A Model of Efficiency and Progress:

The Freetown, MA Stop & Shop Distribution Center

Dan McKnight

Michael Harris

Steve Quinn

Hassan Abualola

John Reardon

Introduction

For this project, our group focused on the day-to-day operations at the Stop & Shop

distribution center in Freetown, MA. We interviewed the following three employees for our

project’s background research:

- Steve Dowler, Senior Warehouse Manager.

Mr. Dowler is in charge of overseeing all of the operations inside the warehouse, including both

the shipping and receiving processes. Essentially, Mr. Dowler role is to ensure that the

distribution center’s procedures are being followed by employees, and that goods are being

delivered on time to the appropriate stores and customers. Mr. Dolwer also manages the center’s

Profit and Loss division, which focuses on the company’s goals for operating costs and

productivity. Labor relations between upper management and warehouse employees is another

area in which Mr. Dowler plays a major role.

Office Phone: 508 – 977 – 5002

Cell Phone: 508 – 717 – 7502

Fax: 508 – 977 – 5149

Email: sdowler@stopandshop.com

- Roger Beliveau, Senior Support Manager

As a support manager, Mr. Beliveau is assigned the tasks of managing inventory, payroll,

product slotting, and customer service. He also manages the facility’s enter technical support

area. In addition, Mr. Beliveau works as a liaison between the warehouse and other store offices,

usually for issues regarding systems, product procurement, auditing procedures and store

relations. Any issues directly relating to system performance are directed to Mr. Beliveau’s area,

as are requests for system upgrades and maintenance.

Office Phone: 508 – 977 – 5270

Cell Phone: 508 – 934 – 6483

Fax: 508 – 977 – 5149

Email: RBelivea@stopandshop.com

- Chris Linehan, Operations Manager

Mr. Linehan’s role is to closely monitor all of the facility’s product purchases from the

distribution center’s vendors. Mr. Linehan’s job requires him to often check if the facility’s

product suppliers are delivering the exact goods that have been purchased by the center.

Furthermore, Mr. Linehan must confirm that the warehouse has received the proper amount of

each product.

Office Phone: 508 – 977 – 5015

Fax: 508 – 977 – 5146

Email: clinehan@stopandshop.com

Background Information

Basic Facts

Below are the key statistics for the Freetown distribution center:

Total Building Size 1.3 M Sq. Ft

Perishable Section 488,000 Sq. Ft.

Non – Perishable Section 612, 000 Sq. Ft.

Number of Dock Doors 214

Number of Deep Docks 110

Selection Aisles 84

Reserve Pallet Positions 56,000

Selection Slots 13,000

Cranes 77

Trailers 785

Tractors 161

Loads Delivered Per Week 1700+

Miles Driven Per Week by Delivery Trucks 300,000

On-Time Delivery Percentage 98%

Union drivers 290

Number of states to which deliveries are made 5

Company History

The Stop & Shop organization was first established in 1914, when the Rabinovitz family

founded the Economy Grocery Stores Company in Somerville, Massachusetts. Soon afterward,

the company adopted the then-revolutionary concept of establishing large supermarkets that

emphasized self-service. This business model proved to be immensely successful, as by 1947

Economy Grocery Stores had expanded into a chain of 86 supermarkets. It was during this year

that the company changed its name to the present-day title of Stop & Shop, Inc. The organization

was acquired by Ahold, a multinational food conglomerate, in 1996.

With such a large number of stores to manage, Stop & Shop Inc. determined that their

current distribution facility lacked the size and technological capabilities to adequately supply its

entire chain of stores. To address this problem, the company green lighted the building of a

massive, state-of-the-art distribution center. This building project was completed in 2004 after a

16 month construction process. As stated above, the distribution center is located on a 1.3

million square foot site, and features an automated crane system that controls a total of 77 cranes.

This crane system plays a crucial role in the facility’s daily operations, as it stocks and

replenishes products when necessary.

