FMI ELECTS NEW OFFICERS, BOARD MEMBERS. - States News Service

ARLINGTON, Va. -- The following information was released by the Food Marketing Institute:

Food Marketing Institute (FMI) announced the election of two new vice chairmen and five new members of its Board of Directors today.

'These new leaders bring to FMI great vision, talent, creativity and utmost dedication to the industry. They exemplify the many ways we serve our customers, communities and, ultimately, America. They make FMI's leadership more diverse, running companies large, mid-sized and small, including retailers and wholesalers, and many of their businesses are family-owned,' said FMI President and Chief Executive Officer Leslie G. Sarasin.

New Vice Chairmen

Elected as FMI vice chairman of independent retailers and wholesalers is David Ball, president and CEO of Ball's Price Chopper/Hen House Markets, Kansas City, KA. In addition, Ball continues to serve as chairman of FMI's Independent Operator Advisory Board. Ball is the third-generation leader of the family company founded in 1923. The business currently has 29 stores and is known for its large assortment of natural, organic and locally grown foods, along with its emphasis on customer service.

Elected as FMI vice chairman of finance is Steven A. Burd, chairman, president and CEO of Safeway Inc, based in Pleasanton, CA. Burd is an active public policy advocate, focusing on organized retail crime, healthcare costs, health and wellness, sustainability, and cancer research and prevention. For these efforts, he received FMI's Glen P. Woodard, Jr., Public Affairs Award in 2007. Safeway is among the world's largest food retailers, operating more than 1,700 food and drug stores in North America.

New Members of FMI's Board of Directors

Jim Donald is currently the president and CEO of Haggen, Inc., headquartered in Bellingham, WA, with 33 stores in the Northwest. Donald joined the company last year after leading the Starbucks Corp. from 2002 to 2008, first as president of Starbucks North America and then as president and CEO of Starbucks from 2005 to 2008. During his tenure, Starbucks grew to more than 15,000 stores in 43 countries. Donald was named one of the top 25 CEOs in the world in 2006 by The Best Practice Institute.

Dennis Eidson , president and chief executive officer of Spartan Stores, a grocery wholesaler and retailer based in Grand Rapids, MI. The company supplies nearly 350 independent grocers and operates 96 retail food stores. Eidson has more than 30 years of industry experience, including serving as chief executive officer of the Great Atlantic and Pacific Tea Company's Midwest region.

Joey Hays , owner and president of five supermarkets under the Food Rite banner, based in Dyer, TN. He founded the company in 1981.

Tom Heinen , president and COO of Heinen's Fine Foods, Inc., based in Cleveland, OH, with 17 stores in the northwestern part of the state. His father, Joe, built Cleveland's first supermarket in 1933. Tom joined the family business in 1978 and pioneered company efforts to develop an in-store bakery and service deli. In 1994, he became president, sharing this position with his twin brother, John.

Mergers & acquisitions. - The Food Institute Report

Birds Eye Foods, Inc. reached an agreement to sell its Veg-All canned vegetable business to Allen Canning Co. For more information, see page 14.

Canteen Vending Services Inc. acquired Delicor, a Hayward, CA-based vending company, a spokesman for Canteen confirmed. Delicor operated branches in Portland, OR, and Seattle, WA ... Vending Market Watch (June 16).

Consolidated Restaurant Operations Inc., Dallas, TX is acquiring Chevys Inc., Emeryville, CA, which is privately owned by a management team and equity firm J.W. Childs Associates. Linda Duke, a public relations consultant for Chevys, said there are no current plans to change or close any of the 82 company-owned Chevys Fresh Mex locations or 37 franchised restaurants. Chevys also is selling its 10 Fuzio Universal Pasta sites, six of which are company-owned. Consolidated Restaurant, a private company, manages 174 restaurants in 18 states, mostly in the Southeast and Canada. Chains include El Chico Mexican Restaurants, Cantina Laredo and The Spaghetti Warehouse ... The Sacramento Bee (June 17).

Oakland, CA-based Dreyer's Grand Ice Cream Inc., which last year agreed to a $2.5 billion takeover by Nestle, said the two companies agreed to extend until June 30 the date after which either side could terminate the deal, in order to give them more time to obtain U.S. Federal Trade Commission clearance. The previous deadline was June 16.

Glazer's Wholesale Distribution purchased Montana Beverage Co., El Paso, TX, a Coors and SABMiller distributor, for an undisclosed sum as part of a strategy to expand its rural wine, spirits and beer wholesale network ... Justdrinks.com (June 17).

The foodservice division of H.J. Heinz, Pittsburgh, PA, acquired Truesoups, a maker of frozen soups for casual-dining restaurants and foodservice distributors, for undisclosed terms. In addition to its premium frozen-soup varieties, the Kent, WA-based company produces a line of frozen sauces, stews, pot pies and gravies ... The Seattle Times (June 20).

