Supply Chain Software: Fisher Nuts succeeds with WMS

John B. Sanfilippo & Sons (Fisher Nuts) Elgin, Ill.

Size: 1.06 million square feet, 60% manufacturing/40% warehouse space, including coolers
Shifts: two shifts, five to six days, depending on the season
Employment: 800
Products:  Nuts
Volume: 375,000 cases per week during peak season

When John B. Sanfilippo & Sons, manufacturer of the Fisher Nuts brand of nut products, reconfigured a 1.5 million square foot complex in Elgin, Ill., for its new corporate headquarters, it made conventional use of materials handling technologies and unconventional use of its warehouse management system.

Since most of the company’s raw materials and finished goods are palletized, lift trucks, pallet racks and a semi-automated stretch wrapper are the primary materials handling tools. In that sense, it’s a very conventional facility.

But in addition to managing inventory and directing the activities of warehouse associates, the WMS (HighJump Software, 800-328-3271) performs two unconventional roles.

Much like a manufacturing execution system (MES), the system synchronizes the delivery of a bill of materials to the manufacturing line. It includes the raw nuts, spices and oils, and packaging materials that go into a particular batch of product. The WMS also tracks the lot numbers of all of the ingredients and materials used to make a batch of product to meet traceability requirements.

More importantly, the WMS is the foundation of the company’s allergen and contamination prevention programs.

There have been several key benefits to this system, according to Jasper Sanfilippo, Jr., the company’s president and COO, and Tom Kirkham, the director of systems implementation.

Thanks to the WMS, inventory is 99.7% accurate in the warehouse and 99% accurate on the manufacturing floor. “As a result of that accuracy and the cycle counting functionality in the WMS, we have been able to eliminate two of four physical inventories a year,” says Kirkham. “That’s saving us nearly $2 million a year.”

What’s more, Fisher Nuts now has what it believes to be the leading allergen control program in the nut industry. “While it’s harder to quantify a benefit in dollars and cents, we know that our customers have developed a heightened awareness of allergens associated with nuts and the possibility of food contamination,” says Sanfilippo.

A business built on nuts
With $550 million in sales, John B. Sanfilippo & Sons has a nearly 90-year history in the nut business. The company was founded in 1922 by Jasper Sanfilippo’s grandfather. Back then, Chicago was the center of the nation’s pecan industry, one built primarily by Italian immigrants. “My grandfather and his competitors would buy the pecans down south and truck them to Chicago,” says Sanfilippo. “Families would pick up a 20-pound sack of pecans and shell them at home, bring the nut meat back to the plant, and take home another sack to shell.”

That was the standard operating procedure for the industry for the next 40 years. “The biggest innovation was mechanical shelling, which was introduced in the 1960s,” says Sanfilippo. “That meant that fewer home-based families were needed to do the shelling.”

In 1964, Sanfilippo’s father took over the company and diversified into other tree nuts, including walnuts, cashews, almonds and macadamia nuts. In the late 1960s, the company also shipped its first private label product, an 8-ounce bag of pecans, to the Chicago-based grocer Jewell Foods. As the private label business grew, the company expanded. In the late 1980s, Sanfilippo & Sons built a peanut plant in Georgia and added walnut and almond processing plants. In 1991, the company went public, and in 1995, it purchased the Fisher Nuts brand from Proctor & Gamble. Today, the company processes an average of 600,000 pounds of nuts each day, and ships 375,000 cases of nuts per week during peak season.

By 2005, the company’s operations were spread across five different facilities in a 10-mile square area in suburban Chicago. “There are logistical challenges when you’re sending raw materials from two warehouses to three different manufacturing facilities,” says Sanfilippo. “Especially when you’re trying to control your inventory with a manual system.”

What’s more, the company was bumping up against capacity constraints that would hinder its ability to continue to grow. “We needed space so we could increase the capacity of our existing line without increasing our overhead, and we needed to standardize processes for quality control reasons,” adds Kirkham. “If you’re operating in five buildings, it’s not hard to end up with five different processes.” 

The company had already purchased land and was working with consultants on the design of a new headquarters when a 1.06 million square foot building formerly owned by Panasonic came up for sale in Elgin, Ill., including 400,000 square feet of office space and 650,000 square feet of manufacturing space. In the end, reconfiguring an existing space was faster and more efficient than building a new space.

Selecting a WMS
From a materials handling standpoint, designing the new facility was relatively straight-forward. The manufacturing area relies on specialized and proprietary processes and equipment.

When it came to warehousing, raw materials and finished goods are primarily handled on pallets with lift trucks and stored in pallet racks. As a result, determining how to best use the 450,000 square feet of raw materials and finished goods warehouse space was the most important aspect of the initial warehouse design. That included two cooler areas for the storage of raw materials, separate areas for spices, cans, jars and corrugated materials, and the finished goods warehouse.

Sanfilippo & Sons used its own engineers for the manufacturing layout and design and a consulting firm for the warehouse layout. The company was able to economize on materials handling equipment by re-using push-back and standard pallet rack left behind by the previous tenant along with equipment it brought over from its old facilities. Likewise, a horizontal carousel system used to store packaging materials for the production line was brought over from one of the other warehouses.

