Kraft Heinz said it plans to invest more than $400 million toward building a “state-of-the-art” automated consumer packaged goods distribution center in DeKalb, Ill.
The 775,000 square-foot national distribution facility, which is expected to open in 2025, will help the food giant to drive greater supply chain efficiencies and distribute its products to retail and foodservice customers far more quickly, according to a Thursday press release.
“The DeKalb distribution center is expected to play a critical role in our larger distribution strategy, moving more than 60 percent of Kraft Heinz dry goods in North America through our automated facilities,” Carlos Abrams-Rivera, president of Kraft Heinz North America, said in the release.
The announcement comes as other industry players are also looking to automation as a way to boost their supply chain efficiency.
General Mills has implemented warehouse automation in four locations and has “other projects in the works,” CFO Dive sister publication Supply Chain Dive reported Monday. In May, Associated Foods announced that it was teaming up with technology company Symbotic to add a warehouse automated system and fleet of vision-enabled, autonomic robots to pick and pack products. And earlier this year, Sam’s Club said it was expanding its use of automated fulfillment and distribution centers using robotics.
More than a quarter (26%) of warehouses are expected to be automated by 2027, up from 14% a decade earlier, market research firm Interact Analysis reported in May.
The demand for warehouse automation rose after the pandemic as e-commerce accelerated and increased the need for warehousing space, particularly in industries such as retail, manufacturing, logistics and parcel delivery. However, demand dipped in 2022 for end-to-end warehouse automation technologies — other than robots — in response to excess capacity built during the pandemic, the decline in e-commerce rates and the overall slowdown in the global economy, according to a separate report from Interact Analysis.
The new Kraft Heinz distribution center will feature a fully automated storage retrieval system with the ability to run 24/7, according to the company’s release. In an emailed statement, the company said it has partnered with Daifuku Wynright, a global leader in integrated material handling systems to build “end-to-end automation technology,” including a warehouse control system and a 29-crane automated storage and retrieval system. Robotic technology will enable fully-automated selection of Kraft Heinz products, the statement said.
Addressing supply chain challenges through technology investments has been a high priority for Kraft Heinz under its current CEO, Miguel Patricio.
In May, the company released an investor presentation saying that it added $30 million to its sales by applying artificial intelligence to its supply chain visibility functions, as previously reported by Supply Chain Dive.
This followed an April announcement by Kraft Heinz that it signed a multi-year agreement to shift much of its datacenter assets to Microsoft’s Azure cloud computing service, an effort designed to help the food giant create a more resilient supply chain.
“Our collaboration with Microsoft is a critical piece of our transformation strategy, providing us with the machine learning and advanced analytics to drive innovation and efficiencies across the supply chain so we can get products into the market faster, better serve our customers and, ultimately, deliver on the sustained and growing consumer demand our iconic brands continue to experience,” Abrams-Rivera said in a press release at the time.