Business Strategy/Goals

The Freetown distribution center strives to maintain consistent, on-time delivery services

to individual stores. To accomplish this, all machinery must be constantly maintained and

repaired when necessary. In addition to dependability, the Freetown site also allows stores to

customize their orders, enabling individual locations to obtain exact quantities of specific

products. The quality of its products is another key part of the company’s strategy, as it regularly

inspects the condition of both perishable and non-perishable items. Finally, Stop & Shop Inc.

places a strong emphasis on keeping operating costs as low as possible.

These strategies give Stop & Shop Inc. a solid chance to achieve its goals of maintaining

market share and keeping pace with the technology of its competitors. Accomplishing these

objectives would allow the company to provide consumers with popular products in a timely

fashion. By the same token, maintaining relatively low operating costs will have a positive effect

on the organization’s financial picture, potentially serving to boost the company’s overall profits.

Purpose of System

The Freetown facility’s distribution system gives Stop & Shop Inc. a solid chance to

achieve its goals. The company correctly believes that it is crucial to supply its stores with

popular products, since this will greatly help stores to keep frequent customers. To accomplish

this, stores must be able to customize orders to reflect consumer demand. Moreover, individual

outlets also require on-time delivery to adequately function and maintain sales.

Consequentially, modernizing technology is an area of great importance to the company,

as it enables the center to quickly and efficiently replenish the inventories of its stores. Without

this system, Stop & Shop supermarkets would be at a sizable disadvantage compared to its

competitors, as rival chains would likely be able to respond to customer demand trends at a much

faster pace.

Furthermore, the center’s automated nature acts a guard against system failure. Instead of

being vulnerable to human error, any miscues or miscalculations can easily be pinpointed and

adjusted with a simple input of data. Because of this, the organization’s business process will

likely not be derailed by either technological malfunctions or employee mistakes.

Business Process

Perhaps the most notable hardware used by the Freetown distribution site is its 77

automated cranes. Employees also frequently use headsets, which transfer orders to workers and

provide specific warehouse locations for products. Large sets of computers are used to run the

company’s multiple software programs.

The distribution center relies on four software programs to carry out routine tasks. These

programs are known as Blue Sky, EXE, Vocollect, and HK – ASRS (or HK for short). Together,

these four programs are indispensible for the company’s business process. Their combined

capabilities are vast, as they direct the movements of cranes, enter and store product and delivery

information, and dispense instructions to employees.

The data used for the company’s business process focuses on deliveries, incoming

products, and inventories. Several procedures are also routinely used for distributing this data,

and involve both hardware and software. For example, delivery data for individual stores is

typically entered into the system through the Blue Sky software. In turn, Blue Sky sends this

information to the EXE program, where it is stored until an employee is ready to assemble the

order. To access this information, an employee must put on a headset, which is linked to the

Vocollect software. EXE then uses Vocollect to transmit the delivery data to the employee, who

receives it through his headset.

There are additional procedures involved for both transmitting data and gathering

warehouse products. Before he can receive a delivery order, an employee is required to verbally

enter in his name and password into the Vocollect system. After this step, the Vocollect software

will instruct the employee to say a predetermined printer number, which will prompt that same

printer to print out a Pallet Destination Summary. This summary will tell the employee how

much product will be gathered for the delivery. The Vocollect system will then direct the

employee to the aisle where the products are located.

As one can infer from the above descriptions, there is a near flawless business process at

the Freetown Distribution center. This system represents a perfect interaction between software,

hardware, and employee protocol.

Software Hierarchy and Functions

The Blue Sky software program can be considered the overseer of all the other programs,

as it is the manager of all other software and is used to place orders into the system. EXE can be

summed up as being second in command, and is used to send distribution orders to Vocollect.

EXE also stores delivery orders and inventory data. Given the nature of their responsibilities, it

would be impossible to run the center without these software programs.

Below EXE are the Vocollect and HK programs. Both of these programs receive all of

their information and instructions from EXE. Vocollect is used to disperse employee distribution

assignments, and is used by employees to alert the HK system about empty pallets. The HK

software controls the facility’s crane system, and is entrusted to replace and stores pallets. In

addition, the HK software also keeps track of empty pallets.

