, and size, totes, and PET bottles onto order pallets in a store-friendly manner using a stacking algorithm.
"With the COM technology, order pallets are produced fully automatic. Instead of gripping the product, the COMs push the articles exactly to the position on the order pallet that was calculated by the system on the basis of a stacking algorithm. The entire process is monitored via sensor technology to ensure high availability", explains Josef Pollinger, Project Manager at WITRON for the Migros project. "Conventional gripper technology would considerably limit the range of goods that could be picked automatically and would also make the entire system less interesting in terms of cost-efficiency". Prior to store-friendly palletizing at the COM, the products were verified and recorded fully automatically in the receiving area, stored as single-item pallets in a pallet high bay warehouse, removed from stock on demand, depalletized layer by layer, married with different tray sizes, mechanically sorted in upstream fine tuning processes, and automatically separated from the tray. Completely picked pallets pass through the OPM system to the wrapping station where they are secured with foil. Via a conveyor network system, the pallets are then transported towards shipping into a buffer area and consolidated with other customer orders in a route-optimized manner.
OPM system of the latest generation
The WITRON OPM solution was awarded with the "innovation award for logistics" by the "VDI Gesellschaft FML" (VDI Society for Materials Handling, Materials Flow and Logistics Engineering) in 2005. OPM distinguishes itself by considerably high cost-efficiency, picking quality, and picking volume compared to conventional picking processes. All processes within the entire supply chain are optimized through OPM. Many market-leading food retailers in Europe and North America are already using this innovative technology in their logistics centers. So far, a total of more than 400 COM machines are currently being used or almost ready to be used in ambient, refrigerated, and frozen environments. OPM is capable of covering an article range of more than 18,000 different products. Thanks to WITRON's extensive industry know how in the food retail business, the OPM solution has been continuously refined. The system at Migros represents the latest generation in terms of both material flow and technology. Enhanced features like the channelizer function, pusher, TCC (Tray Collection Conveyor System), SBR (Sequence Buffer Rack) and stacker cranes with double loading devices make the solution faster, more efficient, and more flexible - while consuming less energy.
Efficient picking of beverages is an important decision parameter
Because Migros picks a large number of order pallets with beverages and PET bottles (corresponding to a proportional quantity of 20 to 30 percent), efficient processing in the beverage area was an important decision parameter for the use of OPM. Simple and practical processes comply with the high quality demands of Migros. The automatic insertion of an additional carton layer as a layer stabilizer - directly through the COMs - considerably increases the stability of beverage pallets that are built fully automated.
The optimum pallet structure is generally a central quality attribute for the Swiss retailer. "Pallet stability and the sorting of articles on the pallet is quite vital for the store process", says Nussbaumer.
Based on the pallet building process according to a stacking algorithm, it has been possible with the "FUTURE COM" project to offer a higher service level to the Migros stores. During the picking process, articles are placed on the pallet in such way that they can be replenished to the store shelf in the quickest and most efficient manner possible. "Moreover, we are absolutely flexible in terms of pallet filling degree. If a store can only be supplied with pallets of a certain height due to existing specifications, or if the stores provide specific heights for the delivery of certain products, the COM machine is able to handle these store-specific parameters", explains Daniel Nussbaumer.
Based on an efficient processing in the logistics center, there are no out-of-stock situations in the stores. As the logistics system generates densely packed pallets, we have also reduced the cost of transportation.
The existing logistics structure was used as the basis for the implementation. The existing high bay warehouse covering 68,500 pallet locations and implemented by WITRON in 2002 serves as a replenishment warehouse. The new OPM system was installed in a compact and space-saving manner on the roof of an already existing building - quite a special challenge for the Migros design team and the WITRON planning team. A part of the former system is also used for the handling of special offers and animal feed products, as a buffer warehouse for shipping pallets, and for the receiving and goods issue processing. Migros has invested a total of 85 million Swiss Francs for the entire project.
Successful system ramp-up after little more than 3 months
In order to perfectly determine the possibilities and limits within the entire concept of such a large project, and to realize processes in every project phase on time, it is extremely important to obtain information beforehand.
