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 A review of Co-op’s food retail supply chain revealed that too many small depots, which were difficult to service and to administer, were handling inbound and store deliveries. Three separate networks existed: one for ambient goods, another for temperature-controlled, and a third for frozen. Delivery zones overlapped, some distribution routes were illogical and many warehouses lacked sufficient space. The flows were complex and stores were receiving a high frequency of ambient deliveries but few chilled goods.
The challenge was to streamline the delivery process, ideally serving each store with a single, multi-temperature lorry while improving the availability of goods in the stores. Trevor Ashworth, director of food retail logistics, described the problem. “When you are dealing with small stores, it’s a disaster if the product isn’t available. You don’t have the luxury of offering the customer a range of brands when you have limited shelf space - the product is either there or it’s not. We knew we were notching up a lot of unnecessary mileage on our deliveries and had to find a way of fixing this problem while ensuring product availability improved at the same time.”
The solution
The Co-op’s first move was to build a new national distribution centre in Coventry, which instantly gave each of the regional distribution centres 25 per cent more capacity. This solved the immediate storage problem. However, it was also clear that the company’s existing warehouse management systems were not capable of supporting the further development of the network’s physical infrastructure. The organisation carried out a project to scope a plan for the network as a whole, to include a scalable and robust warehouse management solution that would be capable of running the Co-op’s complex nationwide network. The models employed by many other organisations, from large supermarket chains to small convenience stores, were examined and potential productivity gains were calculated. Following an evaluation that spanned several competing solutions, the Co-op decided to adopt Manhattan Associates’ Warehouse Management solution for Open Systems.
The implementation
The South East region, which was experiencing the largest number of problems, was selected as the pilot for the new network. A regional distribution centre (RDC) was built at Thurrock, Essex to serve 700 stores handling almost 50 million cases per year. The RDC would be run by Manhattan Associates’ Warehouse Management solution, which integrated with Vocollect voice technology supplied by Zetes. A plan to streamline the local network of warehouses was also put into action. Ashworth comments, “The implementation went largely according to plan. The fact that we invested sufficient time to the planning stage removed many of the obstacles that might have been encountered if we had attempted to rush things.”
The benefits
Since the Thurrock warehouse opened, on-shelf availability has improved dramatically. “We are very pleased that the whole model we originally envisioned is now in place,“ says Ashworth. “We can pick for any combination of products, taking into account the need for security, temperature control or location, and be confident that we are handling everything correctly. We’re expecting a fairly fast pay-back on the project; probably less than three years. It’s the productivity gains that have been most important for us. The South East used to be our worst-performing region, now it is our best.”
The future
The next site to go live will be Nottingham, followed by the national distribution centre in Coventry. The North East and North West regions will be streamlined according to the model of the South East. At this point 60-70 per cent of the project will be complete. Ultimately, the entire national network will be managed by Manhattan Associates. “Our target is to provide seven mixed-temperature deliveries a week to every store in the country,” says Ashworth. “We are well on the road to achieving our ideal network. We have a framework that gives us visibility, control of stock and the flexibility we need to grow.”
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