Flexibility is the match-winner

Migros Verteilbetrieb Neuendorf

16.04.2024 - 7 minutes reading time
Switzerland is known throughout the world: For its stable economic system, for the quality, design, and precision of the watches manufactured there, the impressive mountain scenery, and the success of its winter sports athletes. Switzerland also stands for innovation. This innovative strength is also evident in the omni-channel distribution center of Migros Verteilbetrieb AG (MVB) in Neuendorf (near Basel), which, according to MVB Project Manager Alexander Schweizer, belongs to the “unmitigated Champions League” and is one of the most dynamic logistics centers in the world. It was designed and implemented by the logistics lifetime partner WITRON. The main building, which houses the near- and non-food area, supplies more than 700 stores and many thousands of home shopping customers from a range of 100,000+ items per year. On a peak day, WITRON’s OPM, AIO, CPS systems pick more than 470,000 cases.

Alexander Schweizer is responsible for a seamless material flow at the site. The head of projects and his team manage various distribution channels including the store, specialist retailer, and online business, handle near-food, non-food, and frozen food items, supply cases, pieces, and bulky parts - both by truck and by rail. From very small to very large items: Cosmetics, toiletries, detergents, toilet paper, baby and frozen food, electronic parts, lawnmowers, parasols, washing machines, televisions, and even furniture.

Alexander Schweizer, Head of Engineering and IT, Migros Verteilbetrieb AG

Successful brownfield / greenfield installation

To ensure that everything can be handled cost-efficiently, in line with consumer needs, and ergonomically, Migros and WITRON integrated end-to-end automated and semi-automated logistics solutions, both as brownfield solution into the existing buildings and in newly constructed logistics areas.

"Ongoing operations always had top priority so that we could deliver on-schedule at all times."

Alexander Schweizer, Head of Engineering and IT, Migros Verteilbetrieb AG

Doesn’t that make you dizzy? “When we started in early 2020, I wasn’t really aware of what was to come. I didn’t get dizzy, but more and more challenges arose, and we had to balance all of Migros’ logistics processes - including Migros supermarkets, Migros specialist retailers, and the online business”, explains Alexander Schweizer. Alexander Schweizer is in the brownfield building: “Everything used to be manual here - spread over five floors. It’s hard to imagine today.” The MVB Manager stands next to the new conveyor system that is winding its way across the floors. “It was one of the bigger challenges implementing the new automated logistics systems into the existing material flow in terms of mechanics and IT during ongoing operations. At the same time, our manual order picking processes continued to run. Because despite the new installation, we still had to make daily deliveries. That was the prime directive. Thus, some reconstruction activities had to be interrupted from time to time and time schedules had to be flexible. Ongoing operations always had top priority so that we could deliver on-schedule at all times.“

Today’s consolidation is (semi-)automated and system-controlled

MVB’s challenge back then: Different picking modules were distributed across the five floors. “Before the project started, we had approx. 10 to 15 picking modules and each picking module produced its own pallet. The pallets were then collected in a consolidation area and every pallet that didn’t have a corresponding pallet filling degree was consolidated. This required quite a bit of organizational, manual, and therefore unergonomic effort. And we no longer have all that with the WITRON solution because all systems, the OPM, AIO, and the CPS are completely networked with each other in terms of IT and conveyor technology. All picking and consolidation processes both in the store and online business are now controlled by process technology and carried out automatically or semi-automatically.” Existing building parts, storage areas, and mechanical elements have been integrated into the overall process as far as possible.

End-to-end process for store and online business

Alexander Schweizer takes us on a journey. “A truck arrives. We have to run through the process to understand the revolution in our logistics processes.” Once arrived at the dock, the truck is already being unloaded. It contains detergent. We have already received the notification electronically in the WITRON system, which means that the employee only has to place the pallet on the conveyor system. The conveyor system is equipped with a scale and a SSCC laser.” The SSCC laser identifies the pallet with detergent containing 40 packs. The system checks the pallet weight and height and compares the figures with the existing master data. The pallet is then stored.

“The system now knows that it is a detergent with good packaging, square practical, and easy to pick”, jokes Alexander Schweizer. The detergent will be transported to the OPM, but first buffered in one of the three high bay warehouses (HBW). „Preferably in a high bay warehouse that is close to the OPM. Then, it is stored there and as soon as the stock in the picking warehouse is less than one day, the pallet is automatically removed from stock, separated, and transported to the 12 COM machines, which stack the product with other items from a customer order onto pallets or roll containers in a store-friendly manner. The items are then delivered by truck or rail.” And the home shopping customer? “If the item is toteable, it is picked in the AIO system.” Here, the workstations are semi-automated, and the items are presented directly to the employee. In addition to the detergent, the employee also picks an online ordered lipstick from the source tote, for example, which is then returned to the warehouse. “If the item is not toteable, the item for the online order will be picked in the CPS system. We will come back to this later.”

