REWE Group
Annual Report 2020

WAREHOUSE NETWORK
gearing up for the future

REWE
Higher volumes, increased product handling, more articles: The demands being placed on logistics are rising. The REWE project BeneFiT25 is laying the foundation for a system that will keep much-needed products flowing to the company’s stores in future. It is a strategy that was affirmed by the coronavirus pandemic in 2020.

The core job performed by logistics can be summed up in one sentence: It must ensure that the right product in the right quantity and quality is available at the right time and place and at the right costs. A complex warehouse and transport system is required to ensure this. Many gears must intermesh to get this job done. And the challenges that have nothing to do with the turbulent year of 2020 and the coronavirus pandemic are growing larger and larger. Product ranges are becoming increasingly regional or local and being broken down more and more often by store format. Local providers must be integrated into the process. Everything has to be done faster, and the volume of products that have to be transported constantly rises as REWE continues to grow. All of this is occurring in a marketplace where new obstacles arise over and over again: Appropriate sites for new warehouses are a rarity. Personnel and construction costs are rising. Fuel costs and toll charges and regulatory demands are also increasing. Moreover,the logistics industry faces tough competition in the race to attract qualified and dedicated employees. All of these conditions are creating pressure to take action. The future strategy of REWE’s full-range logistics operations focuses on the entire supply chain that extends from store to suppliers. It is a strategy that can also be adapted in response to changing scenarios.

BeneFiT25 is the name of the project that the REWE Logistics is using to prepare for the company’s continued growth in revenue, products and volume in years to come. Everyone should profit from it: customers, stores and employees. REWE is investing more than 1.1 billion euros in the construction, expansion and partial automatisation of eight locations – six regional warehouses (Henstedt-Ulzburg, Oranienburg, Wölfersheim, Wiesloch, Stelle, Breuna), a regional fresh foods centre (Lahr) and a central national warehouse (Magdeburg). The focus of this project extends well beyond the creation of additional storage space. “By improving our logistics services, we want to provide our stores with maximum advance support,” says Lars Siebel, the Head of Logistics and Supply Chain Management, Retail Germany. “But we also want to remain flexible so that we can meet new requirements as they arise in the product range or sales.”

The REWE Logistics
in numbers

More than 15,000 people work for the REWE Logistics

20
warehouse locations, including 2 central national warehouses for dry foods (Neu-Isenburg / Osterweddingen) and 18 regional warehouses
42.6
mn
transport units per year

More than 1 mn tours per year to supply stores

The warehouse space amounts to roughly the size of 150 football pitches

25.000
stock keeping units

Number of products has been rising for years

The number of products that must be warehoused will rise even further in years to come, a trend fuelled by our customers’ desire for an ever wider product range and the integration of local providers. This means one thing for logistics: The job of bundling shipments and synchronising frequencies in a way that will enable our stores and external partners to be optimally supplied is increasingly turning into a challenge. A key role in this transformation will be played by the continued automation of warehouse processes. And it will do so for a number of different reasons. State-of-the-art locations equipped with automation technology require only about 25 per cent of the floor space that conventional warehouses need. The reason? These facilities can be built higher or products can be stored more compactly in them. Such a layout shortens the routes that order pickers have to cover, simplifying the job (an end to waiting, no “intersecting” transports, reduced accident risk, more ergonomy, fewer errors). The result is faster processes.

In contrast to what people occasionally assume, partial automation of a warehouse does not completely eliminate the need for human staff. The opposite is actually the case. Every new facility continues to create up to 500 crisis-proof jobs. The types of individuals recruited for these jobs in future will no longer solely comprise order pickers and dispatchers. The search will increasingly extend to automatisation and IT experts as well. These are highly qualified jobs that do not fit neatly into the common image of logistics held by many people who are unfamiliar with the industry. “The word ‘logistics’ conjures up images of pallets and forklifts in the minds of some people,” says Lars Siebel. “But this is changing. As part of BeneFiT25, we are taking the job image of logistics to a higher level and are expanding the range of jobs and qualification opportunities,” he adds. New generation warehouses will never be able to operate without employees who are willing to lend a hand. But intelligent technical aides and well-conceived planning will make warehouse jobs increasingly ergonomic. The job of lifting and loading heavy products will increasingly be done by machines in future. Employees will then increasingly assume responsibility for controlling and monitoring the warehouse’s technology and resolving technological failures. This change will have a beneficial effect on employees’ health and make logistical jobs more attractive.

The planned warehouse location in Henstedt-Ulzburg/Schleswig-Holstein will strengthen the REWE warehouse network from the second half of 2022.

Coronavirus affirms strategic warehouse network optimisation

“Our experiences during the coronavirus pandemic have affirmed things that we considered to be essential years ago as part of our work to strategically optimise our warehouse network: the need to extensively expand our capacities and develop even better supply solutions for our stores,” says Lars Siebel. The past year was a particularly gruelling one for the REWE Logistics. Acute shortages of many long-lasting foods that are easy for customers to store, things like noodles, flour and sugar, occurred throughout the entire German retail industry, REWE’s stores included. Demand for fresh products like fruit and vegetables shot up, too, as restaurants closed and more and more people began to work remotely. During 2020, the volume handled by REWE’s warehouses climbed more than 10 per cent above the level processed in 2019. The company’s planning had not anticipated such a level until 2022, at the very earliest. Even as the REWE Logistics wrestled with the increased demands imposed on its daily operations, work on BeneFiT25 continued to move forward without delays. “We lost time in approval processes last year – partially as a result of corona,” says Jan Müller, the main project head of Benefit25. “Construction moved full steam ahead while complying with all protective measures. Everyone involved pulled together.” The first three locations (Lahr, Wiesloch and Oranienburg) will be brought on line this year step by step. The warehouses in Henstedt-Ulzburg, Breuna and Stelle will follow next year. The location in Magdeburg and, afterwards, the one in Wölfersheim will gradually go into operation in 2023. But that is far from all. The REWE Logistics will expand and further optimise its warehouses in an effort that will extend beyond the projects defined in the first stage of BeneFiT25. Other warehouse locations are being scouted. Lars Siebel says the experience gained during the coronavirus pandemic could prove to be helpful in this work. During the crisis, the REWE Logistics impressively showed just how important it is in the job of comprehensively and dependably supplying Germany’s population – or to sum it up in two words: it is “system relevant”. Many REWE warehouses bucked the general trend in the German economy last year and actually hired employees. “In short, we created a positive image. We intend to take advantage of this wave – as we search for the right locations and recruit new colleagues,” says Lars Siebel.

PENNY warehouse in Kronau goes into operation in the summer of 2020

PENNY also continued to optimise its warehouse network in 2020. The new 50,000 square metre warehouse in Kronau went into operation during the summer. It is now supplying around 275 PENNY stores in the Region Southwest – and is simultaneously optimising internal processes. This includes the warehouse’s ability to separately store fruit and vegetables based on their needs for cool or warm storage. This feature improves the food’s quality and enables customers to keep it longer.