Arla
Optimisation of Internal Transport
3 min read
Centralising and Automating
December 2010
Geography, demographics, politics, and economics are key aspects of any long-term business strategy. In Norway, they also have an unusually large influence on logistics. As a result, Carlsberg Ringnes is undergoing a major overhaul of its warehouse operations. The investment in an Automated Picking System (APS) is crucial for future efficiency.
Logistics Cost-effectiveness is Critical
‘One of the consequences for Carlsberg Ringnes,’ says Logistics Director, Claus Loft, ‘is that it is four times as expensive to service customers in Northern Norway. The customers are primarily large grocery chains, and their purchasing agreements do not allow us to differentiate the delivery price. Therefore, the cost-effectiveness of logistics is crucial for profitability. The company is constantly pressured to streamline production and warehouse operations.’
Warehouse Operations Centralised in Gjelleråsen
Three years ago, Carlsberg Ringnes asked Langebæk for help with a master plan study. The geographical starting point was the production and central warehouse in Gjelleråsen, which handles the majority of Carlsberg Ringnes' volume of nearly 400 million litres of beverages annually. The purpose of the project was to model the expected and potential growth in volume up to 2020 and, based on this, determine whether - and if so, how - the logistics structure, production and warehouse systems, buildings, and internal logistics could be adapted to future developments. Additionally, the recommendation had to consider natural limitations - due to the location on a ridge, expansion is very difficult and costly.
APS Handles 80% of Volume
The APS, designed to handle a wide range of boxes, cases, and trays, will initially pick and palletise about 65% of the daily volume, corresponding to more than 50,000 units and 1,000 pallets per day, which will be distributed to retailers, kiosks, bars, and restaurants according to their specifications. The system is designed to pick 80-90% of the daily volume. Carlsberg Ringnes expects to reach 80% of daily volume as picking is centralised. If the expected growth is realised, inventory turnover will increase, meaning the APS will eventually handle up to 90% of the volume it is designed to process.
Tightening of Working Environment Laws
‘It has, of course, been crucial for the investment decision that we could demonstrate a good business case for the APS,’ says Claus Loft.
‘But there have been other significant arguments as well. For example, we are already experiencing a labour shortage. Looking ahead, we expect the shortage to become even more pronounced. Additionally, there are ongoing tightening of the working environment laws, which dictate how much our warehouse employees are allowed to handle manually. So, in the long run, we would likely have been forced into this investment.’
First Norway, then Finland
In Gjelleråsen, the APS project is entering its final decisive phase. All hardware has been set up and is undergoing testing. By November, the APS will be integrated with Carlsberg Ringnes’ WMS, a critical moment in any APS project. Claus Loft continues: ‘So far, the project has gone entirely according to plan. In fact, we’re slightly ahead. If all goes well, the APS will be operational before Christmas.’
The success of the APS project is of great importance to Carlsberg Ringnes and Carlsberg as a whole. At Carlsberg Sinebrychoff in Kerava, Finland, a similar project is underway. In the long term, both projects will have a decisive impact on Carlsberg’s future investments. As a result, the APS projects are being closely monitored in Denmark, Sweden, and Switzerland.
Connection Between Strategy and Operations
Regarding the decision to entrust both the master plan and the APS project to Langebæk, which is based in North Zealand and not Norway, Claus Loft explains: ‘Naturally, it means a lot that Carlsberg and Langebæk have had a successful collaboration for many years and on many projects. The main reason, however, is that Langebæk, based on our experience, is the most competent consultancy in logistics in the Nordic region. Not only do they understand how to align strategy and operations better than anyone else, but they also manage to make the solutions work in practice. And on long-term projects like these, personality is also very important. Peter, Lars, and Christoph are able to relate to both leaders and warehouse staff.’
The completed Master Plan Study Has Led to a Greater Degree of Centralisation in Warehouse Operations
‘Today, we pick 65% of the volume in Gjelleråsen, and we will increase this to 100% in the coming years. For this to be possible, a greater degree of automation is required. Langebæk recommended an Automated Picking System (APS) as the best solution to this challenge,’ says Claus Loft.
