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A Model of Efficiency and Progress:
The Freetown, MA Stop & Shop Distribution Center
Dan McKnight
Michael Harris
Steve Quinn
Hassan Abualola
John Reardon
Introduction
For this project, our group focused on the day-to-day operations at the Stop & Shop
distribution center in Freetown, MA. We interviewed the following three employees for our
project’s background research:
- Steve Dowler, Senior Warehouse Manager.
Mr. Dowler is in charge of overseeing all of the operations inside the warehouse, including both
the shipping and receiving processes. Essentially, Mr. Dowler role is to ensure that the
distribution center’s procedures are being followed by employees, and that goods are being
delivered on time to the appropriate stores and customers. Mr. Dolwer also manages the center’s
Profit and Loss division, which focuses on the company’s goals for operating costs and
productivity. Labor relations between upper management and warehouse employees is another
area in which Mr. Dowler plays a major role.
Office Phone: 508 – 977 – 5002
Cell Phone: 508 – 717 – 7502
Fax: 508 – 977 – 5149
Email: [email protected]
- Roger Beliveau, Senior Support Manager
As a support manager, Mr. Beliveau is assigned the tasks of managing inventory, payroll,
product slotting, and customer service. He also manages the facility’s enter technical support
area. In addition, Mr. Beliveau works as a liaison between the warehouse and other store offices,
usually for issues regarding systems, product procurement, auditing procedures and store
relations. Any issues directly relating to system performance are directed to Mr. Beliveau’s area,
as are requests for system upgrades and maintenance.
Office Phone: 508 – 977 – 5270
Cell Phone: 508 – 934 – 6483
Fax: 508 – 977 – 5149
Email: [email protected]
- Chris Linehan, Operations Manager
Mr. Linehan’s role is to closely monitor all of the facility’s product purchases from the
distribution center’s vendors. Mr. Linehan’s job requires him to often check if the facility’s
product suppliers are delivering the exact goods that have been purchased by the center.
Furthermore, Mr. Linehan must confirm that the warehouse has received the proper amount of
each product.
Office Phone: 508 – 977 – 5015
Fax: 508 – 977 – 5146
Email: [email protected]
Background Information
Basic Facts
Below are the key statistics for the Freetown distribution center:
Total Building Size 1.3 M Sq. Ft
Perishable Section 488,000 Sq. Ft.
Non – Perishable Section 612, 000 Sq. Ft.
Number of Dock Doors 214
Number of Deep Docks 110
Selection Aisles 84
Reserve Pallet Positions 56,000
Selection Slots 13,000
Cranes 77
Trailers 785
Tractors 161
Loads Delivered Per Week 1700+
Miles Driven Per Week by Delivery Trucks 300,000
On-Time Delivery Percentage 98%
Union drivers 290
Number of states to which deliveries are made 5
Company History
The Stop & Shop organization was first established in 1914, when the Rabinovitz family
founded the Economy Grocery Stores Company in Somerville, Massachusetts. Soon afterward,
the company adopted the then-revolutionary concept of establishing large supermarkets that
emphasized self-service. This business model proved to be immensely successful, as by 1947
Economy Grocery Stores had expanded into a chain of 86 supermarkets. It was during this year
that the company changed its name to the present-day title of Stop & Shop, Inc. The organization
was acquired by Ahold, a multinational food conglomerate, in 1996.
With such a large number of stores to manage, Stop & Shop Inc. determined that their
current distribution facility lacked the size and technological capabilities to adequately supply its
entire chain of stores. To address this problem, the company green lighted the building of a
massive, state-of-the-art distribution center. This building project was completed in 2004 after a
16 month construction process. As stated above, the distribution center is located on a 1.3
million square foot site, and features an automated crane system that controls a total of 77 cranes.
This crane system plays a crucial role in the facility’s daily operations, as it stocks and
replenishes products when necessary.
