the retail consolidation concept and application at london ... · the retail consolidation concept...

The Retail Consolidation Concept and Application at London’s Heathrow Airport

BESTUFS II Workshop

13th January 2005

Contents

Consolidation: Concept & Applications

Heathrow: The Solution

BAA: The Challenges facing Heathrow

Consolidation: Delivering the Benefits at Heathrow

Performance: Sustainability Measures - Heathrow

Multi-Retailing: Challenges and Issues

Questions: Questions from the Floor

Multi-Retailing: Challenges & Issues

Airports, Shopping Centres and City Centres represent the main types of multi-retailing environments

Shopping centresAirports

Sustained growth of retail activity within airports has provided Airport landlords

and retailers with additional challenges. Supporting this

growth presents new challenges for centre

management and sustainability

Out of Town shopping centres have developed in

response to ever demanding customer

requirements for the 'one-stop-shop' experience.

More retail selling space is required within restricted

physical space

City centres

City Centres need to find the right balance

between end customer demand, environmental improvement initiatives,

planning restrictions and retailer needs.

Multi-retailing: Challenges & Issues

Multi-retailing at airports, shopping malls and city centres have created new supply chain challenges for Retail Centre operators and Retailers

Shopping Centres City CentresAirports

Supply chain challenges• Maintaining availability in high footfall

retailing environments• Restricted access for deliveries• Congested delivery areas • Small stock rooms supporting large stores• Often inadequate in-store stock management systems

• Waste disposal/management• Collections and returns• Security control• Increasing supply-chain costs

A typical multi-retailer environment supply-chainKey logistics processes are performed by retailers and landlords who are distracted from their core business activities

Direct deliveries

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Suppliers •Increased congestion around multi-retailer centres•Worsened turnaround times leading to additional costs into the supply-chain•Requirement to provide more reliable services to retailers

Retailers•Inefficient staff planning•Severe restrictions on stockholding ability•Lower productivity due to the performance of non core activities

Landlords•Service area congestion results in higher emissions and risk of accident•Irregular and ad-hoc supplier management difficult to control •Mismanagement of delivery media causing potential H&S and fire risks

Chal

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RDC

Parcel Carriers

A typical multi-retailer consolidation solutionExel addresses these challenges with solutions that outsource key logistics processes enabling stakeholders to focus on core business activities

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Supplier Management•Approved suppliers•Performance reporting•Supplier collections

Stock consolidation•Checking of goods•Offsite stockroom management/provision •Caging of stock for delivery

Delivery to store•To door/stockroom service•Agreed delivery windows•End to end carton tracking•Delivery of manageable quantities

Returns•Collection of inter-branch transfers and supplier returns •Disposal of cardboard•Collection of delivery equipment (cages, tote boxes)

Stock visibility and replenishment solution

Consolidation centre media tracking system

Enab

ling T

ools

Consolidation platform

Direct deliveries

RDC

Parcel Carriers

BAA plc

Naples

Melbourne

Pittsburgh (Retail)

Muscat

Launceston

IndianapolisBoston (Retail)

MauritiusPerth

NT Airports

Aberdeen

Glasgow Edinburgh

Stansted Heathrow

Southampton Gatwick

Salalah

The world’s leading airport company

Heathrow Airport

4 Passenger Terminals

Terminal 5 opening 2008

Currently 240 Retail and Catering Units

500,000 square feet of Retail Space

63 Million Travellers per year


Terminal 5 planning application required BAA to

- reduce traffic congestion and environmental impact

- reduce waste per passenger

Terminals 1 - 4 not designed for retail logistics

- access restricted and insufficient loading bays

- landside access shared with passengers and staff

- limited back room storage for retail outlets

Heathrow Airport: The Solution

1995 Consultancy work to identify solutions

The preferred option was a Consolidation Centre- to streamline the supply of retail and catering outlets- to provide a central point of receipt for all suppliers- to provide timed delivery by outlet into the terminals- to provide door to door deliveries in secure roll cages

To prove the business case BAA chose Exel to operate a trial during spring 2000

Exel was awarded a 5 year contract in March 2001 following a tender process

Heathrow Airport: The SolutionSolution for Heathrow is based on off-site consolidation, which includes all processes from product receipt to despatch and returns

Central point of receipt for all supplierdeliveries

Continuousdelivery

operation

Timed delivery to

outlet

Receive stock from

stores

GoodsReceiving

Supplier consolidation

Securityscanning

Delivery shuttle

In-terminal operations

Collections&

Waste management

Order Assembly

by terminal, by outlet

To meet legislative

requirements

‘Track and trace’ palm pilot based systems


Opened April 2001

25000 square feet warehouse on south east perimeter of airport

Multi-temperature operation

Operational 24 hours per day, 7 days per week, 365 days of the year

8 delivery areas (Landside and Airside in 4 terminals)