HFL Corp., a company led by top Uni-Marts Inc. officials, terminated a buyout agreement with convenience store operator Uni-Marts. State College, PA-based Uni-Marts said the agreement was broken off by HFL over concerns that Uni-Marts. lenders might not agree to the deal in a timely fashion. Uni-Marts will continue to look for merger possibilities and will divest poor-performing sites (see FOOD INSTITUTE REPORT, June 9, page 5) ... The Morning Call (June 20)

Jerry's Foods agreed to buy the North Minneapolis, MN Target store that is scheduled to close Aug. 2 for an undisclosed price and will convert it to a Cub Foods store. Jerry's Foods is a unit of Jerry's Enterprises Inc., Edina, MN. The privately held company operates a total of 24 stores in Minnesota, Wisconsin and Florida ... The Star Tribune (June 19).

The Kroger Co., Cincinnati, OH, struck a deal with Spartan Stores Inc., Grand Rapids, MI, to buy two Food Town supermarkets in Toledo, OH and one in Fremont, each of which will be converted to Krogers by June 25 ... toledoblade.com (June 19).

Nutraceutical International Corp., Park City, UT, entered into a purchase and sale agreement to acquire substantially all of the operating assets of Arizona Health Foods, Inc. through its subsidiary, Fresh Vitamins, Inc. Phoenix, AZ-based Arizona Health Foods owns and operates a chain of 11 health food stores, which primarily sell branded nutritional supplements.

In other news, Nutraceutical International Corp. completed its acquisition of 100% of the stock of M.K. Health Food Distributors, Inc. for about $10.8 million in cash (see FOOD INSTITUTUTE REPORT, June 9, page 7).

Denver, CO-based Vistar Corp. signed an asset purchase agreement to acquire the Vend Products operations of Estey Corp. Located in Portland, OR and Livermore, CA, Vend Products, with fiscal year 2002 sales of approximately $62 million, distributes candy, snack items and office supply products to the vend industry.

Discounting Becomes Retailing.(Brief Article)(Statistical Data Included) - Mass Market Retailers

MMR ANNUAL REPORT

WAL-MART

Discounters appear well positioned to cope with the changing retail scene, as consumers are focused on value in good economic times and bad ones alike.

NEW YORK -- The discount store industry is growing at such a pace, in terms of both total sales and the variety of merchandise sold, that it soon may be more accurate to simply call it retailing.

According to the International Mass Retail Association (IMRA), discounters continue to account for an ever-larger share of apparel and general merchandise sales. The association estimates that discount stores claimed 67.7% of all department store sales in the United States in 1999, up from 65.8% in 1998.

Part of the gain is doubtless due to the increased credibility such chains are getting in such fashion-oriented categories as apparel and soft home. But while they have proven adept at taking business away from middle-tier department stores in those categories, they have made inroads in other mass retail arenas as well.

'Discounters are also gaining market share from other players in the industry, notably food stores and drug stores,' notes an IMRA spokeswoman.

Indeed, industry giant Wal-Mart Stores Inc. has identified the food industry as a major growth opportunity and is treating the Supercenter, which is essentially a discount store and a supermarket under one roof, as its primary expansion vehicle. Wal-Mart is even experimenting with a smaller format, the Neighborhood Market, that most closely resembles a food/drug combination store.

Even its traditional discount stores are getting more of a food focus, with extensive assortments of nonperishable food. And Wal-Mart is not alone in recognizing the potential of food departments as traffic builders and sources of incremental sales.

Kmart Corp. and Target Corp., while slower to roll out supercenter formats of their own, have each reaffirmed their interest in the concept. Kmart also made the Pantry department, featuring an extensive assortment of convenience food, a key component of its turnaround strategy in recent years, and Target too has added convenience food departments to many of its stores.

As a result of such developments discounters have been gaining market share in a number of nonperishable food categories. Much the same thing is happening in a number of health and beauty aids categories, where discounters have used low prices and widened assortments to gain market share at the expense of supermarkets and drug stores.

For all its successes, the discount store industry does face some challenges. Internet retailers, which typically do not have to worry about local sales taxes or the overhead associated with running stores, are emerging as competitors for price-conscious shoppers in certain product categories.

Consumer populations are becoming more diverse, leading to fragmenting tastes and product preferences that can be challenging to address in mass market formats. And the low unemployment levels that are helping boost consumer confidence and spending are also making it more difficult for discounters to find and retain the employees they need to run their stores.

Generally, though, discounters seem well positioned to cope with the changing retail scene. With consumers proving to be value-minded even in economic good times, and likely to be more so if the economy turns sour, discount stores are among the retailers best positioned to offer consumers the merchandise they want at the prices they want to pay.