Hardware

For the most part, the hardware used by the center’s applications consists mainly of

desktop computers, laptops and rugged mobile tablets. In addition to the headset, the Vocollect

system also uses a large terminal, which transmits assignments to the headset. The facility also

uses Symbol Truck mount units and Symbol handheld units for a variety of functions with EXE

and HK.

Networks

The Freetown Distribution Center has its own intranet, with access restricted to only

company employees. This intranet allows a user to access the Blue Sky software, which oversees

the company’s other software programs. An employee can use this intranet to insert delivery

orders into the system, and to observe the performance of the facility’s software. In addition,

users can access the network at distribution center offices and at off-site locations.

The distribution center does not have its own external internet site open to the public. Its

parent company, Stop & Shop Inc., does have an internet site at www.stopandshop.com. This

website contains details about store locations, store sales, discount cards, and other various

promotions. The site also features recipes, recommendations for healthy dieting, and suggestions

for meals. Most notably, it allows for customers to purchase food online.

Network Connections

Essentially, the Freetown facility uses Wide Area Network, or WAN for short. This

means that computers not positioned on the distribution site are still able to access the network.

The Distribution center uses a WAN in lieu of a Local Area Network (LAN), in which clients

that use the network are all positioned on one geographical location. The use of the company’s

WAN network is fairly limited, however, as contact with vendors and other outside parties is

typically conducted through the company’s email system.

The specific WAN style used by the center is known as a Virtual Private Network (VPN).

This VPN allows staff to access the distribution center from off-site locations. An employee can

access the VPN network by first establishing an internet connection, and then connecting to the

center’s internal site. VPN use is strictly limited to company employees, and can only be

accessed with the use of a FOB key.

As mentioned earlier, this FOB key is a security measure taken in order to ensure that the

VPN is only used by authorized personnel. The key is placed directly into an employee’s

computer, and displays a number code. This number code changes at regular intervals. This code

is then entered in the password field in order to access the VPN.

Authorized employees use the VPN for several purposes. Staff can use this network to

access confidential data, such as company updates and training modules. These are used as tools

for employees to stay up to date on company policies and procedures. Employee addresses and

phone number extensions are also stored on this network as well.

Database

The facility’s EXE program also functions as its database. All incoming orders from

individual stores are stored in the EXE system. In addition, EXE also keeps track of product

inventory. EXE is also entrusted with the warehouse locations for each particular item. Data is

entered into the database by employees working in a facility department referred to as the

Receiving Office.

Security

In order to prevent unauthorized individuals from accessing the company’s intranet, an

employee needs to insert a security key into the computer that is being used to access the

network. This key is known as a FOB key and is made by RSA, a company that is a well

established in the business of security products. The key resembles a flash drive, and features a

small screen which displays a system password. A typical password consists of six numbers, and

will change every fifteen minutes. The changing of the password every fifteen minutes makes it

almost impossible for any outside “hackers” to enter into Stop & Shop’s intranet. The user

simply has to type in this password into a specific box to enter the network and he or she will

have full access to Stop & Shop. As far as security software is considered, the distribution center

had its own IT department that is specifically designed for implementing all of the necessary

software.

Above: SecurID key (FOB Key)

E – Commerce

In order to use the organization’s internal network, employees must download Blue Sky

software into their personal computers. Because of this requirement, it can be accurately stated

that the distribution center uses a thick client to conduct daily operations. Employees who do not

have Blue Sky software installed will be unable to enter orders into the system, and will also be

prohibited from monitoring the interaction and performance of the facility’s software.

Delivery Assignments

Vocollect System History

The Vocollect system is relatively new software program that was recently added to the

Stop and Shop distribution center. Years of laboratory tests proved to be extremely beneficial for

the software’s development, as preliminary tests with prototypes were met with rave reviews.

The Freetown distribution center was the first location were the Vocollect program was used for

daily operations. Since its installation, this state-of-the-art software has proven to be a

tremendous asset for the company, as it represents a major upgrade from the center’s previous

methods for processing orders. As stated previously, Vocollect receives all its data from the EXE

program.

