Logistics warehousing: Kraft's underground operations expected to result in major efficiency improvements

Jeff Berman, Group News Editor -- Logistics Management, 6/13/2008

SPRINGFIELD, Mo.—Kraft Foods is taking operations into the ground—underground, that is. The food and beverage manufacturer, commercial and industrial real estate developer Springfield Underground, and third-party logistics services provider Exel rolled out a 400,000 square-foot below ground refrigerated warehouse in Springfield, Missouri, which will be a central distribution facility for Kraft.

Kraft is leasing the facility from Springfield, with Exel overseeing warehouse operations, including full-service inbound and outbound services such as finish goods storage, order picking, and fulfillment services, according to a company statement. It added that the 36 degree Farenheit warehouse will store things like Kraft cheeses, meats, and puddings.   

Cathy Pernu, Senior Manager, North America Supply Chain Communications Kraft Foods Global Inc., told LM that this new warehouse consolidates several offsite leased sites and space adjacent to Kraft’s Springfield plant.

“We saw the need to create additional warehouse space to support our Springfield manufacturing plant and at the same time create an opportunity for more efficient distribution regionally,” said Pernu. “Consolidation enables us to better serve our customers by eliminating double handling.  For example, with refrigerated products coming to Springfield from other plants in the Midwest, we will be able to efficiently combine loads of products that might logically be shipped together onto one truck for a customer.”

Along with the advantages that consolidation offers, there are also myriad benefits to having this location underground—in terms of energy efficiencies as opposed to a traditional surface site—according to Kraft. Examples of these benefits include:

• high-energy lighting that reduces monthly energy consumption by an average of 28-48 percent;
• a 65 percent reduction in electricity demands compared to surface warehouses;
• a solid limestone roof that results in a significant reduction in building materials and the facility is built in active limestone mine which provides natural insulation; and
• high efficiency refrigeration equipment with reduced horsepower requirements, among others.

Kraft also noted that by consolidating distribution and reducing multiple stops by Kraft and customer trucks, it will save an estimated 180,000 gallons of fuel and carbon dioxide emissions will be reduced by an estimated 4 million pounds per year. Pernu explained that these reductions are in comparison to operations currently handled at multiple Kraft sites in the Midwest that will now be handled through the Springfield underground warehouse.

The food and beverage manufacturer also said that Springfield is well-positioned as the site for its regional refrigerated distribution facility, due to the needs of the local Kraft plant and convenience to other Kraft manufacturing facilities in the southern Midwest; the presence of a Kraft Private Fleet hub and other major transportation carriers; and the proximity to customer distribution points for direct shipments.  It also said that Kraft has been utilizing warehouse space offered by Springfield Underground since the 1960s, with the new construction more than doubling the below-ground square footage leased by Kraft.  

“This facility incorporates all of the best practices that we learned in 48 years of underground development,” said Louis Griesemer, President and CEO of Springfield Underground Inc., in a statement.  “The energy efficiency, security and other amenities of the underground make this a state-of-the-art distribution facility.  This is our single largest project and brings our underground square footage to over 2.2 million of developed space.”