"What helped us a lot while searching for the right system was the ability to visit many WITRON installations and speak with OPM users of various organizational levels - starting with the management board, the project team, the realization team, through to the employees who operate the warehouse", says Nussbaumer. "Thanks to this intensive exchange of information with WITRON's OPM customers, we were able to obtain more details of the process flows". Migros and WITRON also developed a precise training concept that enabled the Migros employees to get familiar with the system. "After our staff has become well prepared with the help of WITRON and Migros trainers, we began to operate the system in terms of IT and mechanics with our own personnel. All service and maintenance works including system control are carried out by ourselves", according to Nussbaumer. Moreover, Migros received many tips and suggestions from other OPM users.
"As the modification had to be carried out during ongoing operation, individual processes had to be planned and scheduled precisely - it was a challenging task for all persons involved", explains WITRON's Project Manager Pollinger. Therefore, intensive test phases were an integral part of the modification strategy. This concerned both the respective simulation of the real operation, as well as the execution of extensive software tests in order to be well prepared for the future live operation. "In particular, the ramp-up of such a system is always a question of associated risks. First and foremost, it is about reducing possible risks for the stores and for the end customer business to a minimum. In the optimal case, the stores shouldn't notice anything about the system modification in the beginning and should immediately benefit from the amenities of the new system".
For this purpose, the type of communication is an important central instrument. During ramp-up, Migros provided help to the first 25 Migros stores on a daily basis and created an individual support structure for them. "This was organized perfectly by Migros. The feedback we received from the stores during the modification gave us permanently new impulses for the next steps". Also the suppliers were prepared to the new Migros system well in advance of that modification: "Product quality and master data handling are important for the system to operate at a high availability day in and day out. And these tasks too, were overcome successfully, because the number of products that cannot be handled with the COM machine is close to zero percent at Migros", according to Pollinger, and it is a distinctive sign for a well-organized cooperation between Migros and its suppliers. "Based on good preparation work and cooperation between all involved parties, the system ramp-up was successfully completed after little more than 3 months. From the first replenishment process to the supply of our more than 600 stores, it only took 14 weeks", explains Daniel Nussbaumer. "So ramp-up was finished one month earlier than previously planned"!
Quality and adherence to delivery dates in the supply process were significantly improved
The implementation of OPM has paid off for Migros - and the results are certainly something to be proud of. Today, Migros' supply chains are less vulnerable to seasonal or weather influences and therefore as a logical consequence there are fewer out-of-stocks at the stores. "Before OPM, we required a much longer preparation time and picking could not be carried out as accurately timed. A store-friendly picking process, aimed to the demands of the respective market was also not possible", says Daniel Nussbaumer, division manager at Migros. "With the OPM solution, we are able to do that, and we have full transparency of all our logistical processes at any time. And these processes are a perfect fit for our business". Since the start of system ramp-up, Migros has always supplied picked pallets on time, with the right quantity and quality to its customers. "Already during the ramp-up phase, we had a delivery ratio of 99.2 percent", says Nussbaumer. "All economic aims specified by the management board, as well as all quality figures determined for our customers, were achieved".
Since ergonomics will become a more important issue for all processes, Migros is certain to be well positioned with the new system. "We have a corporate responsibility towards our employees for whom we can offer pioneering workplaces within an attractive work environment", says Nussbaumer. "Thanks to WITRON's picking solution, we are able to meet this responsibility, too".
Both logistics partners are currently thinking about further expansion steps. An expansion of common activities in the area of warehouse capacities for the Migros suppliers may allow manufacturers to supply their goods directly to Migros in the future without having to use logistical interim solutions. How such a solution could look like is currently being discussed.
*Thomas Woehrle, journalist, Karlsruhe.
OPM system at Migros:
- Dry assortment covering 3,500 different articles (system designed to handle 4,500 articles)
- Picking of 240,000 trading units/day on average (315,000 on a peak day)
- Tray warehouse with 56 aisles and 285,000 locations
- 68,500 pallet locations
- 28 COM machines
- 131 stacker cranes
- more than 5,500 meter conveyor system with approx. 6,000 drives, 16,000 signal encoders, 35 group controls, 12 automatic depalletizers, 6 separation and wrapping stations