Discounters are also proving adept at using technology not only to boost the productivity of their employees, helping to at least partially offset the labor crunch, but to fine tune the merchandise mix in different stores to better reflect the needs of local consumers.

DEPARTMENT OF CONSUMER PROTECTION ASSISTS IN "NEW ERA" GREEN BEAN, CHILI BEAN AND GARBANZO BEAN RECALL - US Fed News Service, Including US State News

The Connecticut Department of Consumer Protection issued the following news release:

Department of Consumer Protection food inspectors, in cooperation with the U.S. Food and Drug Administration, are checking stores statewide starting today to ensure that green beans, chili beans and garbanzo beans canned by New Era Canning Company of New Era, Michigan are removed from sale, Consumer Protection Commissioner Jerry Farrell, Jr. announced today. The action is a direct response to New Era's expanded recall for concerns related to potential Clostridium botulinum (botulism) contamination.

'This is an expanded recall, affecting all green beans produced by New Era, in addition to some chili beans and garbanzo beans,' Farrell said. 'New Era produces canned products under other brand names and labels. Therefore, the recalled products may not necessarily be labeled with New Era's name. Also, the cans may bear a variety of product codes or no codes at all. Regardless of brand name or label, or the presence or absence of a code, the recalled cans should not be opened or used, and should be disposed of as described below. Consumers who are not sure if a product is subject to the recall should still throw it out as a precaution.'

The recalled products are sold in large institutional-sized cans of green beans, cut green beans, Blue Lake green beans, Mexican Style chili beans, red kidney beans and garbanzo beans (chick peas), weighing approximately six and a half pounds. These may sold to consumers in warehouse stores in the state.

Brands include:

- Bunny brand, distributed by Bunn Capitol Co., Springfield, IL - Classic Sysco brand, distributed by Sysco Corp., Houston, TX- Code brand, distributed by Code, Atlanta, GA- ComSource brand, distributed by ComSource, Atlanta, GA ] - ComSource Medallion Premium Quality brand, distributed by ComSource, Atlanta, GA] - ComSource Merit Excellence Food Service brand, distributed by ComSource, Inc, Atlanta, GA- ComSource Traditional brand, distributed by ComSource, Atlanta, GA- Frosty Acres Restaurant's Pride Preferred brand, packed for F.A.B., Inc., Alpharetta, GA- GFS brand, distributed by Gordon Food Service, Grand Rapids, MI - Goodtaste brand, distributed by New Era Canning Co., New Era, MI- Great Value - yes I a,Harvest Value brand, distributed by U.S. Food Service, Columbia, MD - Kitchen brand, distributed by Potato Products, Detroit, MI- Kitchen brand, distributed by North Oakland Commodities, Grand Blanc, Michigan- Kitchen Essentials brand, distributed by Gordon Food Service, Grand Rapids, MI.- Monarch brand, distributed by Reid, Murdoch & Co., Columbia, MD- Monarch Premium brand, packed for PYA/Monarch, Inc, Greenville, SC- Mount Stirling brand, distributed by Pocahonta Foods USA, Richmond, VA- Necco brand, packed by New Era Canning Co., New Era, MI- New Era brand, distributed by New Era Canning Co., New Era, MI- Nugget brand, distributed by Nugget, Atlanta, GA- Pocahontas brand, distributed by Pocahontas Foods USA, Richmond, VA - Reliance Sysco, distributed by Sysco Corporation, Houston, TX- Sysco brand, distributed by Sysco Corporation, Houston, TX- US brand, distributed by U.S. FoodService, Columbia, MD- USDA, Food and Nutrition Service, Special Nutrition Programs, Alexandria, VA label

For specific codes of beans that are subject to this recall, consumers and retailers can access this information at the following link: http://www.fda.gov/oc/opacom/hottopics/newera.html.

C. botulinum can cause botulism, a serious and sometimes life-threatening condition. To date, no illnesses have been reported; however, consumers should not consume these products, even if they appear to be normal, because of the potential serious risk to health. Consumers who have the affected products or who have used them in recipes should immediately throw the cans and food away.

Any food that may contain the recalled canned beans should be disposed of carefully. Even tiny amounts of the C. botulinum toxin can cause serious illness when ingested, inhaled, or absorbed through the eye or a break in the skin. Skin contact should be avoided as much as possible, and hands should be washed immediately after handling the food.

When disposing of these products, double-bag the cans in plastic bags. Make sure the bags are tightly closed, then place in a trash receptacle for non-recyclable trash outside of the home. Restaurants and institutions should ensure that such products are only placed in locked receptacles that are not accessible to the public. Additional instructions for safe disposal may be found at www.cdc.gov/ncidod/dbmd/diseaseinfo/botulism.htm.

