Without consolidation into the Champions League

The Migros-Verteilbetrieb Neuendorf AG is investing in the future of the location. Together with WITRON, the Swiss company is expanding and modernizing a frozen goods warehouse, automating a manual logistics center in the non-food area, and ordering an Omni-Channel warehouse concept for the interaction of store business and e-commerce. Altogether, there are three construction sites in an ongoing operation. 

The figures are impressive: 100,000 different items, some 500,000 cases per day, 250,000 pallet storage locations, 136,000 tray storage locations, and 240,000 tote storage locations - an enormous project that will be realized by 2021. 

If the weather permits, Thomas Kissling from Migros-Verteilbetrieb AG in Neuendorf can see the Swiss Alps from his window. He is responsible for the non-food area of the Swiss company. Many envy him for the panoramic view. However, nowadays, Kissling has little time to view the mountains. Combining daily business and the new construction site keep him even busier than usual. 

Parallel to the still operating manual warehouse processes, WITRON technicians install the new systems in the huge non-food warehouse, which extends over several floors. Kissling summarizes the overall project at the location: “We are replacing an existing Schäfer system in the frozen goods area with WITRON’s OPM technology while we are also expanding the operation to include the assortment of the Denner discount store chain. In the non-food area, we are expanding the logistics processes with the AIO system, an OPM system, and a CPS system. Moreover, in order to meet the increasing e-commerce demand, we are further automating the online processes”, explains Kissling. The non-food area in Neuendorf can handle the shipment of store orders, store pick-ups (click + collect) as well as online orders.

A challenging project. Probably too ambitious for some observers. The local newspaper headlined the presentation of the plans as “Logistics 0.4”. Kissling laughs. He and his team are making an even greater leap forward. “It has to be 4.0 because we are strongly investing in automation, a new IT infrastructure, supply chain intelligence, new processes, and distribution channels”, Kissling is proud and still has to smile about at the headline.

Kissling is tasked with managing the non-food assortment. The challenge at the Migros-Verteilbetrieb: The goods are stored on several floors and the logistics center is very large - in total more than 490,000 square meters / 5 million square feet of logistics footprint. So far, the Swiss have been picking their goods manually. “Our goal is to be able to pick close to 100 percent automatically or semi-automatically.” There will always be a few ugly items that are not conveyable. This means: 500,000 cases are shipped on approx. 9,300 pallets on peak days. Added to this is the growing e-commerce business of Migros. “We want scalability in the e-commerce business”, Kissling summarizes the main requirements. 

The system should grow with us. “Being able to breathe with the daily business, reacting flexibly to changing market volumes. Agility and scalability are the central keywords here”. In addition, Kissling sees further benefits in automation: “Ergonomics - because physically heavy work is eliminated. Sustainability - by reducing inventories and by reducing transportation costs due to optimally packed load carriers. High cost-efficiency - by reducing packaging costs per pick”.

And of course, the Swiss also have the focus on their customers: Premium customer service for all distribution channels - store and e-commerce orders. This means: Store-friendly picked pallets, roll containers and totes, optimally filled shipping cartons in the correct size, less waste, on-time delivery, and consumer-friendly prices. 

The people in charge decided to use the new AIO system from WITRON and are now on the way to an omni-channel warehouse. AIO stands for All in One Order Fulfillment - the developers in Parkstein refer to it as the next generation of piece picking. 

The Migros-Verteilbetrieb is the first customer to use this system. The All-in-One can handle store business, the delivery of orders to the stores (click + collect) as well as e-commerce orders right to the customer’s front door. “The product range covers some 100,000 different items, which we have to stock for all the channels”, explains Robert Venzl from WITRON. Together with Josef Pollinger, he is in charge of the project and is always on site for several days in a row. What makes the AIO special is that proven basic technologies are merged into one integrated system - and thus the need for synchronization of different systems and multi-handling of inventories is completely eliminated. Furthermore, the AIO can react flexibly to any market changes. The AIO can handle both, store and online fulfillment. "The online business has access to the same stock, but is handled at separate picking stations”, explains Venzl. “Processes that are usually handled in two separate sectors of a conventional warehouse are now covered in just one integrated warehouse logistics system. The result: significant efficiency, performance, and quality increase of the picking and packing processes as well as considerable investment savings”, Pollinger proudly adds. “The elimination of the need to most of the consolidation of online deliveries is a huge advantage for us”, confirms Kissling.

