A leading food retailer, with more than 500 stores of which 75% are run by entrepreneurs and 25% by affiliates, faced a major logistics challenge. Within three years, the entire logistics footprint had to be reviewed, while at the same time an integration project was being carried out due to a merger. The logistics costs of the Rural Fresh Distribution Center (DC) increased significantly, and distribution was handled by a logistics service provider.
Approach
To address these challenges, a Quick-Scan and performance analysis of the Rural Fresh DC and transportation was conducted. Improvement initiatives were then identified in the areas of picking and transportation, with intensive stakeholder management between entrepreneurs, headquarters and the logistics provider. In addition, simulations of different scenarios and improvement measures for transport planning were carried out. The implementation of these measures included communication improvements, process adjustments, system design, project management and stakeholder management.
Results
The retailer took the first steps toward market-based delivery frequencies, both scaling up and scaling down as needed. This led to a 7.5% reduction in transportation costs over budget, 10% fewer stops and improved shelf availability. In addition, the ordering and delivery schedule was optimized, with a solid basis for periodic maintenance. Support for these changes was created among all stakeholders involved.