NEW ERA RECALLS GREEN BEANS AND GARBANZO BEANS NATIONWIDE - US Fed News Service, Including US State News

The Wyoming Department of Agriculture issued the following news release:

The Consumer Health Services Division of the Wyoming Department of Agriculture is urging consumers to check their cupboards for cans of green beans and garbanzo beans that are a part of a national recall.

New Era Canning Company of New Era, Michigan has voluntarily recalled all cans of green beans and garbanzo beans in #10 cans (large cans containing between six and seven pounds).

Although these products have not been linked to any illnesses, they may have been processed under conditions which could have led to contamination by Clostridium botulinum bacterium spores, which can cause life-threatening illness or death.

The codes on the affected product begin with the numbers '00249,' or the letters 'GREEN' or 'GARB'. The issues were uncovered in a FDA inspection of products. None of the products have tested positive for the toxin.

Although the products have been removed from retail stores in Wyoming, health officials want to make sure that products do not remain on the shelves in homes or food service operations.

'In addition to consumers, it is especially important for retailers, food banks, charitable organizations, child care facilities and other food service operations to be aware of the recall,' said Dean Finkenbinder, Manager of the Consumer Health Services Division.

Clostridium botulinum bacterium spores have the potential for growth that produces a toxin that causes a potentially fatal form of food poisoning - botulism. Symptoms of botulism poisoning can begin from 6 hours to 2 weeks after eating food that contains the toxin and include general weakness, dizziness, double vision, and trouble speaking or swallowing. Difficulty breathing, drooping eyelids, muscle weakness, abdominal distension and constipation are also common symptoms. Botulism poisoning can result in death unless medical assistance is provided.

Individuals who feel ill after handling or accidentally consuming any of the recalled products should seek immediate medical attention.

The following product labels are affected:

* Bunny brand, Distributed by Bunn Capitol Company, Springfield, IL

* Classic Sysco brand, Distributed by Sysco Corporation, Houston, TX

* Code brand, Distributed by Code, Atlanta, GA

* ComSource brand, Distributed by ComSource, Atlanta, GA

* ComSource Medallion Premium Quality brand, Distributedby ComSource, Atlanta, GA

* ComSource Merit Excellence Food Service brand, Distributed by ComSource, Inc., Atlanta, GA

* ComSource Traditional brand, Distributed by ComSource, Atlanta, GA

* Frosty Acres Restaurant's Pride Preferred brand, Packed for F.A.B., Inc., Alpharetta, GA

* GFS brand, Distributed by Gordon Food Service, Grand Rapids, MI

* Goodtaste brand, Distributed by New Era Canning in New Era, MI

* Harvest Value brand, Distributed by U.S. Food Service, Columbia, MD

* Kitchen brand, Distributed by Potato Products, Detroit, MI

* Kitchen Essentials brand, Distributed by Gordon Food Service, Grand Rapids, MI

* Monarch brand, Distributed by Reid, Murdoch & Co., Columbia, MD

* Monarch Premium brand, Packed for PYA/Monarch, Inc., Greenville, SC

* Mount Stirling brand, Distributed by Pocahontas Foods USA, Richmond, VA

* Necco Brand, Packed by New Era Canning Company, New Era, MI

* New Era brand, Distributed by New Era Canning Co., New Era, MI

* Nugget brand, Distributed by Nugget, Atlanta, GA

* Pocahontas brand, Distributed by Pocahontas Foods USA, Richmond, VA

* Reliance Sysco, Distributed by Sysco Corporation, Houston, TX

* Sysco brand, Distributed by Sysco corporation, Houston, TX

* US brand, Distributed by U.S. FoodService, Columbia, MD

* USDA, Food and Nutrition Service, Special Nutrition Programs, Alexandria, VA label

For specific brands and codes of green beans and garbanzo beans that are subject to this recall, consumers and retailers can access the following link: http://www.fda.gov/oc/opacom/hottopics/newera.html.

Recalled products should be disposed of immediately. Consumers who have the product or any foods made with these products should double bag the products in plastic bags that are tightly closed, then place in a trash receptacle for non-recyclable trash outside the home. Restaurants and other institutions are encouraged to ensure that such products are only placed in locked receptacles which are not accessible to the public. More information about safe disposal is available at http://www.cdc.gov/botulism/botulism_faq.htm.

Consumers with questions may contact New Era Canning at 1-800-282-9007, ext. 111.

Food Product Recalls Reported - The Food Institute Report

The FDA Enforcement Report (July 8) included the following recalls:

Kellogg's Rice Krispies Treats Cereal, in 14.8-oz. boxes, bearing a Better If Used Before date code of Sep 17,1998RC on boxtop, manufactured by Roskam Baking Company, Kentwood, MI, and recalled by Kellogg USA, Battle Creek, MI. The completed recall covered 48,942 cartons distributed naTIonwide. Reason for recall: Product contains undeclared whole oats, whole grain wheat, almonds and nonfat dry milk.