Business Strategy/Goals
The Freetown distribution center strives to maintain consistent, on-time delivery services
to individual stores. To accomplish this, all machinery must be constantly maintained and
repaired when necessary. In addition to dependability, the Freetown site also allows stores to
customize their orders, enabling individual locations to obtain exact quantities of specific
products. The quality of its products is another key part of the company’s strategy, as it regularly
inspects the condition of both perishable and non-perishable items. Finally, Stop & Shop Inc.
places a strong emphasis on keeping operating costs as low as possible.
These strategies give Stop & Shop Inc. a solid chance to achieve its goals of maintaining
market share and keeping pace with the technology of its competitors. Accomplishing these
objectives would allow the company to provide consumers with popular products in a timely
fashion. By the same token, maintaining relatively low operating costs will have a positive effect
on the organization’s financial picture, potentially serving to boost the company’s overall profits.
Purpose of System
The Freetown facility’s distribution system gives Stop & Shop Inc. a solid chance to
achieve its goals. The company correctly believes that it is crucial to supply its stores with
popular products, since this will greatly help stores to keep frequent customers. To accomplish
this, stores must be able to customize orders to reflect consumer demand. Moreover, individual
outlets also require on-time delivery to adequately function and maintain sales.
Consequentially, modernizing technology is an area of great importance to the company,
as it enables the center to quickly and efficiently replenish the inventories of its stores. Without
this system, Stop & Shop supermarkets would be at a sizable disadvantage compared to its
competitors, as rival chains would likely be able to respond to customer demand trends at a much
faster pace.
Furthermore, the center’s automated nature acts a guard against system failure. Instead of
being vulnerable to human error, any miscues or miscalculations can easily be pinpointed and
adjusted with a simple input of data. Because of this, the organization’s business process will
likely not be derailed by either technological malfunctions or employee mistakes.
Business Process
Perhaps the most notable hardware used by the Freetown distribution site is its 77
automated cranes. Employees also frequently use headsets, which transfer orders to workers and
provide specific warehouse locations for products. Large sets of computers are used to run the
company’s multiple software programs.
The distribution center relies on four software programs to carry out routine tasks. These
programs are known as Blue Sky, EXE, Vocollect, and HK – ASRS (or HK for short). Together,
these four programs are indispensible for the company’s business process. Their combined
capabilities are vast, as they direct the movements of cranes, enter and store product and delivery
information, and dispense instructions to employees.
The data used for the company’s business process focuses on deliveries, incoming
products, and inventories. Several procedures are also routinely used for distributing this data,
and involve both hardware and software. For example, delivery data for individual stores is
typically entered into the system through the Blue Sky software. In turn, Blue Sky sends this
information to the EXE program, where it is stored until an employee is ready to assemble the
order. To access this information, an employee must put on a headset, which is linked to the
Vocollect software. EXE then uses Vocollect to transmit the delivery data to the employee, who
receives it through his headset.
There are additional procedures involved for both transmitting data and gathering
warehouse products. Before he can receive a delivery order, an employee is required to verbally
enter in his name and password into the Vocollect system. After this step, the Vocollect software
will instruct the employee to say a predetermined printer number, which will prompt that same
printer to print out a Pallet Destination Summary. This summary will tell the employee how
much product will be gathered for the delivery. The Vocollect system will then direct the
employee to the aisle where the products are located.
As one can infer from the above descriptions, there is a near flawless business process at
the Freetown Distribution center. This system represents a perfect interaction between software,
hardware, and employee protocol.
Software Hierarchy and Functions
The Blue Sky software program can be considered the overseer of all the other programs,
as it is the manager of all other software and is used to place orders into the system. EXE can be
summed up as being second in command, and is used to send distribution orders to Vocollect.
EXE also stores delivery orders and inventory data. Given the nature of their responsibilities, it
would be impossible to run the center without these software programs.
Below EXE are the Vocollect and HK programs. Both of these programs receive all of
their information and instructions from EXE. Vocollect is used to disperse employee distribution
assignments, and is used by employees to alert the HK system about empty pallets. The HK
software controls the facility’s crane system, and is entrusted to replace and stores pallets. In
addition, the HK software also keeps track of empty pallets.
