The warehouse crew at Minnesota’s Pepsi-Cola Bottling Co. of Rochester Inc. received a phone call in the middle of the night last fall with instructions to hang banners to announce it had won Pepsi-Cola North America Beverages’ Donald M. Kendall Bottler of the Year award.

“We were pretty excited,” says Greg Kiser, sales manager for Pepsi-Cola Bottling Co. of Rochester. “As the employees got here the next morning they were pretty fired up.”

The Rochester Pepsi distribution facility is one of four in the network managed by The Gillette Group Inc., La Crosse, Wis. In addition to Rochester, the family-owned Gillette Group operates Pepsi distribution facilities in La Crosse as well as Mankato, Minn. It also has a branch warehouse in Decorah, Iowa. The Rochester facility was specifically honored as PCNAB’s Bottler of Year, but the company feels the award reflects its overall performance as a company, says Fritz Truax, chief executive officer of The Gillette Group.

The Gillette Group is primarily a distributor of Pepsi and Dr Pepper Snapple Group brands. The company is a member of Watertown, Wis.-based Wis-Pak Inc., a co-op that produces 95 percent of the beverages The Gillette Group distributes. It was a founding member of the Wis-Pak co-op in 1969, Truax says.

“Wis-Pak was formed when the industry started to move to aluminum cans, and rather than all these individual bottlers putting in can lines, they had the vision to see that it made a lot more sense to form a co-op,” he says. “It’s evolved to the point that we have no production in our facilities anymore, which is very nice.”

In addition to being a reliable bottling partner, Wis-Pak and The Gillette Group have partnered to offer direct shipments to The Gillette Group’s customers. The Gillette Group’s large format merchandisers place orders for layered and full pallets of product to be shipped directly to the account from Wis-Pak. Currently, 32 percent of its total cases are shipped direct from Wis-Pak’s bottling facilities to The Gillette Group’s customers.

“Direct shipments have allowed us to generate efficiencies and at the same time acquire less equipment to handle our deliveries,” Truax says. “Obviously if we brought 32 percent more product through our warehouses, we would need to evaluate both our facility and fleet requirements. Direct shipments have been a complement to our entire operations organization.”

The Gillette Group also streamlined its delivery by implementing 10-hour work day schedules four days a week for distribution of its products. With more than half of its customers in rural areas, some accounts did not need to be serviced five days a week, says Mark Gamoke, director of operations for The Gillette Group. The schedule change also has reduced the distance driven by its delivery fleet by 137,000 miles, about an 11 percent reduction, and fuel usage by 37,000 gallons, Gamoke says.

Rochester remodel
The Rochester warehouse serves the city as well as the more rural territory within a 70-mile radius of Rochester. The distribution division operates in a 35,000-square-foot loading area in Rochester’s 75,000-square-foot building. The warehouse used to be overloaded with the nearly 435 SKUs the warehouse stocks, says Don Gillette, operations manager for Pepsi-Cola Bottling Co. of Rochester.

“Pepsi is very aggressive with their SKUs, so we knew we had to find a way to reorganize the warehouse. If we didn’t, we’d have to build on an addition to make room for all the new products,” Gillette says.

The company worked with Precision Distribution Consulting (PDC), York, Pa., to reorganize its warehouse, Gamoke says.

“We have some breathing room now,” he says. “We have the ability to take on another 125 products or so. The old layout was very tight and had potential hazards from a safety perspective for our employees.”

The reorganized layout allocated space based on SKU velocity, Gamoke says. Generally the warehouse has a three- to 10-day inventory of a given product, he says. The facility moves 12,000 to 14,000 cases per night, Gillette says.

One of PDC’s recommendations included the installation of gravity feed rollers for slower moving SKUs. The rollers stock 20 to 30 SKUs in 10 feet of space. In the old layout, the same amount of SKUs used to take up 80 feet or more of space, Gamoke says.

In the updated warehouse, pickers traverse the long aisles on walkie rider pallet trucks assembling orders. Rochester’s loading crew consists of seven full-time and three part-time employees, who are part of Rochester’s 85 full-time and 30 part-time workforce.

The aisles are arranged by package type, including 20-ounce and 2-liter bottles, which continue to be a big part of its business, Gillette says. Its major products are arranged in the first two rows to limit the amount of travel the pickers must do.

Picking also used to be more complicated until The Gillette Group invested in a warehouse software program in 2008 that changed the picking system, Gamoke says.

“Our old method was to build by store, so you could have pick sheets that ran up to 16 pages long, and it was up to the loader to figure out how to build this puzzle. There was little consistency in how that was done,” he explains.

Orders are now downloaded to the system that identifies the easiest way to assemble it. For layered pallets featuring single layers of multi-packs, the Rochester warehouse uses a layer picking forklift attachment. The attachment picks a high percentage of the warehouse’s orders, Gamoke says.

“It helps us pick 28 to 30 percent of our product,” he says. “We ship another 32 percent directly from Wis-Pak to our large format stores. Our employees only have to hand pick approximately 40 percent of our cases, which represents a significant advantage as far as efficiency goes.”

For the remaining 40 percent of cases that require handpicking, individual pick tickets are produced for each pallet of the order and assigned to the builders, which enables multiple people to work on one order, Gamoke says.

The system also helps Rochester’s double-bottom deliveries, he says. The company has 21 trucks in its Rochester fleet, the majority of which are rear-loading bulk trailers used for both large and small format deliveries, Gillette says. In the Rochester market, many of its shipments are double-bottomed to outlying markets with a 27-foot rear-loaded trailer and a side-bay trailer, the company says. To accommodate the doubles routes, the Rochester warehouse has a double-bottom bridge that allows the truck to pull into the interior loading area. Once the bridge is in position, the bulk trailer can be loaded from warehouse level, Gillette says.

In 2010, The Gillette Group intends to further its policy of continuous improvement. The company hopes to increase its capabilities with advanced shipment notification (ASN). The system is increasingly important for serving the more than 20 Wal-Marts in The Gillette Group’s distribution territory. ASN notifies the retailer of what’s coming before the order arrives, which has increased accuracy in deliveries as well as shortened delivery times, Gamoke says.

“Through the ASN process, the delivery stop at Wal-Mart has been shortened to as little as 15 minutes from what was once as much as 90 minutes,” he says. “The Gillette Group has a 99.95 percent accuracy, which is above Wal-Mart’s goal of 99.8 percent. This has been accomplished due to the heightened awareness and great effort by our employees in the warehouse regarding accuracy.”

The company also is looking into a voice picking system for its warehouse, which would help reduce its errors, Gillette says. In addition, it is planning to implement some of PDC’s recommendations into its warehouses in Mankato and La Crosse, Truax says. Those locations are facing similar space constraints as Rochester was prior to the warehouse redesign, he says. BI

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