Before Vocollect/EXE, employees were forced to carefully review each order, and were

required to mark off each item on the order with a red or green pencil. A green mark signified

that the product had been located, whereas a red mark meant that the distribution center had run

out of that particular product. Needless to say, this system’s reliance upon manual calculations

made it very susceptible to various errors, usually involving inventory counts and aisle

information. Such mistakes could ground the distribution center’s entire business process to a

halt. In response, the company poured a significant amount of funds towards research and

development for Vocollect.

Standard Operating Procedures

As mentioned earlier, Blue Sky is positioned as the top program, followed by the EXE

software. Located directly below the EXE program is the Vocollect system and the HK software,

which operates the facility’s cranes. Essentially, Blue Sky plays the role of the systems “parent,”

and gives instructions and data to its “children” (the EXE, Vocollect, and HK software).

The delivery process begins when the Blue Sky software transfers delivery data to the

EXE system. EXE stores this data until it is accessed by an employee. EXE sends this data to

facility employees through the Vocollect software. Access to the Vocollect system is strictly

limited to registered workers who have been trained in the procedures used for operating

Vocollect. Employee training usually involves learning a set of voice commands, which allows

EXE to keep track of each specific order. This is certainly an important part of the Freetown

center’s business process, as there could be dozens of employees with distinct orders

simultaneously communicating with the EXE program through Vocollect.

When an employee begins

his shift, he first heads to a

specific room where all of the

facility’s head sets and batteries

are stored. This same room also

contains the hardware used to run

the Vocollect system. Once the

employee has placed on a headset,

and has gone through all of the

procedures required to use it, he

will then walk to the building’s

warehouse to pick up a battery-

operated forklift (shown on the

right). They employee will then

begin his first delivery assignment.

The employee will start by asking the EXE system for assignment details through his

head set. EXE will then tell the employee which aisle to drive to, and where in the aisle the

Above: A row of Forklifts,

positioned near the facility’s aisles

product is located. For example, EXE may instruct an employee to head to aisle 44, and look for

location B1111. All of this information is typically found on a Pick Slot Label.

Once he has reached the label, and employee will repeat this data back to EXE through

Vocollect. EXE will then ask for the Voice Confirmation Number, which is also located on the

Pick Slot Label. An employee is also required to tell EXE the forklift’s letter. The employee, for

instance, could give EXE a confirmation number of 32 and M as a forklift letter. Not only does

this procedure further confirm if an employee has arrived at the correct destination, but it also

will prevent EXE from continuing to give this order to the employee once it has been completed.

After EXE confirms that the worker has chosen the correct pick slot, it will then inform the

employee of the amount of items that should be taken.

When the employee has taken the correct amount of a product, he states into his head set

that he has fulfilled EXE’s instructions. EXE will give then direct the employee to another pick

slot, where he will again be asked to retrieve a specific quantity of a certain item. This process is

repeated until the entire assignment has been completed.

It is at this point when the employee will place his pallet near or directly into a

predetermined trailer. Another facility employee then will place the pallet into the trailer if

necessary, and then signs off on a nearby document that the trailer is ready to be transported to

its intended destination. This document is referred to as a diagram, and is located right beside

the trailer’s back door.

Additional Software Details

It is important to note the role Vocollect training plays in this process. Employees who

are not native-English speakers may pronounced certain letters and words differently than the

rest of the workforce. To get around this issue, the Vocollect program undertakes a process of

voice coding each employee. This allows it to recognize employees with distinct voices and to

communicate with them accordingly. In short, Vocollect is able to mimic the individual speaking

patterns of workers.

To further boost efficiency, Stop & Shop Inc. hired researchers to determine the standard

time necessary for workers to find and load each product. Employees are therefore required to

tell EXE through Vocollect when they have obtained each product. This allows company

supervisors to monitor employee performance. As with the other data stored on EXE, supervisors

can access this information through Blue Sky.

