Dive Brief:

• Penske Logistics will take over Kroger's warehouse from SouthStar in Tarrant County, Texas, but one consequence of the switch will be the layoff of the warehouse's 690 workers, effective Dec. 10, according to a report from Dallas News.
• According to information emailed to Supply Chain Dive from Penske, Penske will take control of the warehouse Dec. 29 and "preserve approximately 500 unionized jobs at the facility" following an agreement with the Teamsters and United Food and Commercial Workers unions finalized Dec. 20.
• Penske expects to employ more than 600 at the warehouse and is currently accepting applications from workers laid off in the transition and potential new hires. During the transition, the warehouse has not closed but continued normal operations.

Dive Insight:

Human labor bearing the brunt of a business decision is nothing new — back in June, former third party distributors for Kellogg's threatened to sue the packaged food giant for terminating their contracts as Kellogg switched distribution models.

Kroger's move isn't as dramatic as Kellogg's, and the end goal appears to be a more streamlined supply chain: Penske is currently Kroger's logistics provider in many other locations across the U.S., so it makes sense that Kroger would seek uniformity.

Furthermore, Penske is a big-name brand with both strong history and credibility, and it's no secret that Kroger is racing to keep up with the logistical prowess of companies like Walmart and the new Amazon-Whole Foods union. Penske might just be able to give Kroger the leverage it needs to efficiently meet consumer demands in the e-commerce age.

But there's still a human cost. In this case, it looks like most of the old workers will be rehired, which is good for Kroger's image. Kroger and Penske also managed to keep the warehouse running during the transition, which says good things about their logistics partnership and management.