If the building won't stretch, find some other way to increase capacity. At URM Stores in Spokane, Washington, moving from a six-day workweek to making deliveries seven days a week has provided the ability to spread increased volume across improved utilization of the warehouse, the fleet, and the staff of almost 350 workers. While more changes to expand capacity must be made, adding the extra delivery day has provided at least a year of breathing room, says Kirk Rollings, vice-president of operations.
Finding additional capacity concerns many distributors in the Inland Empire as the four-state area of eastern Washington, northeastern Oregon, northern Idaho, and western Montana is known. The Spokane metropolitan area is growing rapidly, and communities in the mountain regions of Montana are becoming increasingly popular with people moving in from out-of-state. URM has seen its business grow by almost 15% over the past three years. One indication of a healthy local economy is an unemployment rate that hovers below 5%.
URM Stores is a member-owned cooperative and voluntary grocery wholesaler founded in 1921 as United Retail Merchants. In its present form, it is one of the largest privately owned companies in the Pacific Northwest. URM serves 160 supermarkets, including 21 owned by the company, and a large contingent of convenience stores. An integral foodservice operation, established in 1976, serves hotels and restaurants in Washington, Oregon, Idaho, and Montana. In addition to the headquarters distribution center, URM operates six cash and carry locations for on-site sales to small stores, restaurants, churches, and other customers.
The company also owns Peirone Produce, a fresh produce distributor, acquired in 1986, operating from a separate location in Spokane. Peirone delivers directly to large URM customers and selects smaller orders for integration with scheduled wholesale grocery delivery from the URM warehouse through a nightly cross-dock operation. With the availability of produce from Peirone, URM stocks no fresh produce.
Shipping 600,000 cases weekly
The company operates from a 685,000-sq-ft warehouse containing 28,000 slotted line items. Weekly activity ships more than 600,000 cases resulting in consolidated average annual sales approaching $800 million. Current fleet size is 58 tractors and 150 trailers. The tractor fleet is split between Freightliner Columbia and Kenworth T800 heavy tractors for grocery and long distance delivery and Freightliner Business Class M2 and KW T300s for foodservice delivery. The trailer fleet contains 46' 6" refrigerated vans for dairy delivery, 52' 6" multi-temp reefers for grocery distribution, and 53-ft single temperature trailers, also for grocery delivery. The trailer fleet also includes 30- and 34-ft multi-temp reefers for foodservice distribution.
In general, supermarket, convenience store, and foodservice distribution is handled on separate equipment in Spokane and the surrounding communities within about 50 miles. Outside the core metropolitan area, combination loads are built to serve all three customer groups. For an illustration of the diversity of the trade area, URM's closest customer location is less than five miles from the distribution center; one of the most distant is in Hood River, Oregon, more than 325 miles one-way from Spokane.
Substantial fleet replacement
Within the past three years, URM has pursued a continuing plan for upgrading warehouse systems and replacing aging equipment in the fleet. All tractors and all but 24 trailers are held on a finance lease from PHH FirstFleet, a new entity formed early in 2006 by the merger of PHH Arval and First Fleet Corporation. Headquarters for PHH FirstFleet remains in Ft Lauderdale, Florida. Starting early in 2006, URM has replaced 60% of the tractor fleet, taking delivery of 25 Freightliner Columbia heavy tractors and seven Freightliner Business Class M2 medium tractors. The Business Class tractors pull 30- or 34-ft trailers primarily used for convenience store and food service deliveries.
Although some of the routes require drivers to lay over for a night, all URM tractors are daycabs. The new Columbia tractors are powered by Detroit Diesel Series 60 engines rated at 450 horsepower. The 21 Kenworth tractors remaining in the fleet are powered by Detroit Diesel or Caterpillar C15 engines, most rated at 435 hp. The new medium tractors use Mercedes-Benz MBE900 engines rated at 280 hp. Kenworth T300 tractors used with the short trailers are powered by Cummins ISC engines rated at 275 hp. The entire tractor fleet is equipped with 10-speed transmissions.
Tractors are held on leases with an initial term of five years with an option to extend the term to seven years. Trailers are leased for an average of seven years.
Service for the fleet is handled internally. URM has a three-bay shop staffed by eight technicians. Heavy tractors for grocery distribution are serviced every 15,000 miles or at least once every 90 days. The 90-day interval applies more to the medium tractors than the big tandem drive equipment, because the smaller tractors do not run as many miles. Trailer service happens at least once every 120 days. The Carrier Transicold refrigeration units on both single and multi-temp trailers go to the shop for inspection and service every 1,000 operating hours.
Voice-directed order selection
In the warehouse, URM has implemented voice-directed order selection using a system provided by Vocollect, a vendor based in Pittsburgh, Pennsylvania. Vocollect is the largest supplier of voice-directed order selection systems with more than 57,000 units deployed in more than 400 distribution centers. The voice direction system has been in place for 18 months and is credited with improving the accuracy of order selection as well as providing more efficiency from workers. Order selection can be quicker, because workers no longer have to handle labels and other paperwork formerly associated with the selection process, Rollings says. In addition, the work is safer with hands free from labels so that all effort can be concentrated on handling cartons.
Supermarket orders now are completely paperless with labels applied only to complete pallets ready for shipping. Eliminating labels for the majority of warehouse work saves URM a substantial sum simply from not buying label stock and printing labels. Because orders are smaller and are often mixed on pallets, foodservice and convenience store orders still utilize labels.
URM also has rationalized its warehouse management systems, placing the entire facility on a single software system. The warehouse operates with Power Warehouse and Power Productivity from Retalix. As new systems are implemented, URM keeps its emphasis on using systems that are easy to use, because productivity comes from the personnel, not the technology.
Fleet routing is based on the needs of URM's owner-members. Those are the big customers that define route profitability. While close-in stores and particularly large stores tend to get more deliveries per week, some of the largest stores are the farthest from the distribution center. At least one of those stores takes an average of six deliveries per week. This is a significant factor for a company that does almost 50% of its business within 50 miles of the distribution center, Rollings says.
Routing for supermarkets
Outside the core trade area centered in Spokane, loads typically are built around one large stop at a supermarket with the remainder of trailer capacity given to convenience store or foodservice customers. Foodservice accounts, in particular, must fit into the member-based routing process. Every foodservice account must generate a profit, and it must fit the routing schedule required to serve member supermarket customers. While not a large part of the business, foodservice delivery remains a valued complement to basic grocery distribution.
Many URM customers have the sales volume to take an entire trailer load in a single delivery, particularly when a variety of products is delivered with a multi-temperature trailer. The effect of these large deliveries is that URM averages 1.5 stops per supermarket route. Getting the right mix of product married with the best equipment combination for the longer routes can sometimes require a pair of doubles trailers, one of them with multi-temperature capability. Convenience store and foodservice routes require more stops — typically about six stops per load.
Concentrating on route efficiency has improved distribution and cut operating costs. In a year after the new routing package was installed, improved utilization allowed the fleet count to drop from 175 trailers to 150 and the tractor count to fall from 67 to 58 while sales have increased 13%.
Although recent operating changes have relieved some of the pressure, expanding capacity remains at the top of the list at URM. The company has always used older trailers for storage of non-perishable products and today it has 30 dry vans filled with merchandise parked on the property. Other overstock for the warehouse is held at two public warehouses in Spokane. URM has product delivered directly from vendors to the warehouses and shuttles replenishment to the distribution center with the company fleet as needed for delivery, Rollings says.
