Leaders in Multi-Channel Retail

 

Case Study

Operational turnaround plan for supermarket chain, with important short-term results through implementation of key projects.

Client
A regional supermarket chain, well known for its focused customer loyalty program, its primary marketing strategy.

Objective
Develop a plan to revitalize core processes and systems to support Efficient Consumer Response goals.

Situation
The chain's supply channels had fallen behind industry best practices for ordering, receiving, and inventory management. Stores averaged over 200 deliveries per week from over 100 suppliers, information systems were over 10 years old with unsupported hardware and software, a proprietary EDI system was used with only 3 suppliers, and ordering and replenishment were totally manual processes performed by store personnel or suppliers. As a result, logistics and in-store labor costs were high, inventory turns low, and invoice discrepancies had a negative impact on the gross margin.

Solution
We conducted a supply channel assessment to and defined initiatives to turn operations around. We were subsequently retained to implement many of the key initiatives.

• Activity-based costing analysis focused on cross-docking DSD deliveries through perishable and non-perishable consolidators.
• Less-than-truckload orders from multiple suppliers were combined into full truckloads, improving efficiency and cost factors.
• We evaluated EDI alternatives and assisted the client to negotiate an outsourcing contract for EDI services.
• We replaced the existing DSD system that could no longer be supported.
  • Developed 5-year ECR business strategy with 8 major initiatives:
    
  • DSD Electronic Receiving & Ordering
    
  • EDI Outsourcing
    
  • Consolidated Supply Channel Deliveries
    
  • Reliable Perpetual Inventory
    
  • Information Technology Strategy & Architecture
    
  • Computer Assisted Ordering
    
  • Category Management
    
  • Continuous Replenishment

Results

• Reduced overall costs by consolidating supply channel deliveries.
• Reduced 90% of invoice discrepancies via electronic DSD ordering & receiving, and eliminated much needless transaction documentation and non-value added activities.
• Leveraged EDI invoices and purchase orders through an effective outsourcing relationship. Allowance and price maintenance files are easily reconciled, eliminating the greatest source of invoice discrepancies. Advance Ship Notices greatly enhance cross-docking and receiving functions.
• Roadmap is in place to guide major projects in support of overall business strategies.

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