key issues and lessons in grocery replenishment automation retail
TRANSCRIPT
Key issues and lessons in grocery
replenishment automation
– retail and DC perspectives
Lauri Loikkanen 4/10/2012
Tuko Logistics Cooperative
Traditional Logistics and purchasing company for its
owners
Sourcing and purchasing
Inbound logistics
Warehouse services
Nationwide distribution
services
Product quality services Sales support Private label
Key Figures 2011
Turnover 759 M€
Personnel FTE 650
people 800
Assortment, SKUs 25.000
SKUs in stock 16.500
Annual volume Handling volume 268 000 tn
Order rows 45,5 milj.
Owners %
Wihuri Ltd 41
Suomen Lähikauppa Ltd 39
Stockmann Plc 10
Heinon Tukku Ltd 10
Suppliers
Domestic 800
International 850
RETAIL (VK) ~ 1000 POS
Tuko Logistics Cooperative
Cash & Carry
Professional
- Cash & Carry
- Professional
- HoReCa
- Large scale
customers
HERKKU-OSASTOT
Food departments
PROFESSIONAL (SK) ~5000 POS
PROFESSIONAL / C&C 33
Transition to information driven
Supply chain leader
”Finger to the market pulse”
Sales forecasting
Store replenishment
DC replenishment
Transport planning
Workforce (LTP, STP)
Total integration of the supply chain
Forecasting
Process control
DC Replenishment
Store Replenishment
CPFR-process Campaigns, assortments
Collaboration Replenishment
Forecasts for the supply chain
(customers’ predicted demand)
Supplier integration Optimisation of transportation and
warehouse
Synchronisation of logistics processes
Case Stockmann
No. 1 department store in
Finland
Turnover over €2bn
(groceries ~€271m)
7 big department stores –
7 big grocery departments
16 000 SKUs
Shelf availability the most
important KPI
Very demanding clientele
Focus is on customer
experience and on high
service level
Employees take pride in
their work
Completely manual replenishment orders
Slightly old-fashioned processes
Huge ERP (Oracle) project at the same time
Lack of right personnel
On the other hand Clear understanding that things need to change
Solid trust to Tuko’s ability to deliver projects
Case Stockmann
Case Stockmann
Month Phase
Pre-study
Technical integration
Live piloting
Roll-out
Change management
Measurable results
May June Aug Sept July Oct Dec Jan Nov
Case Tuko Logistics DC
Tuko had an automated replenisment system from
JDA
Reasons for change: Better automation level
More optimised replenishment process
Reduction in tied up capital
Need for flexibility in our processes
Multi-level supply chain integration
Case Tuko Logistics DC
So far we have been able to reduce over 1/3rd of
buyers
Improvements in inventory turnover
Other improvements Batch-level spoilage estimation
Process development
Customer-chain level diverted forecasting
Rich campaign data
Option to build up new models with suppliers
Due to high flexibility potential for development is very high
Process is still on-going
Conclusion
Make sure you: 1. Have accurate data
2. Know and control your assortment
3. Have a focus on change management
This is not an IT project
Collaborate with suppliers
Share data
Share benefits
Check and double check
your data
Change resistance
”Improving the performance requires
changes in the whole supply chain, not only
in the phase where the problems occur or
benefits are realised” *
*Kaipia, R., Loikkanen L. and Dukovska-Popovska (2012), ”Fresh data for waste reduction
in fresh food supply chains”, International Journal of Physical Distribution & Logistics
Management
