Canadian experts take logistics execs into the world of automated public, private warehousing.

It was as far as you could go south - to hear our neighbors from the north.

New Orleans hosted the International Association for Cold Storage Construction (IACSC) annual conference and expo last November. The meeting featured two in-depth case studies about automated material handling systems in cold storage operations.

Delivering the keynote address was Bruce Dimmel, vice president of distribution for TDL Group Corp., part of Canada’s popular Tim Hortons restaurant chain. The other presentation featured Larry Laurin, president of public refrigerated warehouse operator Conestoga Cold Storage, based in Kitchener, Ontario. Laurin also is current chairman of the International Association of Refrigerated Warehouses.
Both executives spoke with Refrigerated & Frozen Foods.

“Automation has given us the high (inventory) accuracy levels we were looking for within the distribution center,” says Dimmel. “It also has resulted in improved productivity (compared to manual alternatives) and it has reduced our labor costs.”

Adds Laurin, “The main considerations with automation are [inventory] turns and the ability to start, operate and reliably maintain a very complicated system. That said, we have found that automation works well in fast-moving locations where you have costly real estate and high wages. Automation is more flexible than many people believe.”

Dollars to donuts
Tim Hortons Inc., Oakville, Ontario, says it is North America’s fourth largest publicly traded quick service restaurant chain (based on market capitalization) and the largest in Canada. As of last September, Tim Hortons had 3,527 systemwide restaurants, including 2,971 in Canada and 556 in the United States.

In 2009, Tim Hortons’ supply chain program involved as many as 17 Canadian and U.S. warehouses (private and third-party distributors) including five Canadian sites managed by Tim Hortons Distribution (TDL). Dimmel said TDL and third-party warehouses serve 3,527 stores and were on pace in 2009 to handle 49 million cases of product including dry goods (33 million), refrigerated and frozen products.

Of course this growing restaurant chain had a different supply chain network several years ago. For starters, it previously used a third-party to handle all refrigerated and frozen foods distributed to Ontario-area stores. Dimmel notes that it was as early as 2003 when officials first considered building a highly automated distribution center in Guelph, Ontario.

“We were considering a warehouse and – at the time – we had a 90-acre property,” he says. “Because an automated structure has a smaller footprint, we were able to sell off 48 acres of land with a high level of return.

“Meanwhile, we liked the reduced need for material handling labor while automation enabled us to handle reduced order lead times.”

With that, Dimmel says TDL invested more than C$50 million to build and equip the 8.8 million-cubic-foot Guelph facility between June 2004 and November 2005. The facility featured a 101-foot high freezer tower, cooler and refrigerated dock; in addition to an ambient goods tower and shipping-receiving dock.

Four years later, Guelph alone was handling about 22 million cases each year with 400,000 units received per week and 400,000 units shipped per week. On average, the operation ships 57,000 units daily in 93 truckloads that service between 300 and 320 stores. The warehouse handles as many as 2,500 SKUs, Dimmel said.

Dimmel told convention attendees that there were multiple benefits to automation. They include …

• smaller land footprint
• higher material handling efficiency vs. manual operations (lower product damage, lower error rate and less labor)
• expansion capability (more automated pallet storage capacity per square foot of new land vs. conventional)
• energy savings (due to smaller space to cool)
• reduced facility footprint (contributing to greener profile)
• longer depreciation (AS/RS and rack)
• more efficient picking operations (reduced station-to-station travel).

Since Tim Hortons built its operation five years ago, Dimmel says he has seen the warehouse industry improve productivity even more with order selection and storage aided by pick-to-light, put-to-light and voice-directed picking technologies.

“The future will be robotic picking – where it is the right fit for the business,” he predicts. “I also believe the companies that build these high technology warehouses will have to become more active in running them for clients.”

First person, third party
Laurin provided a first-person view of automation in a third-party storage application. And in this case – to Dimmel’s point – Laurin said Conestoga Cold Storage ended up building a system for itself.

For the record, this 36-year-old business says it offers complete Canadian and U.S. distribution services from four fully computerized warehouse and distribution centers in Kitchener and Mississauga, Ontario; Calgary, Alberta; and Montreal. The operations handle a wide variety of frozen retail and foodservice products – from fish and poultry to bread and vegetables. Officials say order sizes range from full pallet and full truckload to case pick and less-than-full-load shipments.

Conestoga opened in 1974 with the Kitchener operation serving area processors of turkey, vegetables and meat pies. By the end of the decade, however, Laurin said Conestoga had gone from “slow product turns” to more case pick requests on short notice. The company also was eyeing an expansion in 1979 and – given land costs, labor and material handling demands – he decided to invest in an automated storage and retrieval system.

Thus, the company has been involved in the automation for more than 30 years, since 1980.

“Automation is not without its risks,” he says. “Back in 1979, we were the first automated cold storage facility in North America and took a giant leap by using technology that was in its infancy. We learned that there were no stacker crane manufacturers building low-maintenance, heavy-duty systems that could operate efficiently in our harsh environment.

“It was then that we decided to dive even deeper into the building process and build our own stacker cranes . . . Since the first two Conestoga Cold Storage-designed cranes were installed into the Kitchener location in 1992, we have built and installed eight more systems in both Kitchener and Mississauga.”

IACSC leaders asked Laurin to discuss the challenges of building an automated system.

“Some of those challenges include slab design, rack-supported buildings, stacker design and installation,” he says. “This included discussion on the importance of a high level of accuracy when building and installing components for a high rise system.

“I also talked about some of the negative issues associated with these systems – such as capital cost and the risk of the system never meeting expected standards due to design and construction flaws. We also discussed the risk of extended start-up time, which has been the cause of many project failures.”

That said, Laurin remains a staunch advocate for automation – in the right conditions.

“Automated high rise buildings not only provide extremely efficient storage but also eliminate human errors, require less energy and eliminate the need for employees to work in the cold,” he concludes. “They also maximize the building footprint in markets with limited or expensive real estate.”

At a glance: IACSC
Founded in 1978, the International Association for Cold Storage Construction (IACSC), represents contractors and suppliers in the cold storage construction industry. Officials say IACSC “provides a forum for innovative ideas, promotes standards of practice, hosts professional education programs, and promotes the interests of the industry in political, legal and regulatory arenas.”

IACSC is a global organization and core partner of the Global Cold Chain Alliance. Visit www.iacsc.org for more information.