Upon entering Eastern Distribution Center III at Hershey Foods, one quickly realizes this is not your normal warehouse.

For one thing, there is the distinct smell of chocolate in the air. This 1.2 million square foot building, located in Hershey, Pa., is packed full of millions of candy bars as well as cocoa, syrup and many other chocolate delights. (Click here to see a layout of the facility)

Second, the temperature is a bit cooler than your average warehouse, just 55-60 degrees to preserve its precious stock. The humidity is low too.

Third, the building contains very little automation. Instead, Hershey uses a more conventional design featuring plenty of pallet racks - enough to store 165,000 pallets. A fleet of 160 lift trucks services the racks, including counterbalanced, reach and walkie-rider units.

'We wanted a world-class facility, but we did not want to automate if we could drive efficiencies with improved processes and technology,' says Ken Miesemer, Hershey's director of distribution operations.

Eastern Distribution Center III is located only a mile or so from several of Hershey's main manufacturing plants. The DC was built to accommodate growth in Hershey's food distribution network and to bring more product under one roof. It is one of three large distribution facilities that the chocolate maker operates in central Pennsylvania. The new building ships directly to customers in the Midwest and Atlantic states, as well as to other Hershey facilities around the country.

'We acquired a couple of companies, including Leaf Candy,' recalls Miesemer. 'Our SKU (stock keeping unit) count grew dramatically. We had the two other DCs in the area, but also had to lease space in some overflow facilities. That involved a lot of extra handling to combine products for the customers before they could ship. We wanted this building to have so much throughput capacity that we would not be constrained.'

And throughput it has. Some 125 trucks arrive and 150 full trailer loads depart the facility each day during its peak seasons - August though October in preparation for Halloween and the weeks before Christmas. This amounts to over 600,000 cases of candy passing through daily. The new facility has provided faster turnaround on these items with less product damage and has eliminated the need for the overflow storage.

The two other area distribution facilities continue to operate as well. Different SKUs typically reside in each, with the new facility performing most of the partial pallet processing.

The new building has already proven to be more efficient than the older facilities while requiring less labor. While Hershey owns the building, it uses a third party, Exel, to manage it.

Central to the facility's success are improved slotting and the use of very dense storage. Racks in the new building are double-deep and seven levels high, compared to five levels in the older buildings. The dock areas were also created with 80 feet of staging space, permitting more product to accumulate and allowing orders to be batch-picked for greater efficiencies and less movement. All of the processes are controlled and monitored by an intelligent warehouse management system (RedPrairie Corp.)

'We measure everything on this operation,' explains Miesemer. 'The system can accurately measure where workers are, how far they have to travel, and how long it should take them. We then measure that against a standard. That helps to drive productivity.'

Besides distribution, about 200,000 square feet of the building houses a co-pack area. Here items are converted into merchandising and promotional displays. Candy is transferred from intermediate shipping cases and re-boxed in promotional packaging. A few small conveyor lines service this area's bagging operations.

Prior to opening this facility, these special packing operations were sent to third parties to perform. Now it can be managed within the complex. During non-peak periods, labor can be transferred from distribution activities to the co-pack area.

'It works more efficiently now that we can do all of these processes under one roof,' says Miesemer.

Each trailer arriving at the facility has its own tracking number that is entered in the management software upon passing through the gate. The system then assigns a door that is located as close as possible to where product on the trailer should be stored.

All of Hershey's 160 dock doors can be used for both receiving and shipping. Ideally, a trailer is unloaded of its incoming product, then re-loaded with outbound orders.

Counterbalanced lift trucks pull arriving products from inbound trailers. Many items arrive on slipsheets, which are handled with special attachments. Once pulled, the driver transfers the load to a standard pallet for movement within the facility. Empty pallets are stored in racks located above the dock doors.

Before leaving the manufacturing facility, each load receives a bar code license plate. The lift truck driver scans this bar code to alert the warehouse management system (WMS) that the product has arrived. The driver then stages the load near the dock until a reach truck can collect it.

Almost all products are taken from the dock to reserve storage. Occasionally cases may be taken to replenish one of the pick tunnels, or crossdocked to an outbound staging lane or even transported to the co-pack area. Usually though, items for co-pack enter as full trailer loads at docks closest to that area.

Reach truck operators are instructed by wireless devices to retrieve an incoming load. The load is scanned upon pick-up, and the WMS assigns it a storage location. Typically, the location is selected to reduce travel time once the item is either picked or used for replenishment. Upon arrival at the putaway location, the lift truck operator also scans a bar code attached to the rack.

While some facilities operate on a first-in/first-out basis, Hershey schedules replenishment based on product expiration dates. Replenishment occurs throughout the day with items brought from the many storage areas to the facility's two pick tunnel modules.

The modules contain the same SKUs, though they may not appear in the same positions within the four tunnels of each module. This design eliminates a great deal of travel, allowing products to come from the closest storage area. Once picking begins, it also permits the tunnel closest to the assigned shipping dock to be used. Active picking is performed on the first level only. Additional product is stored above in pushback racking that is seven pallets deep on five levels. The racks are fed from aisles adjacent to the tunnels, with four-deep racks fed from one aisle and three-deep racks supplied from the other side.

Slotting within the above reserve racks is random and does not always reflect the same product as in the active position below. The goal is to make storage and replenishment as efficient as possible, which is achieved more consistently through dynamic slotting. The active level contains 800 fixed slots and another 800 dynamic positions. These are re-slotted as needed, especially when handling seasonal product.

Picking is performed from both reserve storage racks and the pick tunnels with 65 percent of product selected as full pallets by reach trucks. In former distribution operations, most picking was done to order. Now with the WMS and additional space for staging, batch picking is employed as assignments are interleaved, or multi-tasked.

'In the past, we had only one or two people working on an individual order,' says Miesemer. 'Now with our interleaving, we may have ten or more people working on that order. Their assignments are based on making the most efficient moves from the closest possible locations.'

The batch picks are taken to assigned docks as directed by the on-board wireless units. The driver drops the load at the appropriate staging lane and scans a large bar code sign hanging above the lane to confirm the deposit of the product.

Case picks come from the pick tunnels. Walkie-rider trucks gather most of these items onto pallets comprised of mixed SKUs. Wireless units relay instructions from the warehouse management system. The cases are scanned as they are pulled and placed onto the pallet. The pick location is also scanned to confirm the selection.

'The software system pre-determines the cube of the pallet so that we know how much product will fit on it,' says Miesemer.

Typically, a pallet is used for only one customer. Some loads, however, are sent to pool points where they may be broken down for multiple customers and combined with other items.

Once a full pallet of items has been gathered, it is taken to automatic stretch wrapping units. In a clever use of space, the wrap units are located below overhead racking, but adjacent to the pick tunnels. This design maximizes storage space within the building. A reach truck or counterbalanced truck picks up the wrapped load and takes it to the staging lanes at the assigned dock, where it joins full pallet loads brought directly from the reserve racks.

Counterbalanced trucks load outbound trailers, scanning the load as it is placed onto them. Items repackaged in the co-pack area are also gathered onto pallets and taken to docks closest to that part of the building.

Some of the products distributed from the DC ship as full trailer loads, while others are loaded as partial trailers. Most products will ship directly to customers, while other merchandise will be sent to consolidators or smaller Hershey facilities.

The efficient facility, opened only a year, has already been a treat for Hershey's distribution operations.

Click on the icon to read about Hershey's yard management.