Assorted Mini-Quiches and Cheese Blintzes: a) Country French Style Quiche (flavored with bacon, less than 2%), Net Wt 0.8 oz., 100 - 0.8 oz. pieces, Hof Foods, Inc., Goshen, NY; b) CombinaTIon Quiche 50s (20 mushroom, 15 spinach, 15 smoked salmon), Net Wt. 48-oz., Barney's Foods, Inc., Goshen, NY; c) Assorted Mini Quiches (country French, Monterey, spinach), Net Wt. 80-oz., Town and Country, Goshen, NY and Four Seasons brand, packed exclusively for InternaTIonal Market Brands, Inc., Cleveland, OH; d) 40 Cocktail Quiches (country French style Wilton Foods Inc., Goshen, NY, Net Wt. 30-oz. e)Cheese Blintzes with four different packaging configuraTIons as follows: (1) Imperial brand, Sysco CorporaTIon, Houston, Texas, 144, 2.2-oz., CrepeBlintz Cheese, Net Wt. 19.5-lbs.; (2) Sysco brand, Sysco CorporaTIon, Houston, Texas, 128, 3-oz., Crepe Cheese Blintz, Net Wt. 24-lbs.; (3) Four Seasons Brand, packed exclusively for InternaTIonal Market Brands, Inc., Cleveland, OH, 12 Cheese Blintzes, Net Wt. 26-oz.; (4) Wilton Foods Inc., Goshen, NY, 12 cheese blintzes, Net Wt. 26-oz. All were manufactured by and recalled by Wilton Foods, Inc., Goshen, NY. The ongoing recall covers 232 cases of assorted mini quiches and 659 cases of cheese blintzes distributed in California, ConnecTIcut, Florida, Illinois, Maryland, Massachusetts, Missouri, New Jersey, New York, and Pennsylvania. Reason for recall: Products were manufactured using an ingredient, liquid pasteurized eggs, which was found contaminated with salmonella.

Spartan brand Blackeye Peas, dry, in 16-oz. bags, manufactured by Arrow Industries, Carrollton, TX and recalled by Spartan Stores, Inc., Grand Rapids, MI. The completed recall covered 1,272 16-oz. bags distributed in Indiana, Michigan, and Ohio. Reason for recall: Product contains a lindane pesTIcide residue greater than FDA's 0.5 ppm acTIon level.

Automation domination; Grocery wholesalers and food distributors are jumping on the automation bandwagon.(AS/RS UPDATE) - Food Logistics

Grocery retailers and food distributors are finally catching up with the rest of the food industry in the use of automation in their warehouses.

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Despite the hefty price tags of the solutions, these companies are employing a variety of automated and semi-automated storage retrieval systems (AS/RS)--including horizontal and vertical carousels, stacker cranes, conveying and sortation systems and automated guided vehicles--throughout their facilities.

In recent years, a number of grocers and distributors such as The Kroger Co., C&S Wholesale Grocers, Sobey's, HEB and Stop 'n Shop have gone high-tech in their warehouses--and experts expect that trend to continue. Faced with the increasing complexity of receiving, storing, picking and shipping product, many are looking for new ways to improve logistics performance levels at a lower cost, according to Ken Ruehrdanz, warehousing and distribution market manager for Dematic Corp., Grand Rapids, MI, which leads them to automation.

'The drivers in food distribution include SKU proliferation, servicing multi-format retailing, building mixed case pallets, space utilization, transportation costs, inventory and order accuracy and labor costs, as well as health and safety issues for employees,' says Ruehrdanz.

According to the Material Handling Industry of America (MHIA), sales of automation equipment reached a record low last year. However, because the recession did not hit the food industry as hard as it did others, food companies did not put the brakes on automation investments. Vendors report seeing a growing number of new projects, retrofits and system upgrades for their food as well as beverage customers.

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The good news for grocery distributors is that a number of automation solutions providers are targeting the industry. 'This is where the real arms race is in terms of automation for material handling--it's all focused on food and beverage right now,' says Tom Coyne, president and CEO of System Logistics Corp., Lewiston, ME. 'And in the grocery space, there have been a couple of companies that have been willing to make the long term investment and take the risk.'

'There's been a huge increase in the interest in automation across the board in the industry--from the food and beverage manufacturers and distributors to the retailers,' agrees Paul Moore, director of MS systems sales of Mason, OH-based Intelligrated Inc. 'One of the big drivers is the consolidation of the industry--it's creating scale. In grocery, you've got retail giants such as Walmart and Target, in beverage you've got Anheuser-Busch and we're seeing a lot of acquisitions in the snack food arena. The larger these companies get, the more automation makes sense for them. Their size helps them get a good return on investment on these types of solutions.'

