DC upgrade provides confectionery giant with sweet success

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Confectionery supplier, Cadbury, recently carried out a major upgrade of its Australian national distribution centre in Melbourne, resulting in a 20% productivity improvement to the automatic storage and retrieval crane system in its warehouse while at the same time maintaining full capability of its distribution operations.

This was achieved by Cadbury and automated logistics systems supplier Dematic working closely together to ensure minimal disruption to operations during the A$2 million, three-and-a-half week upgrade project.

The Cadburys upgrade involved the refurbishing and upgrading of four automated stacker and retrieval cranes, as well as the upgrading and modernising of the DCs conveyor and sortation system.

The DC operates alongside the main Australian manufacturing facility in Ringwood, strategically located near Melbournes new Eastlink Tollway.

The Ringwood DC stores Cadbury bar line products manufactured in the adjoining facility, as well as handling the importing, storage and distribution of other products manufactured in company facilities in Victoria, Tasmania, New Zealand and Europe.

According to Mike Ratcliffe, Cadburys National Distribution Manager, the DC supplies wholesale customers in Australia and New Zealand including the distribution centres of the major retailers, and also exports to Asia.

We operate 24 hours a day seven days a week and in months leading up to peak periods such as Easter and Christmas, this DC will despatch over 30,000 pallets a month thats 1.7 million cartons of confectionery, he said.


Cadburys original DC started operations 13 years ago and was regarded at the time as a state-of-the-art facility.

  • It now has a total storage capacity of 36,000 pallets, divided between:
  • a manual distribution centre using conventional rack and forklifts
  • an automated distribution facility with four automated stacker and retrieval cranes
  • multi-tiered order picking modules for full-case picking.

After 13 years of operation and although a series of strategic initiatives enabled us to double the throughput in this time we were aware that the system was dated, said Ratcliffe. It was apparent that it posed some risk in terms of productivity, reliability and ongoing supportability and yet the role of the DC is integral to the overall business so we couldnt shut it down in order to upgrade or refurbish it.

In 2005, Cadbury established a project team to fully upgrade warehouse systems and procedures, and to establish a plan with clear milestones and tight timeframes. It commissioned Dematic to conduct a survey of the operation and to make recommendations on the upgrades required. By late 2005 it had decided to proceed with the upgrade. Detailed planning continued throughout 2006, with project managers from both Dematic and Cadbury working closely together.

Via phone hook ups to engineers in the German factory, we were able to examine the best ways to upgrade the system while minimising the impact on productivity and product throughput, said Ratcliffe.

All aspects of the upgrade were configured and tested before being implemented on site.

We also developed test and fallback plans so we could revert to the old system if necessary. Critical to the success of the project was the upgrade of the system in a fully operational environment without affecting Cadburys ability to meet customer requirements during the process, he said.

A key element of the project before the upgrade process began was a workshop to facilitate development of functional requirements and to test specifications.

At the same time, a comprehensive project implementation plan was developed and agreed, incorporating a risk management strategy, contingency plans and comprehensive factory acceptance testing before site work commenced.
Ratcliffe said Cadbury targeted January 2007 for the upgrade as this is typically the quietest time of the year for the DC.

An upgrade process was established so that work could be performed on one storage and retrieval crane at a time. To accomplish this, the night shift transferred product from the decommissioned crane aisle to the operating cranes. Careful planning ensured that stock disruption was kept to a minimum as each aisle was refurbished. Keeping the warehouse running was the major issue, we simply couldnt afford to have a failure and we didnt.

Upgrades to the DC, including the installation of new control and computer systems, have ensured the centre now functions at the high degree of reliability demanded by Cadbury and its customers.

Our automated stacker and retrieval cranes, while functioning reliably, incorporated obsolete 1990s-era software and control systems, leading to concerns about their long-term supportability, said Ratcliffe. Since the upgrade Cadbury has experienced significant gains in productivity at the DC. Throughout the survey process, Dematic was reluctant to put a percentage on the expected improvements in productivity; however, we thought that around 6% improvements could be expected but we are in fact realising a 20% improvement in productivity.

A new laser positioning system facilitates faster crane movements between missions. The cranes now accelerate much quicker and find the required position faster and more accurately, while the conveyor and sortation system is also operating at optimum levels, he said.

In terms of return on investment, this upgrade has allowed us to extend the life of the facility for several more years. We are delighted with the productivity gains which, combined with the very smooth upgrade process, have given us a much higher capacity DC combined with a relatively painless upgrade, Ratcliffe said.

Upgrading to the latest software and control systems including troubleshooting and diagnostics systems will allow these critical, high-capacity elements of Cadburys DC to continue operating reliably for many years to come, with clear support and backup guarantees in place from the supplier.

The upgrade has been an outstanding success in maintaining our high standards in supply chain excellence, delivering a major upgrade of a critical distribution operation, while minimising adverse impacts on our supply chain and on customers. The upgrade has not only extended the life of the system, it has ensured performance improvements, along with higher degrees of reliability and supportability, he said.

As a result of detailed planning and a transparent and collaborative relationship with Dematic, this mission critical upgrade was delivered in full and on time. Cadbury can now operate in the comfort that the system will serve us well into the future, said Ratcliffe.

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