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28 May 2009

NTUC FairPrice unveils $41 million Automated Sortation Distribution Centre to support business expansion

NTUC FairPrice today unveiled a $41 million Automated Sortation Distribution Centre to support the expansion of its warehousing capability. The facility houses a state-of-the-art Material Handling System (MHS), the first of its kind for the retail industry in ASEAN. With the MHS, the distribution centre will be able to increase its productivity by 50% and double the volume of grocery items handled per day.

Housed in FairPrice’s central distribution centre at Joo Koon, the MHS uses a high-speed automatic sortation system on a conveyor belt that can handle up to 20 kg per carton of grocery items in various sizes. The system consolidates orders from individual stores into bulk batches and then indicates on the lighting panel the number of cartons required, using a paperless Pick-to-Light technology. It then allocates the items for distribution to individual stores, resulting in higher efficiency and reduced manual labour. 

Before the Material Handling System was implemented, the order picking process was labour-intensive as it was based on individual order and the orders were not consolidated.  This means that staff had to pick the products for every order requested from the store. The new system consolidates all the orders by product and reduces the number of manual pickings required. With higher efficiency, the centre can now double the volume of items handled. FairPrice had earlier announced that it will open five new stores this year. The increased volume capability of the new distribution centre will cater to FairPrice’s business and expansion plans over the next five years. Besides, the fully automated high speed sortation system also means items can now be sorted faster and more accurately, shortening working hours by about 3.5 hours per day based on current volume, so that staff can enjoy better work-life balance.

FairPrice’s central warehousing facilities in Joo Koon and Penjuru provide centralized warehousing and distribution solutions for 221 FairPrice stores. FairPrice’s suppliers deliver their products to the GLS warehouse at Joo Koon or Penjuru Distribution Centres.  From the warehouse, goods are sorted and delivered to the stores everyday. The new Material Handling System ensures the correct goods are delivered to the right store in the right quantity so that customer’s needs are served everyday.

NTUC FairPrice Group CEO Mr Tan Kian Chew said, “FairPrice started our centralized distribution system in 1993 with the primary objective to eliminate inefficiencies, raise productivity so that cost savings can be passed on to our customers in terms of lower prices.  We have since upgraded and improved our system.  This latest investment in the Material Handling System is our continued effort to improve cost efficiency while meeting our business expansion needs.”

The centralized distribution concept also benefits suppliers. With bigger warehousing capability, more suppliers can now make use of FairPrice’s centralised distribution system.

The Managing Director of Lion Corporation, Mr. K K Chan, said “Having worked with NTUC FairPrice since our incorporation in 1982, we are one of their pioneer partners. The centralized distribution centre has helped us achieve cost advantage in stockholding, gain better control over our inventory and provides a one-stop information centre for all our requirements. By reducing our procurement workflow and easing our distribution process, we have been able to increase our supply, giving us the benefits of economies of scale.”

Mr. Allan Ang, Managing Director of Alphico Marketing Pte Ltd, said “The new system allows stores to be replenished during the weekends, so we can avoid out-of-stock situations. Our items are ordered in bulk and put on pallets, which makes it easier for us to do the deliveries.  In the past, we had to deliver to each individual store, but now, we just have to go to one central location. It helps us to save on time and manpower, reducing our delivery costs. FairPrice also tracks our sales data, helping us to monitor our business. Since we started doing business with FairPrice in 1989, our business has improved around 200 percent.“

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About Grocery Logistics of Singapore Pte Ltd

Fully owned by FairPrice, GLS operates two Distribution Centres, namely Joo Koon and Penjuru Distribution Centres. The total floor area managed by GLS is 500,000 sq. ft., made up by 300,000 sq. ft. in Joo Koon and 200,000 sq. ft. in Penjuru.  The Distribution Centres servicing all FairPrice and Cheers stores, are operational seven days a week. Handling non-perishable products, GLS delivers more than 21 million cartons per year to the stores.  A key feature in the Joo Koon distribution centre is the Material Handling System.

The efficiency of FairPrice’s distribution system is an area that has a big impact on its bottom line. In the days when suppliers used to deliver goods directly to FairPrice stores, some stores recorded up to 200 deliveries per day. With more than 30,000 items to manage, the distribution system was unproductive and was prone to errors and pilferage. 

In 1993, FairPrice entered a joint venture with a major Australian grocery distributor to set up a large scale central distribution and warehousing operation in Singapore. 

FairPrice bought over the operations in 1998 and renamed it Grocery Logistics of Singapore Pte Ltd (GLS).

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