Receiving Process

Standard Operating Procedures

The Freetown distribution center is frequently besieged with requests from stores for

perishable goods, especially around holidays. These items include products such as turkeys,

bananas, apples, pears, as well as other types of assorted fruits and vegetables. With such a high

demand for goods from individual stores, it is imperative that the distribution center has a firmly

established process for receiving the products it must later supply to Stop & Shop outlets.

The distribution center initiates this process by placing an order to have specific

quantities of products shipped to the Freetown site. An excellent example is the Thanksgiving

holiday, when the distribution center orders large shipments of turkeys to supply its stores. When

the shipment arrives, the products will be unloaded at the facility’s docks, located in the

receiving section of the warehouse.

The specific information about the delivery is then entered into the EXE database through

the Blue Sky program. This information includes the product type, the amount of goods that have

been received, and the overall purchase order. After this data has been entered into the program,

EXE will then in turn print out labels to place on the pallets that have just been delivered. These

labels tell distribution center employees where to store each pallet.

A clerk in the Receiving Office will then instruct the delivery driver to back the delivery

truck into a specific docking bay. This bay has picked due its proximity to the aisle where the

products will eventually be stored. The pallets are then removed from the truck and placed as

close to the correct aisles as possible.

The pallet labels are then brought to the Receiving desk, where they are distributed

amongst the warehouse’s employees. These workers then place these labels onto the pallets, and

promptly scan them with Telxon scanning guns. This is a key part of company protocol, as it

allows for the distribution center to ensure that the warehouse has not only received the right

items, but has also been given the amount of product ordered by the facility. If the data received

from the labels matches up with EXE’s stored data, the EXE system notifies the Receiving

Office that the proper items have been delivered. The delivery driver then signs out and exits the

facility.

Finally, a forklift driver finds the pallets and scans its label. The driver is then told by the

EXE system to transport the pallets to a specific crane. When the forklift arrives at the crane, the

driver scans a barcode at one of 5 PND’s (Pick Up and Delivery) stations, located at the end of

each crane. It is at these PND stations where pallets are loaded onto cranes and placed in their

proper aisle location. Scanning the barcode allows the EXE system to tell the crane system the

PND location of each pallet. This communication between the EXE and HK systems is a key

part of the receiving process, as it ensures proper pallet storage.

Pallet Placement and Removal

A product is usually stored above other pallets that contain the same item. When picking

up items for a delivery, an employee will always choose products from the pallet located directly

on the ground. When the ground level pallet is empty, an employee will ask EXE through the

Vocollect system to replace the pallet. To avoid confusion, pallets are color coded, and the

employee is required to inform EXE about the

pallet’s color. EXE will then contact the HK crane

system, and instruct it to move the aisle’s crane to

the empty pallet.

EXE will then order the HK program to

retrieve a full pallet, usually found above the

empty pallet. To replace the empty pallet spot,

EXE will inform the HK system to about the

purchasing dates of each pallet. Specifically, EXE

will tell the cranes which pallet that has been

stored the longest. This particular pallet will then

be moved to the empty aisle space. Once this task

has been accomplished, the crane system will then

place the empty pallets into a pallet collector. The

Above: One of the facility’s cranes

HK software is programmed to keep track of the number of pallets in this pallet collector.

When the collector is reaches nine pallets, the crane will automatically remove it and

place the collector at the end of the aisle. The HK system will then contact a forklift, asking it to

pick up the pallet collector and to bring an empty collector to the aisle. The EXE and HK

programs will constantly perform every aspect of the pallet placement and removal process,

pausing only for periods of scheduled maintenance.

Conclusion

The Freetown Distribution Center’s distribution and receiving systems have proven

tremendously beneficial, giving it an excellent chance to achieve its goals of low operating costs

and increased efficiency. Furthermore, the center’s technology enables it to quickly supply its

numerous stores with the items they need to maintain market share, as evidenced by its stunning

98% on-time delivery rate. Finally, an increased reliance upon firmly established procedures and

stored data has greatly reduced the occurrence of potentially devastating errors. These system

characteristics have dramatically strengthened Stop & Shop Inc.’s overall business process,

enabling it to keep pace with rival companies for the foreseeable future.