Productivity, one bite at a time
By gradually introducing labor standards and paperless technologies, Golden State Foods is improving distribution to McDonald's and its other quick service restaurant customers.
By Corinne Kator, Associate Editor -- Modern Materials Handling, 4/1/2007
- Starting Fresh
- The Low-Tech Transition
- The High-Tech Transition
- Implementing a Warehouse Management System
- System Suppliers
When you pull into the drive-through at McDonald's, you expect the restaurant to get your order right and deliver your food quickly. When McDonald's orders supplies, it expects the same accurate and efficient service from its third-party distributors.
Golden State Foods (GSF)—one of the largest food distributors in the United States—has been providing that service to McDonald's since the 1950s. Today, GSF distributes to approximately 3,600 McDonald's locations in the United States, including the 799 restaurants serviced through its new DC in City of Industry, Calif.
 Joe Michel, Golden State Foods, DC general manager |
The Southern California business has experienced double-digit productivity gains in the last 18 months, and Joe Michel, the DC's general manager, expects at least another 8% increase before the end of the year. The DC's success, says Michel, is the result of a combination of low- and high-tech improvements, taken one bite at a time.
Starting Fresh
The improvements began with a new 270,000 square-foot DC that combined the operations of three smaller facilities. The new DC has an improved layout and substantially more dock doors, says Michel, which reduces congestion inside the building and outside in the yard.
 In the dry goods section of the DC, picking remains paper-based for now. |
Now that GSF is settled into the building, improvements are continuing with the phased rollouts of two initiatives:
- A labor management program that rewards workers for exceeding engineered labor standards for productivity, and
- A paperless environment plan for the DC.
The plan to go paperless started with the introduction of voice-directed picking technology in the refrigerated portion of the DC. The initiative will continue with voice rollouts in the frozen and dry goods sections in the coming months. The final step will be the introduction of a warehouse management system (WMS), which is currently being piloted in another GSF facility.
The Low-Tech Transition
“Because the McDonald's system moves so quickly, we don't need a lot of technology,” says Bob Jorge, president of distribution for GSF.
 Inventory is stored in pallet flow rack to speed the flow of products in and out of the DC. |
McDonald's doesn't require all suppliers to place bar codes on products. Bar coding is expensive, says Jorge, and when products spend so little time in the supply chain, there has been little reason to track them with bar codes or other technology. Traditionally, GSF has relied on paper lists and human-readable labels rather than on bar code scanners and warehouse management software.
The company has also used little in the way of automated handling equipment. Its DCs are relatively small, so lift trucks, pallet jacks and flow rack are all the company needs to keep product moving efficiently. (For the facility's layout, see “Quick flow of fast food.”)
“We try to hold to a philosophy that says, 'you don't buy technology just to have technology,'” says Jorge. “We try to discipline ourselves. We don't need every bell and whistle out there because they don't all pay for themselves.”
The High-Tech Transition
GSF recently discovered a technology that does pay for itself in some circumstances—voice-directed picking. This is being implemented in DCs where there's a clear business case for the investment.
 Golden State Foods has been rolling out voice-directed picking technology in the refrigerated section of its DC. |
As the largest DC in the GSF system, the City of Industry facility was the best place to test the technology, says Jorge. “Because of the volume that goes through that center, we funded (the voice system) with the savings in labels alone,” he says. “It pays for itself in paper cost.”
Training employees on the system has been fairly easy, thanks to the new labor incentive program. When employees are rewarded for working more efficiently, says Jorge, they're willing to embrace technologies that can boost their efficiency.
Michel says the order pickers like the voice system for other reasons, too. “The associates like the ergonomic benefits,” he says. “They're not bending down to place labels on every case.”
Implementing a Warehouse Management System
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GSF's North Carolina DC is testing another new technology: a warehouse management system that will likely be introduced in the Southern California facility next year.
“McDonald's business is getting more complicated with more and more SKUs (stock keeping units) in the system,” says Jorge. “We think they'll need some bar coding technology in the future.” Rolling out a WMS now will give GSF the capability to track bar codes when the time comes.
In addition to improving efficiencies as the business gets more complex, says Jorge, bar codes may also help GSF improve its already impressive food safety program by enabling it to track products in the event of a food recall.
Even without bar codes, the WMS will help GSF gain efficiencies. The software will facilitate more precise putaway, which will in turn allow more efficient picking. It will also allow the company to move away from batch processing of orders.
All these changes—building a new facility, introducing an incentive program, switching to voice-directed picking and rolling out a WMS—are a lot to tackle at once, says Jorge, which is why GSF is phasing in each program gradually. Once all the ingredients come together, Golden State Foods should have a recipe for success for its customers.
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