Nippon Access Hokkaido - Frozen food DC implements efficiencies in its supply chain
Nippon Access Hokkaido, Inc. (NAH) headquartered in Sapporo, Japan is a subsidiary of major food wholesaler Nippon Access, Inc. The subsidiary mainly markets its products in Hokkaido, Japan's second largest island and its largest prefecture.
NAH, the major food wholesaler in the region, has separate distribution facilities for dry, chilled, and frozen food in Sapporo. The company also has distribution centers with refrigerated/frozen facilities around Hokkaido, which create a strong delivery network throughout the prefecture and allow the company to quickly supply fresh, high-grade products.
In February 2007, NAH teamed up with a manufacturer and a warehousing company to open the cutting-edge Ishikari Frozen Distribution Center. The collaboration of the three companies within the DC creates a more efficient supply chain than any of the companies had on its own. Within the facility, the companies share resources, including inventory, to reduce risk and to decrease transportation costs.
Ishikari Frozen Distribution Center is one of the largest distribution centers dedicated to frozen food in Hokkaido. Its innovative material handling systems include unit load Automated Storage & Retrieval System (AS/RS) in a -30°C (-22°F) environment, Sorting Transfer Vehicles (STVs) for load handling, Jet Surfing Sorter for case sorting, and a piece sorting system. The temperature in the majority of the DC is kept below freezing. For example, processing areas on first and second floors are -5°C (23°F) and the shipping accumulation area is -15°C (5°F).
Inventory previously stored separately in five different facilities is now consolidated. Product storage, input/output, sorting, inspection, and shipping are processed at Ishikari. One-thousand frozen food items make up 80% of the volume and 500 ice cream products make up the rest. Products are delivered to 1,500 retail and convenience stores; frozen food is destined for Hokkaido and ice cream for Sapporo. Sixteen-thousand cases are shipped daily. NAH aims to handle product worth 10 billion yen in its first year and 15 billion in future years.
Orders are consolidated for same day shipping
NAH runs the DC with the Toyo Suisan Company, which handles product input to the AS/RS, inventory control, and output to picking. NAH manages sorting, picking, and shipping. Order and shipping data are shared between the companies so that product replenishment for the AS/RS can be automatically moved from Toyo Suisan’s adjacent warehouse when necessary.
Customer orders are received via an electronic ordering system. Orders received by 3:30 p.m. are processed and consolidated from the furthest stores first so that trucks arrive next day. Sorting for consolidation occurs daily in seven batches (frozen food: 2, ice cream: 3, convenience store: 1, other: 1) as follows:
- Case products are output on a pallet from the unit load AS/RS and transported to the picking area via STV.
- An operator picks the number of cases displayed on the terminal from the pallet, attaches shipping labels and inducts the cases onto the conveyor.
- Case shipped products are sent to the Jet Surfing Sorter and piece shipped products are sent to the sorting system on the second floor to be sorted by route and store.
- Cases are loaded onto roll box pallets and pieces are loaded on designated carts for consolidation in the accumulation area until they are shipped.
Volume triples, errors eliminated using one-third the labor
Before consolidating the facilities, most load handling was manually processed and demanded a lot of time and labor. With the automated system in place, 25 people (one-third the amount used in previous operations), process approximately three times the volume in the same amount of time.
In the new DC shipping errors are eliminated by conducting multiple inspections. Products output from AS/RS are checked four times: at picking station (once), during primary and secondary sorting in the piece sorting system (twice), during unloading at destination (once), eliminating human error.
Aiming for additional cost reduction
Mr. Hiroyuki Ota manager for distribution operations explains,”Rethinking our distribution has only just begun. We have been successful in consolidating DCs but our three companies will continue to challenge our supply chain management system to create more efficiencies and reduce cost even further.”
Building area: 5,269 sq.m (56,715 sq.ft)
Gross floor space: 6,667 sq.m (71,763 sq.ft)