Another big driver is the need for store friendly deliveries, according to Dematie's Ruehrdanz.

automation [right arrow] drives baking flexibility

Bisquits Leclerc, Canada's leading producer of breakfast and snack bars, cookies, and cereals, has broken ground for their second Distribution Center in Kingsport, TN. With Swisslog's AS/RS and WMS, they have achieved unsurpassed inventory accuracy (along with track & trace capability) and productivity advances in material movements (allowing them to more quickly respond to changes in customer demands). This improved flexibility has increased sales, driving higher profits. After acquiring their second US plant, Bisquits Leclerc signed distribution agreements with leading supermarket chains Target, FoodCity, and Hannaford. For more information, call (866) 732-8351 or email us at FoodLogistics@swisslong.com.

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Tornado Miniload ... Speeds ... Picking

Efficient picking and packing of thousands of SKUs to thousands of orders every day requires ... speed ... and accuracy. The newest product in Swisslog ASRS family, the Tornado, is 'speed'. The Tornado, fastest miniload on the market, coupled with Swisslog's reliable and efficent controls 'accuracy', is designed to integrate receiving, putaway, replenishment, order selection, and packing; providing retail distribution centers with rapid response to changing demands in a manner independent of SKU range or order size.

The Tornado Case Pick Solution, complete case and item sequencing and packing, can be configured to fit in your existing DC. Heights ranging from 10-60 feet allow the Tornado to best utilize your cube and allow you to best untilize your space for value ad operations.

For more information and/or a complimentary analysis of your distribution challenges, call (866) 732-8351 or email us at FoodLogistics@Swisslog.com

'The traditional method was to replenish the store once or twice a week, with the inventories being stored in the backroom of the store. As consumers purchased items, the stores would replenish the items from the backroom and invariably stock outs would occur,' says Ruehrdanz. 'As companies strive to reduce stock-outs within stores, there is a focus on smaller, more frequent replenishments from the DC to the store. With this strategy, rather than replenish the backroom, the received shipment is replenished directly to the store shelf.'

Advances in automated case picking is also driving the trend, say the experts. 'Retailers are looking for systems that can automatically pick cases and palletize cases in aisle sequence at the distribution center for store friendly delivery, allowing quick replenishment on the shelf,' says Sean O'Farrell, business development manager for Witron, Arlington Heights, IL. 'Besides the obvious savings within the warehouse, many of our retail customers point out that automation is also saving labor in their stores. This is a direct result of our ability to automatically build store-friendly and aisle-ready mixed SKU pallets within the warehouse.'

Automating The Case Picking Process

Order picking is the most costly function in a warehouse and in the food industry--thanks to SKU proliferation and the need for smaller, more frequent deliveries--case picking volumes and costs as percent of total DC expenses are going up. To combat this problem, a number of material handling vendors have developed technologies to automate or semi-automate the case picking process. These solutions offer improvements in productivity, accuracy and speed of delivery.

'Full case picking used to be considered the Holy Grail of distribution,' says Jack Lehr, vice president sales, automation, Schaefer Systems International Inc., Charlotte, NC. 'Until just a few years ago, there were no good solutions--nothing cost justifiable and reliable.'

Schaefer designed its case picking system (SCP) for high-SKU environments such as grocery and beverage handling. The SCP automates all processes from receiving, de-palletizing, selecting, sequencing and palletizing of mixed case pallet loads. The system can handle from 30,000 to 300,000 cases per day and by removing labor from the process, users can expect to attain a drop in cost-per-unit shipped by up to 30 percent.

The system uses advanced computer simulation of pallet-load building. The software that controls the order-picking and sequencing system starts with order information and then virtually builds cube-optimized pallets. Then the software tells the system which trays and in what order to deliver to the pick system. Palletizing robots receive the products in the correct sequence, allowing the SCP to build cube-optimized, store-ready pallets by family group.

Product characteristics are entered into the system through Schaefer's cube dimensioning unit that collects and stores physical data. 'The software that drives the SCP is very complex, so if you're going to automate a DC specifically for case picking, you need a good IT staff because they've got to understand how the software works,' says Lehr. 'Although there's a significant savings in manual labor, companies always have to increase the size of their engineering and IT departments. One of our clients is going from 218 warehouse employees to 23. But they're going to hire 13 engineers, because they're running a triple shift operation and you've got to have adequate coverage on every shift.'

Besides the obvious labor savings within the warehouse, many retailers point out that automation is also saving labor within the stores, notes Witron's O'Farrell. 'This is a direct result of our ability to automatically build store-ready and aisle-ready mixed SKU pallets within the warehouse.'

