REMA 1000 is one of Norway’s growing retail chains with around 450 stores throughout Norway. The company also has outlets in Denmark. The chain forms part of the Reitan Group and controls around 20% of the Norwegian market. The company’s head office is in Oslo.
REMA 1000 took its name from the amount of goods the company sold, as it previously only stocked 1000 articles in its stores, concentrating on bulk buying and satisfying customers by cutting prices on basic foodstuffs. Now its larger shops stock around 4000 articles.
The company’s philosophy is to keep running costs low and prices even lower through efficient logistics routines, being as cost-efficient as possible and with the best purchasing practices. As the company says, earning 1% of 40 million Kronor is the same as earning 2% of 20 million Kronor, but by doing so they sell far larger volumes, making their prices extremely competitive.
Well-positioned warehouse network
Norway is an extremely long and sparsely populated country that poses transport problems. REMA 1000 combats this by placing its main Distribution Centre (DC) in Ski and services the country from warehouses in Bergen, Narvik, Stavanger and Trondheim.
The DC in Ski has over 24,000 sq.m. of space that includes dry, trading, chilled and frozen goods. The warehouse is completely restocked at least 46 times a year (almost every week) and handles more than 8,300 pallets per day served by 95 truck terminals. Three shifts work to service all logistics throughout the warehouse.
The company has a fleet of around 90 lorries, 32 of which service the DC in Ski.
SattStore in all warehouses
The company uses the SattStore WMS from Consafe Logistics in all its warehouses. Using SattStore, REMA 1000 have made great savings through increased productivity, better utilization of storage space and more accurate quantity and location data.
"We started working with SattStore back in 1992" ,says Inge-Peter Myrmoen, responsible for IT and logistic systems at REMA 1000 in Ski. "We were among the pioneers of efficient logistics and worked together with Consafe Logistics to produce wireless solutions back then".
Needed Logistics company, not IT provider
It was important for REMA 1000 to work with a company that had expertise in logistics management and who were not a supplier of an IT system that rationalizes workloads. "We knew all about different types of goods and their volumes and weights. It sounds obvious, but different types of goods behave differently in the warehouse. Logistics specialists understand this, but IT companies often don’t, which leads to goods flows being wrongly inputted into IT systems. This knowledge, which we both give to and receive from Consafe Logistics, is one of the ways we have stayed ahead of our competitors", says Inge-Peter.
Improved performance through simulation
REMA 1000 has a policy of continually striving to improve its routines to drive down prices for its customers. Together with logistics consultants from Consafe Logistics, they identified areas where simulation techniques could improve routines, saving time and money.
The areas identified for simulation were:
- Consolidating goods in, goods out and picking offices into one central office to improve communication
- Free up space by removing offices to see how this would improve goods flow
- How the company could better position goods in the warehouse
- How truck driving routes could be optimised
- Most efficient type of material handling truck
Logistics analyzer shows how
Consafe Consulting uses a tool called Logistics Analyzer Simulator that helps companies simulate the flow of goods throughout the warehouse, enabling better design of warehouse space and goods flow routines.
Consultants simulated and verified the situation at the DC in Ski regarding layout, pallet storage, loading, unloading and localization for different job operations. The results were presented in October and REMA 1000 immediately began implementing changes.
"By tearing down office space and relocating personnel we freed up more space for goods in new storage stations. We measured that each new storage station saved us 4 man-hours per day", comments Inge-Peter. "But I know we save a lot more on the softer values. By locating three functions in the same office we reduce barriers to communication even further and people can help each other to find solutions very easily and quickly. We use the same areas for outgoing and incoming goods, and people can talk to each other face to face to solve space problems."
Optimised goods placement
The warehouse at Ski is long, measuring 265 metres by 70 metres. Simulating goods flows and possible alternatives showed that the most frequently sold goods were placed too far away from both goods in and goods out. Simulation showed that by storing goods according to sales frequency, centring goods in and then placing goods out on either side, it was possible to optimize the driving of goods from wagons to shelves and back to wagons.
Simulation also showed that it was possible to relieve bottlenecks for material handling equipment such as trucks, etc. With as many as 30 order pickers and 10 reach trucks working simultaneously in the warehouse the risk of queues can be high. Simulation showed REMA 1000 where the highest risks for bottlenecks were so that action could be taken.
Simulation also showed that redesigned frequency placement and truck routes, together with a crossing tunnel would save around 7.5 man-hours per day. Another area where man-hours can be considerably reduced is by using trucks that can handle 2 pallets at a time, instead of reach trucks that only move one pallet at a time.
"We have been very impressed by the work carried out by the consultants from Consafe Logistics", says Inge-Peter. "We have already saved around 14 man-hours daily on the changes we have made so far, and expect that the total savings to be around 40 man-hours every day. That would significantly increase our efficiency and enable us to be even more competitive."
Planning now for future savings
As demand grows, REMA 1000 sees opportunities to significantly expand capacity and increase efficiency without a great increase in costs by implementing the changes step by step. "This is what we hope to achieve within the next few years, and of course we will achieve it with the help of Consafe Logistics", concludes Inge-Peter.
Benefits in brief
- Logistics Analyzer showed a saving of 7.5 man-hours per day by using crossing tunnel
- Changing warehouse layout saves 6 man-hours per day, increases space for goods-out and frees up space for more pallet places
- Removing 3 offices and consolidating their functions saved 4 man-hours per office per day
- Multi-cycle picking enables trucks to work more effectively without losing time in unnecessary queues
- Future savings of 40 man-hours per day by implementing the above changes.
Read more at
www.rema1000.com
2008