“Shuttle” based delivery schedule with fixed timetable, visiting each delivery area 4 times per day

Returns service offered as part of overall service

Cardboard collection and recycling service

Delivery is made direct to store and unloaded into stockroom


Store liaison- Dedicated Delivery Service Manager- Agreement of delivery schedule- Monthly performance reviews

Supplier management- Communicating goods-in delivery windows based on

store requirements- Measuring on-time performance - Feedback to retailers / caterers


Delivery management

- Central delivery planning function at HCC

- In-terminal team leaders co-ordinate the off-loading of the vehicles and the delivery to the outlets by the terminal operatives

- All vehicles fitted with ISOTRAK tracking and driver communication system to ensure quick response and enhance security


Warehouse Management & Tracking System

- Handheld palm pilot system developed by Exel Retail Services

- Tracks at carton level all movements of goods within the warehouse

- Tracks cage movements from warehouse to point of delivery in store


Current annualised volumes:- 100,000 roll cages- 5,000 trips to airport- 45,000 store deliveries

Retailers Served- 83 brands serviced, representing 81% of total- 190 stores serviced

Multi-retailing: Challenges and issues








Enables BAA to meet its commitments regarding T5- Expected reduction in delivery vehicles of 70%- Suppliers will be encouraged to introduce re-usable packaging which

will be controlled by Exel

It will provide improved security in the supply chain- Pre-booked receipt from known suppliers- X-Ray Scanned deliveries to controlled areas

In-terminal operations will also benefit- Greater control of airside vehicle movements- Minimal delivery equipment left at stores or bays- Reduction in airside/landside security screening for deliveries

FOR BAA


FOR RETAILERS

Reliable supply chain - improved sales- Improved staff planning and productivity- Improved product availability- Increased delivery frequency- Drip feed manageable amounts rather than single bulk

delivery

Added Value Services- Remote Stock Rooms (either self managed or Exel

managed)- Pre-retailing of goods before delivery- Collection of waste cardboard and plastic (processed for

recycling by Exel at the HCC)


FOR SUPPLIERS

Enables a new approach to serving Heathrow . . .

Moving from:- multi drop- manual handling- vehicle size restrictions- airside security - delays at loading bays- delays waiting for store

staff

To:- single point of delivery- mechanised receipt- no vehicle restrictions- off airport delivery- delivery window at HCC- immediate off loading and

checking


FOR THE ENVIRONMENT

Reduction of Vehicle Movements in and around the airport

Improved Air Quality- Reduction of CO2 and effects on wider environment- Reduction in NOX and PM10s affecting local environment

Reduction in Noise Pollution

Use of Alternatively fuelled vehicles (LPG, CNG or Electric)- Allows further reduction in emissions- Further reduction in noise pollution


FOR THE ENVIRONMENT

Congestion levels reduced- Easier access and manoeuvrability around airport for other

users

Safer environment for other airport users

Sustainability Measures – Heathrow Airport

Collections and Receipts 19380

Exel Consolidated Loads to Airport 4298

Vehicle Movement Reduction 78%

Vehicle Movement Reduction (Adjusted) * 70%

* Adjustment made to allow for some couriers that continue to the airport to

make other retail/non retail deliveries

Period: January 2004 - December 2004

Sustainability Measures – Heathrow Airport

Key Sustainability Figures

5

2003 2004

TOTAL KM SAVED 86709 144017

EMISSIONS SAVED

CO2 (tonnes) 63 106

NOX (tonnes) 1 1

PM10s (kg) 17 29

TOTAL CARDBOARD RECYCLED (tonnes) 106 152

2004 EQUIVALENT TO

3.5 x the circumference of the earth

1,976 trees

18 hot air

balloons

Sustainability

Awards• London Transport Award – Business Contribution to

Sustainable Distribution 2004• Nominated for the National Transport Awards• Institute of Logistics and Transport Environmental Award 2001• Diamond Award – BAA Clean Vehicle Programme

Additional Key Achievements• One of the companies with the highest level of participation in

BAA Car Share Scheme• Introduced a cycle to work scheme • Participation in local community schemes: TACS, local school

support 5

Questions and Answers

For more information, please contact:

Ian Foster

Commercial Manager

Tel. +44 (0)208 990 6770

Mobile. +44 (0)7831 540867

supply chain solutionsfor a changing world

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