Witron has developed automated case-picking systems for supermarket chains such as Kroger and Sobey's that enables the retailers to build mixed pallets for individual stores. Witron's OPM (order picking machinery) system loads cases onto the pallets in the sequence that they'll be put away on the shelves in the store.

Last year, Sobey's opened a fully-automated 500,000-square-foot DC in Vaughan, Ontario, to service more than 340 stores in the Toronto area. The facility receives more than 320,000 cases per day and can ship 200,000 cases per day. The majority of the case picking is done by the OPM system. Order pallets are automatically assembled by 16 picking machines that are installed on two-levels within the warehouse. The retailer says that having the pallets automatically assembled by the individual store layouts has reduced product damage and labor at store, and the system has enabled it to have near perfect order accuracy while helping to reduce out-of-stocks.

The benefits extend beyond the warehouse and store as well. 'Automation is also helping our customers realize savings in transportation, as our automated case picking system can produce taller and denser order pallets than conventional picking methods,' says O'Farrell. 'One customer experienced an 8 percent reduction in transportation cost after implementing our automated case picking system.'

AGVs--An Affordable Alternative To Lift Trucks

For many companies, a full-blown AS/RS implementation is financially out of the question--and, in fact, may not even be necessary. Material handling vendors offer a variety of affordable point solutions that can work within an existing warehouse.

For example, the lift truck is the mainstay of the conventional warehouse. Most fundamental activities in the facility, however, can be carried out by automated guided vehicles (AGVs)--eliminating the need for manual lift trucks, according to Mike Kotecki, senior vice president of HK Systems Inc., New Berlin, WI. AGVs automatically move material through a facility without an onboard operator or driver. They have defined paths over which they can navigate. The paths are defined by buried inductive wires, surface mounted magnetic or optical strips, or by laser guidance.

'AGVs were primarily used for transportation, but we've extended the reach of an AGV to be comparable to a VNA (very narrow aisle) truck or a small AS/RS,' says Kotecki. 'These same vehicles can now do storage and retrieval in racking systems and can conform to a variety of facility types and applications.'

HK recently introduced its 'Automate the Conventional' automated solution for conventional warehouses. Designed to lower operating costs, increase inventory accuracy and reduce product and facility damage, the solution replaces list trucks with HK's fork style AGVs.

One of the greatest advantages of an AGV system, says Kotecki, is that a company can address several challenges without the need to reconfigure conventional rack storage areas. 'You don't have to move the rack or make the ceiling any higher. It's all retrofittable automation, at the fraction of the price of an AS/RS.'

AGVs can conform to a variety of facility types and applications, every type of pallet movement within a warehouse or distribution center, and store and retrieve in a narrow aisle storage and VNA storage warehouse. AGVs have a number of advantages over lift trucks, including labor savings, reduced product and facility damage, increased productivity and inventory accuracy.

AGVs can also enhance voice picking operations, according to Stuart Edwards, manager, food distribution market, Dematic. 'AGVs complement the picking process. With conventional pick to pallet operations, the picker drives the pallet jack to the various pick locations. On completion of the order, the picker moves the completed order pallet to the shipping dock. This leaves inefficiencies due to having a small distance between pick locations because (picker will need to board and alight the pallet jack) and moving the pallet to the shipping dock--all these activities detract from picking productivity.

'The AGV system automatically moves to the correct picking location and moves the completed pallet to the shipping dock without the picker, thereby allowing them to continue picking operations,' says Edwards.

Another example is a semi-automated configuration for accommodating slow-moving inventory. 'It includes an AS/RS for staging food products,' says Edwards. 'The AS/ RS replenishes the pick faces located on the first level. Operators on the outside of the rack pick to pallet from the pick faces. This method reduces the system footprint (eight to one, typically), increases picking productivity since the pick path distance is typically reduced by 75 percent and the replenishment process is fully automated, thereby eliminating labor cost for this function.'

Insourcing Vs. Outsourcing

For companies that outsource their ware-housing' and transportation operations, automation provides an opportunity to bring those functions in house--and gain better control of their supply chain. 'We're asking manufacturers to reconsider the trade-offs, long term, to insourcing vs. third-party logistics providers,' says Bill Leber, business development manager for Swisslog, Newport News, VA. 'Manufacturers that are outsourcing are losing a bit of control and connection down the supply chain.'

Leber points to manufacturers that are consolidating their networks, such as PepsiCo, which recently acquired its bottlers. 'It wasn't that they were having issues with getting stuff in the bottle--it's about getting control of the distribution network. And automation will allow them to get more out of their facilities. The start up costs are high, but with automation you can maximize the use and productivity of the facility--put on a second shift or run it 24/7,' he says.