While the materials handling was relatively straight-forward, Kirkham and Sanfilippo say that from the start, they understood that a WMS was critical to the success of the new facility.

The original goals for the system were to bring real-time system direction to the new facility, improve inventory accuracy, and increase throughput in the DC with the same or fewer associates than were presently being used in the other facilities.

“We were using an inventory control module in our ERP (enterprise resource planning) system to run our other warehouses, but we weren’t real time and we weren’t as accurate as we needed to be,” says Kirkham. As a result, the company was spending $1 million each quarter just to do physical inventories.

In addition to the traditional inventory management functionality a WMS could provide, Sanfilippo & Sons wanted the ability to manage raw materials on a first-in/first-out (FiFo) basis, to do lot tracking and to manage the company’s allergen and contamination program.

At any given time, Sanfilippo & Sons is managing two different types of peanuts and up to eight different types of tree nuts. Because nut allergies can be fatal, peanuts must be segregated from other types of nuts. Since dust or broken pieces can leak from a container of raw nuts, only one type of tree nut can be stored in a bay. Cashews, for instance, can’t be stored on top of pecans or almonds.

Likewise, the introduction of raw materials into the production area has to be controlled to prevent the spread of salmonella and other bacteria.

“We needed a system that would prevent a lift truck driver from putting a nut in the wrong cooler or the wrong location within a cooler,” says Sanfilippo, ”or from risking contamination by going from a raw area into a production area.”

About a dozen WMS vendors were invited to tour the facility and explain how they would manage the allergen program. From that original group, six were sent a very detailed request for proposal (RFP) and invited to bid on the project. “We chose the WMS we ultimately installed because it could integrate to our ERP system and was flexible enough to adapt to our unique processes and requirements,” says Kirkham.

WMS in operation
In addition to the traditional receiving, putaway, pick and pack, and shipping functionality, the WMS has been customized to become the system of record that tracks any material that passes through the facility from the time it’s received on the raw materials side of the house until it’s put on a truck to be shipped as a finished good to a customer.

When product is received, for instance, the system is recording the weight of the product, when that product was received, the pallet it’s loaded on for putaway, and a lot number associated with that batch of product.

One of the goals for the new facility was to inspect all raw materials before moving them off the receiving dock. If un-inspected product is put away into one of the coolers, the system will put a hold on that product so it can’t be processed until it’s inspected.

The WMS also manages the segregation of nuts by type, and even lot number when possible. “If you put an almond on the first level of an empty bay, the WMS will prevent you from putting anything but an almond over top of that first pallet,” says Kirkham.

Once the manufacturing process begins, the WMS is the system of record where all of the manufacturing transactions take place. It receives a work order from the ERP system and a bill of materials that includes all of the raw materials, seasonings, oil and packaging materials required for that work order. Raw materials are selected in part on a FiFo basis. The WMS then directs the delivery of those items to the right workstations in the manufacturing and packaging areas. It also tracks the item level, quantity and lot numbers of everything associated with that work order to meet tracking and tracing requirements.

Once product has been manufactured, the WMS creates a new stock keeping unit (SKU) for the finished good. The system is used to direct palletizing operations and the delivery of a pallet to a stretch-wrapping system. Once it’s been stretch-wrapped, the WMS receives the new product into the finished goods warehouse, which is zoned by customer and then into full pallet and case picking areas. After that, picking and shipping functions are handled by the system similarly to any other system shipping food and snacks into the grocery or big box retail supply chains. That includes the management of any custom labeling requirements or advance shipping notifications (ASNs).

Down the road
Having automated the information management functions, Sanfilippo & Sons now plans to automate some of its materials handling processes. While most of the palletizing is still done manually, two robotic palletizing stations have been installed. Once those units are operating at full speed, the company plans to install more robotic palletizers in another area of the building. There are also plans to cut down on lift truck traffic by installing conveyor to deliver finished goods to one of the manual palletizing areas, and to install automatic guided vehicles to shuttle pallets from the palletizing area to the stretch wrapper and then into the finished goods warehouse.

“We spend an inordinate amount of time moving pallets from one end of the building into the warehouse,” says Kirkham. “We want to use our materials handling in more productive ways. That will allow us to scale up the facility as we grow with our existing workforce.”

Jasper Sanfilippo, the fourth generation of his family to work in the business, says the new facility has been a success.

That can be measured in hard numbers: Inventory is now better than 99% accurate, which has allowed the company to eliminate two of the four physical inventories it performed a year, with a goal of getting down to one physical inventory a year.

While harder to measure, there’s success as a result of the company’s allergen program. “Ultimately that will lead to more business,” says Sanfilippo. “That’s hard to quantify now from an ROI perspective, but we could not have done that without the systems we put in place.”

System suppliers

WMS: HighJump Software, 800-328-3271,
ERP: QAD Inc., 888-641-4141
System design: Tom Zosel Associates, Ltd., 800-229-3450
Lift trucks: Crown Equipment Corp., 419-629-2311
Carousels: White Systems, Inc., 800-275-1442
Stretch Wrapper: Lantech, 800-866-0322
Racking: Existing rack system from previous tenant
Handheld bar code scanning: Intermec, 425-348-2600
Printers: Zebra Technologies, 847-634-6700

This article previously appeared in the April 2009 issue of Modern