Heinz shares gains at its NDC

17-Nov-2004 - Last updated on 14-Mar-2017 at 08:09 GMT

Related tags H. j. heinz company Ketchup

Wincanton operates Heinz's national distribution centre (NDC) at Wigan under an open contract which runs until 2009. Rick Pendrous describes an arrangement where both parties benefit financially from efficiency gains made

Chris Drake, acting general manager of Heinz's vast automated 38 acre national distribution centre (NDC) at Wigan, is a man with a mission. He works for Wincanton which looks after the site handling 80m cases of ambient product a year under an open contract which runs until 2009. Drake is focused on meeting Heinz's aim of reducing its inventory, and by doing so accruing financial returns for both companies under a 'gain sharing' deal.

The two year old NDC is situated just 250m from Heinz's huge Kitt Green plant, which makes the relaunched Heinz range of soups and its baked beans. Catering products for the growing foodservice sector are also handled. Introduced last year, these increased the number of lines by over 300.

The NDC also processes other Heinz products, such as Farley's infant foods made at Kendal. But it also handles products imported for distribution in the UK and elsewhere (exports represent about 8% by volume), including John West Salmon and the famous tomato ketchup, which is made in The Netherlands.

Drake has been in charge of the NDC for the past 12 months. He works closely with the Heinz team on site, using his past experience in chilled distribution to improve efficiency in the ambient supply chain.

He sees opportunities for doing at Wigan what has been achieved at Heinz's Harlsden raw materials warehouse in London, which Wincanton also operates under contract. At the Harlesden site, which stocks tomato paste, spare capacity released has been used to introduce a cross-docking operation with another manufacturer's products.

"The NDC simplifies the flow of material," says Drake of the automated facilities. "It is much easier to control your stock and drive inventory down." The main challenge going forward will be in "smoothing out the order profile", he says. "This system will work at a steady pace -- it's a bit like driving car at 56mph -- but the demand from the trade isn't that way."

The aim in the future is to raise the NDC's flexibility, says Drake. He expects mixed pallet activity to grow at the expense of full pallets, with smaller quantities and more frequent deliveries. "That is one of our biggest challenges," he says.

By improving efficiency at the NDC, service levels have been raised from 99.4% to 99.85% order fulfilment. "This is a significant financial gain for Heinz and we have been able to share in that," says Drake. On time deliveries are also running at 98.5%.

However, achieving such improvements requires some flexibility in response to changing demand, he says.

"The best way of treating automation is as smoothly and slowly as possible," claims Drake, highlighting the potential problems of trying to force through sudden increases in demand. However, engineering improvements made to what is quite sophisticated equipment "have transformed this site over the last 12 months", he says.

For example, work to simplify valve operation on vacuum heads on the layer pickers -- changing from a shut-off system to a continuous operation -- carried out over the past few months has enabled the volume of layer picked products to be doubled to 70%.

However, Drake notes that "one of the main issues with automation is to have strict product integrity". Thus, damaged or twisted pallets with dislodged products can present a potential problem, particularly when you start to "sweat" your assets, he says. "I am approaching my capacity ceiling, so I have to manage my resources more closely."

The NDC uses various IT systems. Three Heinz systems are linked into Wincanton's warehouse management system (WMS) which then links into the Siemens Dematic movement control system (MCS), which oversees products moving on conveyors around the NDC. The WMS is then linked into the transport management system.

The logistics manager's dream is to have trucks fully loaded. Unfortunately the reality is often less than this. Wincanton operates a core fleet of 51 lorries from Wigan "which gives you the benefit of control and service" and it has 160 trailers. But around 50% of its work is sub-contracted to other hauliers.

Wincanton tries to take on backhauling work for its own fleet wherever it can to fill empty lorries. For example, it is working with Asda at its Washington regional distribution centre.

The Wigan NDC features a highly automated high-bay storage area with 11 automated cranes next to a low bay reception and despatch area. Some 326 Wincanton staff are employed on site (including around 100 drivers), together with 50 Heinz personnel involved with stock control and logistics and 100 Exel staff employed on product rework.

Automatic vehicle unloading

Products made at Kitt Green are transported the short distance via a private link road on specially adapted transporters handling 30 pallets at a time. These automated vehicle offloaders (AVOs), handling around 60% of the NDC's throughput, have conveyors to feed products into the automated system by the drivers themselves.

The remaining 40% of products handled arrived by container from various manufacturing sites overseas and require considerable manual handling.

Drake has visited some of the overseas plants in an attempt to improve container loading and thus reduce subsequent manual handling at Wigan. But, he admits, with lower labour costs in some of these countries, it is sometimes difficult to get the message across about the need to reduce the manual element of unloading in the UK.

A significant amount of manual picking takes place at the NDC and this is done using radio frequency data terminals on trucks. Careful management and changes made to picking procedures on the 700 pick faces have also helped to raise efficiency levels when promotional activity kicks in.

The Wigan site operates a three-shift system over six days, which allows a day free for planned preventative maintenance. Employer/employee relationships are changing to reflect modern lifestyles and Drake reports that he is happy to accommodate different staff working patterns, provided this ensures sufficient cover to deal with peak activity periods.

"The last 12 months have been all about building up the right sort of culture with the workforce," says Drake. "It's very important to keep people content and commercially it can be quite sensible."

Wincanton came under flak earlier in the year from other hauliers for the hike in pay it made to its drivers to pre-empt problems envisaged with next year's introduction of the Working Time Directive, which will restrict the hours drivers can work. Drake defends the decision as necessary to guarantee the income of his drivers: "We recognised the need to be first off the block on that; to have a strong, committed driver workforce."

Drake is now striving to drive up efficiency and flexibility at the site even further to reduce its inventory. This should release capacity, enabling other manufacturers' products to be handled on a shared user basis. But it will require peaks and troughs in demand to be smoothed out, and this will require good forward planning. However, he can already claim some success in this area.

Take the changeover to the new Heinz product ranges. This, he claims, went very smoothly thanks to good forward planning. "We had to re-lay out all our pick faces the weekend before we went live, completely changing the picking operation," he says. "You only get logistical nightmares when you get surprises."FM