H-E-B to Build DC in Mexico

SAN ANTONIO, Texas - Supermercados Internacionales H.E.B., the Mexican operating arm of H.E. Butt Grocery Co., has acquired 100 acres north of Monterrey to build a distribution center to serve its 20 stores in Mexico, the San Antonio Business Journal reports.

The company is considering a 300,000-square-foot distribution center for its perishable and dry goods, according to the report.

"We're in the design stages," said Alfonso Barrientez III, VP, Mexico supply chain, for H-E-B. "Hopefully, in mid-July we'll begin construction."

Barrientez said the center will potentially be able to serve 40 to 50 stores, and that H-E-B plans on adding between two and four stores per year in Mexico.

The development of the distribution center will dramatically change the way H-E-B stocks its Mexico stores, Barrientez added.

"It's not only going to promote efficiencies for H-E-B, but for our vendors," he says.

Currently, H-E-B operates three separate "flow-through" distribution centers in Monterrey: a 15,000-square-foot center for produce; a 30,000-square-foot operation for dry goods, and a recently opened 5,000-square-foot facility for meat.

However, the company still relies heavily on direct-store delivery where company vendors deliver directly to each of the chain's stores. Sixty percent of the stores' volume in Mexico is distributed via DSD.

Barrientez told the newspaper that H-E-B utilizes a "pick-on receipt" distribution model, where vendor shipments to a distribution center are re-assembled as per store order. Once the new distribution center is plugged into its Mexican operations, H-E-B will be able to move 75 percent of its volume through this pick-on receipt system.
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