In addition to all the advantages already listed, Migros can profit from a compact design and short, transparent material flows. As a result, hardly any connecting conveyor technology is required in the warehouse. The system can handle both - e-commerce and store business – a true omni-channel warehouse. This increases flexibility for the Migros-Verteilbetrieb Neuendorf AG. “And we have scalability for the business”, adds Kissling.

“The AIO is a black box for us, which gives us a great efficiency gain”, Kissling laughs. “We trust the colleagues from WITRON.” Migros feeds the system with order data, preview data, and historical data. From this, an algorithm develops the best distribution in the system. A “digital twin” provides support in process simulation and thus in decision making. 

“Of course, the customer still has options for intermediation”, adds Venzl. The basis of the AIO is the intelligent distribution of goods in the AIO storage center, which is used to pick goods from totes and/or cartons semi-directly into the designated dispatch unit.

But why is the system numbered as 4.0? The WMS provides the answer: It has an overview of the entire supply chain. All changes in the vertical and horizontal process chain (e.g. master data, inventories, machines, orders, SKUs, stores, tours, distribution channels, general conditions) are permanently and directly incorporated into the logistics process.

“There are several challenges in both – the physical part and the IT part. Physics is not much easier than the IT: We have to install WITRON controls at the lifting devices and inside the conveyor system that spans on five floors during ongoing operation. We have to clear the space for the CPS system, which we need daily to handle the business. The big challenge with the IT is that we are currently connected to the Schäfer system and want to keep it that way. WITRON, therefore, has to dock to this system. We can’t simply clear a high bay warehouse, instead, we have to create temporary interfaces”, Alexander Schweizer summarizes the situation. He is the master of the IT, of the data at the Migros-Verteilbetrieb. In addition, Venzl adds: “We can do it.” Both men are working on this task and it has to run by 2021. “We are working at the Logistics Champions League here”, emphasizes Schweizer who also has an eye on the “frozen” construction site across the parking lot. 

In the neighboring frozen goods warehouse, the Swiss will rely on WITRON’s OPM system, replacing a Schäfer system in order to cope with the current growth. 

“Our frozen goods warehouse runs fully automatically – 24/7. The quantities have increased strongly over the past months. In the future, we will also be responsible for the frozen goods business of the Denner discount stores, an operation where we will need to pick onto roll containers. The current system can neither handle this volume any longer, nor was it possible to expand the system. This is why we are buying ten new COM machines from WITRON”, explains Schweizer. 

With the OPM it is possible to pick more than 95% of the product range of a grocery store fully automatically and in a way that benefits stores - without the use of personnel. The heart of the system is the loading device COM (Case Order Machine). With a system performance of more than 500 picks per hour, it is possible to pick cases onto load carriers in a product-gentle and store-friendly manner. 

How does the staff react to the increase in automation? In the frozen goods warehouse, home of Michael Odermatt, the changes are less complex at first sight. Odermatt manages the change process in the frozen goods area. “The existing team is familiar with the previously used Schäfer system and now we have to adapt to the WITRON system – but this also means that automation is not new for the team”, says Odermatt. The associates working in the frozen goods area have to get to know the OPM system in the next few months and get used to the processes. Odermatt and his “freezer team” are also training with the OPM system at the Migros-Verteilzentrum in Suhr.

And how is the situation in the non-food area? Are there worries among employees in the non-food sector facing the new automation? “Yes, there are worries, because the tasks will change considerably”, Franziska Müller explains openly. Together with Michael Odermatt, she is responsible for the MVN Logistics 4.0 change process at the Migros-Verteilbetrieb Neuendorf.

“We take these worries seriously, talk to our colleagues, inform them about the progress of the construction site, about new tasks, and further training opportunities.” An employee app informs the staff about developments. On large screens at the entrance, they can also see what future tasks will be like. People play a key role in the logistics processes. Those responsible at the Migros-Verteilbetrieb in Neuendorf have quickly recognized this.

“We will have cockpit and monitoring functions because in the future we will be operating the system on our own”, adds Müller. The new tasks will be system support and a new team will be set up, which will maintain and service the system and remove minor errors. In that way, the employees ensure high system availability. In the All-in-One system, additional workstations will be created in the order picking and repacking process. Here, the focus is on good ergonomic workstations.

What do the two change managers expect from the new WITRON system? They both demand an intuitive operation of the user interfaces because some employees have reading difficulties or little screen experience. “Simple screens as we know them from apps would be good for many users. They would help us define simple operating steps that can be learned quickly.”

Johannes Meißner, the IT expert on the WITRON management board has the topic already on his agenda. “User-friendly processes and good usability are important for our customers. The permanent optimization of these processes is one of our main IT topics.” Swiss customers like to hear that.