Hardware
For the most part, the hardware used by the center’s applications consists mainly of
desktop computers, laptops and rugged mobile tablets. In addition to the headset, the Vocollect
system also uses a large terminal, which transmits assignments to the headset. The facility also
uses Symbol Truck mount units and Symbol handheld units for a variety of functions with EXE
and HK.
Networks
The Freetown Distribution Center has its own intranet, with access restricted to only
company employees. This intranet allows a user to access the Blue Sky software, which oversees
the company’s other software programs. An employee can use this intranet to insert delivery
orders into the system, and to observe the performance of the facility’s software. In addition,
users can access the network at distribution center offices and at off-site locations.
The distribution center does not have its own external internet site open to the public. Its
parent company, Stop & Shop Inc., does have an internet site at www.stopandshop.com. This
website contains details about store locations, store sales, discount cards, and other various
promotions. The site also features recipes, recommendations for healthy dieting, and suggestions
for meals. Most notably, it allows for customers to purchase food online.
Network Connections
Essentially, the Freetown facility uses Wide Area Network, or WAN for short. This
means that computers not positioned on the distribution site are still able to access the network.
The Distribution center uses a WAN in lieu of a Local Area Network (LAN), in which clients
that use the network are all positioned on one geographical location. The use of the company’s
WAN network is fairly limited, however, as contact with vendors and other outside parties is
typically conducted through the company’s email system.
The specific WAN style used by the center is known as a Virtual Private Network (VPN).
This VPN allows staff to access the distribution center from off-site locations. An employee can
access the VPN network by first establishing an internet connection, and then connecting to the
center’s internal site. VPN use is strictly limited to company employees, and can only be
accessed with the use of a FOB key.
As mentioned earlier, this FOB key is a security measure taken in order to ensure that the
VPN is only used by authorized personnel. The key is placed directly into an employee’s
computer, and displays a number code. This number code changes at regular intervals. This code
is then entered in the password field in order to access the VPN.
Authorized employees use the VPN for several purposes. Staff can use this network to
access confidential data, such as company updates and training modules. These are used as tools
for employees to stay up to date on company policies and procedures. Employee addresses and
phone number extensions are also stored on this network as well.
Database
The facility’s EXE program also functions as its database. All incoming orders from
individual stores are stored in the EXE system. In addition, EXE also keeps track of product
inventory. EXE is also entrusted with the warehouse locations for each particular item. Data is
entered into the database by employees working in a facility department referred to as the
Receiving Office.
Security
In order to prevent unauthorized individuals from accessing the company’s intranet, an
employee needs to insert a security key into the computer that is being used to access the
network. This key is known as a FOB key and is made by RSA, a company that is a well
established in the business of security products. The key resembles a flash drive, and features a
small screen which displays a system password. A typical password consists of six numbers, and
will change every fifteen minutes. The changing of the password every fifteen minutes makes it
almost impossible for any outside “hackers” to enter into Stop & Shop’s intranet. The user
simply has to type in this password into a specific box to enter the network and he or she will
have full access to Stop & Shop. As far as security software is considered, the distribution center
had its own IT department that is specifically designed for implementing all of the necessary
software.
Above: SecurID key (FOB Key)
E – Commerce
In order to use the organization’s internal network, employees must download Blue Sky
software into their personal computers. Because of this requirement, it can be accurately stated
that the distribution center uses a thick client to conduct daily operations. Employees who do not
have Blue Sky software installed will be unable to enter orders into the system, and will also be
prohibited from monitoring the interaction and performance of the facility’s software.
Delivery Assignments
Vocollect System History
The Vocollect system is relatively new software program that was recently added to the
Stop and Shop distribution center. Years of laboratory tests proved to be extremely beneficial for
the software’s development, as preliminary tests with prototypes were met with rave reviews.
The Freetown distribution center was the first location were the Vocollect program was used for
daily operations. Since its installation, this state-of-the-art software has proven to be a
tremendous asset for the company, as it represents a major upgrade from the center’s previous
methods for processing orders. As stated previously, Vocollect receives all its data from the EXE
program.