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Alexander Schweizer explains: “The OPM is a fully automated case picking system. The only employees working in this area are those who remove the stretch-wrap from the pallet. All other material flow processes are fully mechanized. Our OPM system covers some 5,000 items. Now, we will refere to the piece-picking system All-in-One Order Fulfillment (AIO): Here, items are picked for both the store and online business. The AIO handles small-volume items, which are stored in a tote AS/RS, as well as C-items, which is a pink lipstick, for example, that is probably needed at carnival. The output of the AIO and OPM is roughly the same throughout the day. The big difference is that we do not have 5,000 items in the AIO, but 40,000 different items.”

Completely system-controlled data management

"Yes, but fortunately we don’t have to do much because the WITRON system takes over the entire data management for us. It always knows which packages have been opened and which haven’t, and those that have been opened for too long and are not selling in the online channel are picked for the store."

Alexander Schweizer, Head of Engineering and IT, Migros Verteilbetrieb AG

Important: There is a separate stock management in the OPM and AIO, but no differentiation is made in terms of data between stock management for the store and online business. An item is either in the OPM or in the AIO. However, this can change quickly over the course of the year. A lipstick pack with high demand can then be moved to the OPM. And also an opened trading unit as mentioned in the example from Alexander Schweizer can automatically return onto a store pallet. The data management seems gigantic. “Yes, but fortunately we don’t have to do much because the WITRON system takes over the entire data management for us. It always knows which packages have been opened and which haven’t, and those that have been opened for too long and are not selling in the online channel are picked for the store.” The detergent is picked, as are the lipsticks. And how does MVB deal with lawnmowers, parasols, electrical household appliances, furniture, or detergents that are not suitable for totes? The overall process also includes the car-picking system, which picks heavy and bulky parts in a route-optimized manner with pick-by-voice support and consolidates them with items from the OPM or AIO as required for both the store and online business. “All processes are networked with each other”, Alexander Schweizer is happy.

Successful implementation: High flexibility is the key to success

For Alexander Schweizer and his colleagues, the combination of OPM and AIO is the heart of their new system, and they are confident to be well-prepared for both a changing product range and more demand from online channels. “The system is running successfully. We have achieved a remarkably high level of process flexibility, can change quickly, and adapt our logistics processes to ever new demands. And this is exactly what makes the difference! The merging of stationary and online business is constantly growing. Product ranges are changing very quickly. The pick performances during Christmas promotions and “Black Fridays” is partially 10 times the quantity of a normal weekday, especially when it comes to home shopping orders. But we can manage these challenges with the WITRON system.” Moreover, there are additional benefits. “We were able to reduce our logistics costs, are more cost-efficiently in terms of transportation costs, and we can react more flexibly on the stores’ demands with regard to pallet design or find good compromises to suit the requirements of the sales and logistics departments. The new solution has also improved ergonomics for our employees. Lifting, carrying, and awkward walking routes are almost completely eliminated - in the logistics center and in the store.”

New frozen food logistics concept as brownfield solution

He almost forgot to mention something. “We still need to head over to the frozen food logistics sector”, Alexander Schweizer reminds us. WITRON has replaced a competitor’s picking system there and integrated its OPM system into the existing building. The receiving and shipping area as well as the pallet high bay warehouse from the previous solution were kept. Now 10 COM machines are operated there at -25 degrees Celsius. “We currently supply more than 1,400 stores from a range of 2,200 items with the system and pick up to 100,000 cases onto pallets and roll containers on a peak day. We still have room for expansion as WITRON has already considered the installation of additional COM machines in its design concept”, Alexander Schweizer laughs. Everyone who has once played in the Champions League, wants to stay in the league.

Next steps: OPM expansion planned at the Suhr site

Alexander Schweizer’s work in Neuendorf is done for now. He is moving one logistics center further to Suhr. There, Migros Verteilbetrieb AG has been working with a WITRON OPM system for its dry goods range at Champions League level since mid-2011, supplying over 600 stores with more than 315,000 cases daily. At the end of 2015, an automated solution for the fresh produce and convenience area was integrated into the existing building, which is used to pick almost 120,000 cases daily. “Due to the expected growth, we need to expand our picking capacity in the dry goods range in order to guarantee our customers the usual high level of store service and to be able to continue to pick 100 percent of the items fully automatically. The decision was therefore made to integrate 14 additional COM machines. 28 COM machines are already operated there”.