Kraft Heinz Building Highly Automated Robotic Facility in Illinois: Updated
Facility in DeKalb, Illinois, Will Be Among Largest in North America for Consumer Packaged Goods.
The facility will be responsible for distributing over 60% of Heinz’s food service business and approximately 30% of all dry goods, allowing them to double their previous volume with the help of a 24/7 automated storage and retrieval system.
The distribution center is also part of the company’s larger ESG ambitions and integrates sustainable technology to reduce waste created at the facility, minimizing its operational environmental impact.
For the creation of the new center, Kraft Heinz has partnered with Trammell Crow Company (TCC), Krusinski Construction Company (KCC), the City of DeKalb, and the DeKalb County Economic Development Corporation (DCEDC).
Kraft Heinz is undergoing a multi-year transformation strategy that includes various operational restructures and transformations. As part of this, it's expanded its Agile-based strategy across all business functions and restructuring its operating model to integrate commercial and supply chain teams into their P&L ownership.
Located in DeKalb, IL., the 775,000-square-foot national distribution facility is highlighted by innovative automation technology, enabling the company to drive supply chain efficiencies so they can distribute products faster than ever before, according to the company.
Kraft Heinz’s Next Supply Chain Investment Is a Giant, Automated Distribution Center
Packaged foods giant Kraft Heinz plans to open a $400 million, 775,000-square-foot distribution center in DeKalb in 2025.
The Jell-O and Lunchables maker said the facility will be highly automated using the latest in robotic and software technologies. This distribution center will distribute more than 60% of the company’s food service business and about 30% of its dry goods business, including products like Heinz ketchup and Kraft Mac & Cheese, when completed. The company’s food service business provides products to venues such as restaurants and stadiums.
The facility is expected to bring more than 150 permanent jobs to the area, the company said.
“The DeKalb distribution center is expected to play a critical role in our larger distribution strategy,” said Carlos Abrams-Rivera, executive vice president and president, North America, at Kraft Heinz, in a statement. “It’s a testament to the dynamic, out-of-the-box thinking of our supply chain teams whose work enables us to operate with greater efficiency and agility every day.”
The company is receiving a 50% abatement on its property taxes for the facility for 15 years, said Paul Borek, executive director of the DeKalb County Economic Development Corporation. The planned facility is located within the DeKalb County Enterprise Zone, which makes it eligible for the property tax abatement as well as for a sales tax exemption on building materials used to construct the facility, Borek said.
The Enterprise Zone program is administered jointly by the state and local municipalities, Borek said.
In a statement, DeKalb Mayor Cohen Barnes praised the project, saying the jobs brought to the area would “have a positive and lasting impact on our residents.”
“This positive impact is compounded by the additional diversification of our tax base, which will spur further interest in DeKalb for many years to come,” he said.
Kraft Heinz reported net sales of $6.5 billion in the first quarter, an increase of 7.3% over the year.
The company saw an increase in demand during the pandemic, as consumers looked to stock up on shelf-stable foods to eat at home. Also in 2020, it announced plans to cut $2 billion in costs over five years, putting the savings into marketing brands with high growth potential, including Lunchables and Heinz ketchup, in an effort to become more relevant to consumers.
The company renovated its Aon Center headquarters in 2021, when it had about 1,400 employees based there. At the time, it extended that lease into 2033.
The facility is expected to open in 2025, bringing over 150 jobs to the region.
The Kraft Heinz Company, the No. 20 publicly owned consumer goods company, is investing more than $400 million in a new automated CPG distribution center.
The company also recently relocated its Canadian headquarters to downtown Toronto, a location they feel will help them attract top talent in the region and propel their agility.
Kraft Heinz, which is co-headquartered in Chicago and Pittsburgh, has six manufacturing and distribution centers in Illinois. The company’s Chicago headquarters are located in the Aon Center in the Loop; it also has a research and development center in Glenview. The company said it employs more than 3,300 people in Illinois.
“The DeKalb distribution center is expected to play a critical role in our larger distribution strategy, moving more than 60% of Kraft Heinz dry goods in North America through our automated facilities,” said Carlos Abrams-Rivera, executive vice president and president, North America at Kraft Heinz, in a statement.
"As one of the world's largest food and beverage companies with global brand recognition, Kraft Heinz elevates DeKalb's position as a food processing and distribution hub,” said Paul Borek, executive director for The DeKalb County Economic Development Corporation (DCEDC).
“We’re driving end-to-end transformation across our entire supply chain, investing in automated technology and digitized solutions to increase the agility of our logistics operations,” said Erin Mitchell, vice president of logistics and head of network restructuring at Kraft Heinz.
Updated Story (July 20, 2023)
Kraft Heinz’s 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,”. 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. In an emailed statement. The company has disclosed it has partnered with a global leader in integrated material handling systems to build “end-to-end automation technology,” including a warehouse control system (WCS) and a 29-crane automated high bay storage and retrieval system. This ASRS robotic technology will enable fully automated selection of Kraft Heinz products from inbound to outbound using a state-of-the-art conveyor system.
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.
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 digital 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.
