Dive Brief:
- Nestlé USA opened a 700,000-square-foot distribution center equipped with digital technologies and automation systems in Arvin, California, part of a broader network enhancement, according to a June 10 press release.
- The site is meant to strengthen the consumer packaged goods manufacturer’s West Coast distribution network and features the largest automated storage and retrieval system within the company’s global network, per the release.
- Nestlé invested $330 million into the facility’s construction, part of its plan to spend $25 billion on bolstering U.S. operations over a 10-year period beginning in 2020.
Dive Insight:
Nestlé unveiled its latest high-tech distribution center as it continues to focus on creating a leaner and more agile business.
The Hot Pockets maker is operating with “a sense of urgency” to enhance its brand portfolio and gain market share, U.S. CEO Marty Thompson told Food Dive last year, months after the company announced plans to cut about 16,000 jobs across its global workforce.
The cuts, which were set to take place over two years, include roughly 4,000 layoffs in Nestlé’s supply chain and manufacturing functions, with a goal of cutting costs by 3 billion Swiss francs, or $3.8 billion, by the end of 2027.
As it restructures its workforce and targets expense reductions, Nestlé said its newest distribution center is designed for flexible operations and will use targeted automation to boost agility and resiliency while supporting high demand during peak seasons.
The Arvin facility is the second high-tech distribution facility Nestlé has introduced into its network in the last two years, according to the release, joining a $675 million beverage factory and distribution center the company opened in Glendale, Arizona, last year.
“While Nestlé has been adding digital and automation capabilities across many of its distribution centers in recent years, the Arvin, California facility and the Glendale, Arizona site represent the first new builds where these capabilities were intentionally designed into the operations from the ground up,” a Nestlé spokesperson told Supply Chain Dive in an email.
The Arvin facility, which has been fully operational since May, features automatic storage and retrieval system crane aisles, laser-guided vehicles and layer-picking robotics, the spokesperson said. As it pushes a tech-focused approach to its supply chain operations, Nestlé is also updating its software stack, as it is currently installing a new enterprise resource planning system globally.
Rival Hershey is also leveraging technology across sourcing, manufacturing, delivery and planning as it seeks to improve productivity and reduce inventory, Chief Supply Chain Officer Jason Reiman said during the company’s Investor Day in March. The parent of the Reese’s brand is specifically leaning on tools such as decision-intelligence software, cost modeling and automated delivery-unit assembly.
Beyond advancing its own technology and automation initiatives, Nestlé is targeting sustainability gains with the Arvin site. It plans to source 100% of the facility’s electricity from renewable sources while operating it as a zero waste site by recycling, composting or recovering energy from waste materials, per the release.