On the other hand, HK Systems has launched a company called HK Logistics that not only develops automated material handling systems, but owns and operates them as a 3PL, 'If a food manufacturer wanted to have a 40-aisle AS/RS system with lights out operation and robotic palletizing--but didn't want to own it--we would build it, staff it and provide them with service custom-made for their business,' says Kotecki. 'It's a pretty revolutionary concept.'

Designing an automated or semi-automated system is contingent on a company's product mix and throughput rates, so companies need to do a through analysis of their operation to determine if they're a good candidate for automation.

'Automation can be scaled or tailored to meet the needs of the business,' says Coyne of System Logistics. 'If you're shipping 1,000 cases per hour out the door, you're probably not a candidate for robots, but you may be a candidate for lower cost technology that can improve your picking performance. If you're hitting rates of 4,000 to 5,000 cases per hour and you're carrying more than 500 SKUs, you might be a candidate for a higher level of automation.'

The food industry is destined to see more automation in its distribution process, adds Coyne. 'It has the highest velocity rate of the overall American supply chain, so it's destined to be automated to a higher degree. It's just a question of how fast it's going to happen and what's the final evolution of the solution going to be.'

RELATED ARTICLE: Five reasons lb automate

Automation can be utilized in varying degrees to achieve improvements in product flow, labor allocation, facility size and overall operating costs, according to Ken Ruehrdanz, warehousing and distribution market manager, for Dematic Corp., Grand Rapids, Ml.

'Items to analyze and consider in the current operation include: number of 'touches' by workers, bio-mechanical injuries, issues with seasonal labor, order accuracy, order processing speed and complexity of building mixed case pallets for customer orders,' says Ruehrdanz.

Here are some of the benefits that can be achieved through automation.

Reduction in bio-mechanical injuries: 'Food distribution centers primarily handle case goods, which tend to be heavy--especially when a worker handles these case loads for an entire shift of an operation. Workers will bend, lift and twist a hundred times a day while handling cases of product. Injuries can be devastating to the health of workers, not to mention medical and absentee costs,' says Ruenhrdanz.

Also, the turnover rate in these job functions can be very high. AS/RS can accommodate cases and pallets automatically, thus allowing fewer 'touches' by human hands.

Reduce exposure to harsh working environments: Freezer storage often requires that product be held in sub-zero temperatures. 'This environment is not ideal for worker comfort and health. Legal restrictions require that workers can only be exposed to a freezer environment for limited periods of time, thus increasing costs--turnover rate is also high in these job categories. Automation for the warehouse storage function allows staff to work outside the freezer or cooler environment,' says Ruenhrdanz.

Reduction in building and energy costs: Freezer and cooler space is costly to build and maintain; the use of automated systems can minimize freezer/cooler space. For example, the implementation of an ASRS allows high density storage and will therefore reduce the footprint and square footage of the freezer or cooler, thus reducing building costs and energy costs.

'With automation systems, customers can minimize their energy costs. AS/ RS technology does not require heating/cooling or a lighted environment to function. Modern conveyor systems have power saving functions that automatically power down if not required' says Ruenhrdanz.

Improved inventory control and accuracy: For food producers and manufacturers, it is extremely important to make sure first-in first-out strategies are maintained. When compared to traditional methods (rack and manually operated fork lift trucks), the automated systems operate under computer control and therefore product does not get misplaced in the warehouse and first-in first-out strategies are assured.

With the recent food recalls, particularly in fresh prepared foods, it's even more critical to have robust tracking from manufacturers to the consumers. Automation offers this level of tracking and traceability within the supply chain.

Reduced fork truck fleet and labor: 'AS/RS allow less staff to be required to perform the work. When an automated system is utilized in two or three shift operations, significant ROI can be realized. Furthermore, automated systems mean reduction in facility damage by manually operated fork lift trucks and the reduction in product damage,' says Ruenhrdanz.

Vendor Listing.

* Daifuku America Corp., Salt Lake City, UT; www.daifukuamerica.com

* Dematic Corp., Grand Rapids, MI; www.dematic.us

* HK Systems Inc., New Berlin, WI; www.hksystems.com

* Intelligrated Inc., Mason, OH; www.intelligrated.com (acquired FKI Logistex Group)

* Retrotech Inc., Fishers, NY; www.retrotech.com

* Schaefer Systems International Inc., Charlotte, NC; www.ssi-schaefer.us

* Swisslog Logistics Inc., Newport, MI; www.swisslog.com

* System Logistics Corp., Lewiston, ME; www.systemlogistics.com (acquired Diamond Phoenix)

* TGW-Ermanco Inc., Spring Lake, MI; www.trw-ermanco.com

* viastore systems Inc., Grand Rapids, MI; www.us.viastore.com