Before Vocollect/EXE, employees were forced to carefully review each order, and were
required to mark off each item on the order with a red or green pencil. A green mark signified
that the product had been located, whereas a red mark meant that the distribution center had run
out of that particular product. Needless to say, this system’s reliance upon manual calculations
made it very susceptible to various errors, usually involving inventory counts and aisle
information. Such mistakes could ground the distribution center’s entire business process to a
halt. In response, the company poured a significant amount of funds towards research and
development for Vocollect.
Standard Operating Procedures
As mentioned earlier, Blue Sky is positioned as the top program, followed by the EXE
software. Located directly below the EXE program is the Vocollect system and the HK software,
which operates the facility’s cranes. Essentially, Blue Sky plays the role of the systems “parent,”
and gives instructions and data to its “children” (the EXE, Vocollect, and HK software).
The delivery process begins when the Blue Sky software transfers delivery data to the
EXE system. EXE stores this data until it is accessed by an employee. EXE sends this data to
facility employees through the Vocollect software. Access to the Vocollect system is strictly
limited to registered workers who have been trained in the procedures used for operating
Vocollect. Employee training usually involves learning a set of voice commands, which allows
EXE to keep track of each specific order. This is certainly an important part of the Freetown
center’s business process, as there could be dozens of employees with distinct orders
simultaneously communicating with the EXE program through Vocollect.
When an employee begins
his shift, he first heads to a
specific room where all of the
facility’s head sets and batteries
are stored. This same room also
contains the hardware used to run
the Vocollect system. Once the
employee has placed on a headset,
and has gone through all of the
procedures required to use it, he
will then walk to the building’s
warehouse to pick up a battery-
operated forklift (shown on the
right). They employee will then
begin his first delivery assignment.
The employee will start by asking the EXE system for assignment details through his
head set. EXE will then tell the employee which aisle to drive to, and where in the aisle the
Above: A row of Forklifts,
positioned near the facility’s aisles
product is located. For example, EXE may instruct an employee to head to aisle 44, and look for
location B1111. All of this information is typically found on a Pick Slot Label.
Once he has reached the label, and employee will repeat this data back to EXE through
Vocollect. EXE will then ask for the Voice Confirmation Number, which is also located on the
Pick Slot Label. An employee is also required to tell EXE the forklift’s letter. The employee, for
instance, could give EXE a confirmation number of 32 and M as a forklift letter. Not only does
this procedure further confirm if an employee has arrived at the correct destination, but it also
will prevent EXE from continuing to give this order to the employee once it has been completed.
After EXE confirms that the worker has chosen the correct pick slot, it will then inform the
employee of the amount of items that should be taken.
When the employee has taken the correct amount of a product, he states into his head set
that he has fulfilled EXE’s instructions. EXE will give then direct the employee to another pick
slot, where he will again be asked to retrieve a specific quantity of a certain item. This process is
repeated until the entire assignment has been completed.
It is at this point when the employee will place his pallet near or directly into a
predetermined trailer. Another facility employee then will place the pallet into the trailer if
necessary, and then signs off on a nearby document that the trailer is ready to be transported to
its intended destination. This document is referred to as a diagram, and is located right beside
the trailer’s back door.
Additional Software Details
It is important to note the role Vocollect training plays in this process. Employees who
are not native-English speakers may pronounced certain letters and words differently than the
rest of the workforce. To get around this issue, the Vocollect program undertakes a process of
voice coding each employee. This allows it to recognize employees with distinct voices and to
communicate with them accordingly. In short, Vocollect is able to mimic the individual speaking
patterns of workers.
To further boost efficiency, Stop & Shop Inc. hired researchers to determine the standard
time necessary for workers to find and load each product. Employees are therefore required to
tell EXE through Vocollect when they have obtained each product. This allows company
supervisors to monitor employee performance. As with the other data stored on EXE, supervisors
can access this information through Blue Sky.
