For Arla Foods, customer demands for precision, flexibility and fast deliveries are continually increasing. At the same time, energy and wage costs continue to rise, while the group is constantly experiencing price pressure.
It’s a complex mix of different forces acting in opposite directions that continually requires active optimization of Arla Foods’ entire value chain.
In 2009, Arla Foods signed a five-year contract with Consafe Logistics to introduce or upgrade the IT system with Astro WMS at all Arla’s 14 distribution centres in the Nordics. Astro WMS is a Warehouse Management System that automates and streamlines inventory management. The agreement between Arla Foods and Consafe Logistics is an extension of the collaboration that started in 1994.
The agreement is part of Arla Foods' strategy to merge all the different IT systems that exist within the group. The first plant to introduce the system was fresh food terminal in Hobro in northern Denmark. Arla Foods in Hobro produces about 100 million kg of raw milk and about 33 million kg of organic milk a year, which is distributed to both retail stores and wholesalers in the catering industry throughout the north of Jutland. The terminal also handles some transit goods such as vegetables that are repackaged in the warehouse and distributed to customers together with Arla Foods products.
The dairy centre in Hobro employs around 405 co-workers, approximately 150 of which are employed in the warehouse working with received goods, stock picking, loading, packing and dispatching goods. Stock picking and delivery normally takes place in the evenings and at night, so that fresh produce can be supplied ready for sales to the stores the morning after.
100 % production from day one or two
"In January, we installed Astro WMS in the pilot warehouse. When we install new IT tools, we require 100% production from day 1, or day 2 at the latest. We have to do this because we are working with fresh foods. After a first attempt in November 2009, we succeeded with Astro WMS in January 2010.
We still develop some details in the system to match our processes and requirements 100%," said Plant Manager Rudi Petersen. "It has been, and still is, a learning process where we gather a lot of experience, which means that implementing Astro WMS has been much quicker and easier in the Christiansfeld and Slagelse terminals," he says.
Arla Foods has created an implementation team consisting of leading and proactive users. In cooperation with the Consafe Logistics team they travel around and support implementation and training of Astro WMS at the various terminals. "Basically, we install the same Astro WMS solution on all terminals, but there are small local differences from terminal to terminal," said Rudi Petersen.
Testing, resources and training
Rudi emphasizes three important aspects in the implementation of WMS. They are:
- End-to-end test the system on real life data before implementation so pitfalls and errors are detected in time
- Make sure there are enough resources from both Arla’s organization and the provider organization
- User training is crucial for successful implementation and operation.
Both Rudi Petersen and Consafe Logistics understand that it is especially important to focus on need-to-know, and not on nice-to-know, and to schedule training as close to implementation as possible.
"If you train staff in systems use long before they actually start working with the system, there is a risk that much of the learning is lost and needs to be redone," says Michael Barding, Sales Manager from Consafe Logistics.
Efficient use of trucks
Astro WMS includes box calculation, which means that the system for adapting picking orders and picking routes take into consideration the size, shape and weight of goods.
"Box calculations mean we can pack trucks closer to each other, and that we use fewer trucks during the course of a workday. It is difficult to give precise figures about how much that saves on shipping, and in turn on transportation costs and CO2 emissions, but we are likely to see a positive impact here," says Rudi Petersen.
Pick-by-Voice improves quality
In collaboration with Consafe Logistics, Arla Foods has implemented voice picking at its fresh food terminals since 2005. This has resulted in significant improvements, both in terms of quality and safety, and some improvement in productivity.
"The advantage of voice picking is increased productivity, better balance control and hands free and clear vision. The latter advantage helps create a safer working environment as voice control through speakers produces fewer body twists," says Rudi Petersen and adds, "Our main reason for implementing the new technology was to significantly improve quality. Picking faults add many extra kilometers on the roads when our vans have to correct all errors. If we can reduce the number picking faults this will result in much less kilometers on the roads. We have experienced that voice picking reduces errors by 30-50%"
New technology providing better quality means fewer possibilities for error, as warehouse staff need to concentrate on fewer factors, and as the new system has check digits that warehouse staff input into the computer. This latter feature greatly improves correct picking.
WMS improves quality
Implementing Astro WMS has yet to lead to further improvements in efficiency and productivity at the Hobro terminal. "We have seen some improvement in productivity with Voice Technology in 2005. The WMS has not changed that, but we can notice an improvement in quality since January".
"Wastage is less because picking orders are almost always correct and there are very few picking errors. Customers have fewer goods with a short "shelf life" - this is important both for our costs to correct errors, and for customer satisfaction," says Rudi Petersen. He adds that he expects the WMS will create more effective goods receipt and replenishment in the long run.