Receiving Process
Standard Operating Procedures
The Freetown distribution center is frequently besieged with requests from stores for
perishable goods, especially around holidays. These items include products such as turkeys,
bananas, apples, pears, as well as other types of assorted fruits and vegetables. With such a high
demand for goods from individual stores, it is imperative that the distribution center has a firmly
established process for receiving the products it must later supply to Stop & Shop outlets.
The distribution center initiates this process by placing an order to have specific
quantities of products shipped to the Freetown site. An excellent example is the Thanksgiving
holiday, when the distribution center orders large shipments of turkeys to supply its stores. When
the shipment arrives, the products will be unloaded at the facility’s docks, located in the
receiving section of the warehouse.
The specific information about the delivery is then entered into the EXE database through
the Blue Sky program. This information includes the product type, the amount of goods that have
been received, and the overall purchase order. After this data has been entered into the program,
EXE will then in turn print out labels to place on the pallets that have just been delivered. These
labels tell distribution center employees where to store each pallet.
A clerk in the Receiving Office will then instruct the delivery driver to back the delivery
truck into a specific docking bay. This bay has picked due its proximity to the aisle where the
products will eventually be stored. The pallets are then removed from the truck and placed as
close to the correct aisles as possible.
The pallet labels are then brought to the Receiving desk, where they are distributed
amongst the warehouse’s employees. These workers then place these labels onto the pallets, and
promptly scan them with Telxon scanning guns. This is a key part of company protocol, as it
allows for the distribution center to ensure that the warehouse has not only received the right
items, but has also been given the amount of product ordered by the facility. If the data received
from the labels matches up with EXE’s stored data, the EXE system notifies the Receiving
Office that the proper items have been delivered. The delivery driver then signs out and exits the
facility.
Finally, a forklift driver finds the pallets and scans its label. The driver is then told by the
EXE system to transport the pallets to a specific crane. When the forklift arrives at the crane, the
driver scans a barcode at one of 5 PND’s (Pick Up and Delivery) stations, located at the end of
each crane. It is at these PND stations where pallets are loaded onto cranes and placed in their
proper aisle location. Scanning the barcode allows the EXE system to tell the crane system the
PND location of each pallet. This communication between the EXE and HK systems is a key
part of the receiving process, as it ensures proper pallet storage.
Pallet Placement and Removal
A product is usually stored above other pallets that contain the same item. When picking
up items for a delivery, an employee will always choose products from the pallet located directly
on the ground. When the ground level pallet is empty, an employee will ask EXE through the
Vocollect system to replace the pallet. To avoid confusion, pallets are color coded, and the
employee is required to inform EXE about the
pallet’s color. EXE will then contact the HK crane
system, and instruct it to move the aisle’s crane to
the empty pallet.
EXE will then order the HK program to
retrieve a full pallet, usually found above the
empty pallet. To replace the empty pallet spot,
EXE will inform the HK system to about the
purchasing dates of each pallet. Specifically, EXE
will tell the cranes which pallet that has been
stored the longest. This particular pallet will then
be moved to the empty aisle space. Once this task
has been accomplished, the crane system will then
place the empty pallets into a pallet collector. The
Above: One of the facility’s cranes
HK software is programmed to keep track of the number of pallets in this pallet collector.
When the collector is reaches nine pallets, the crane will automatically remove it and
place the collector at the end of the aisle. The HK system will then contact a forklift, asking it to
pick up the pallet collector and to bring an empty collector to the aisle. The EXE and HK
programs will constantly perform every aspect of the pallet placement and removal process,
pausing only for periods of scheduled maintenance.
Conclusion
The Freetown Distribution Center’s distribution and receiving systems have proven
tremendously beneficial, giving it an excellent chance to achieve its goals of low operating costs
and increased efficiency. Furthermore, the center’s technology enables it to quickly supply its
numerous stores with the items they need to maintain market share, as evidenced by its stunning
98% on-time delivery rate. Finally, an increased reliance upon firmly established procedures and
stored data has greatly reduced the occurrence of potentially devastating errors. These system
characteristics have dramatically strengthened Stop & Shop Inc.’s overall business process,
enabling it to keep pace with rival companies for the foreseeable future.