When Data Meets Delivery: How to Empower Retailers through Logistics March 5th, 2019 Click here to watch the recording
Introductions Dr. Goos Kant Aaron Geiger Chris Tuttle ORTEC: Partner & Board member ORTEC: Managing Director ORTEC: Manager, Chief strategist Logistic Solutions Manufacturing | Retail Business Consultant Tilburg Univ.: Professor Logistic Optimization 2 March 5th, 2019 When Data Meets Delivery: How to Empower Retailers through Logistics
When Data Meets Delivery: How to Empower Retailers through Logistics 3 March 5th, 2019 When Data Meets Delivery: How to Empower Retailers through Logistics
“We’re in the most dynamic era in retailing” • “Digital technologies have become a top priority for retailers, even having higher priority than revenue growth.” • “New technologies such as AI and ML are recognized as gamechangers, but many retailers are not there yet.” • “Supply chain innovations can become key differentiators, such as automation, on-demand supply chains focused on the consumer or inventory orchestration.” • “Strategic, technology driven inventory management leads to greater visibility and control over supply chains.” 4 March 5th, 2019 When Data Meets Delivery: How to Empower Retailers through Logistics
To help you to stay ahead of the curve The opportunities Understand your Focus on cost Do it together Treat your people of omnichannel customer reduction and well sustainability 5 March 5th, 2019 When Data Meets Delivery: How to Empower Retailers through Logistics
Logistic operations is perceived as a small cost – But it’s not! Controlling cost is about life or death for a retailer 3 main drivers for Growing Volumes shareholder value (none of them alone More Larger Assortment being enough) Stores Smaller Shorter Expiry Dates Multi Format Smaller Drop SIzes costs growth Multi Channel % Smaller Expedition Units revenues Less Consumer units/collis time Faster Response A strong cost culture is in all times important to avoid a cost / sales squeeze 6 March 5th, 2019 When Data Meets Delivery: How to Empower Retailers through Logistics
Logistic operations is perceived as a small cost – But it’s not! Logistics and transportation are the second most important cost factor (as % of sales, food retail, store delivery) 3% Store Operations (*)(**) 13.0% - 18.0% Logistics &Transportation 3.5% - 5.5% Administration 1.5% - 2.5% Losses 0.9% - 3.0% Transport 31% IT 0.8% - 1.4% 34% DC Fresh DC Dry 32% Others (*) includes also shelving (**) main components are lease/rent costs, staff costs, energy 7 March 5th, 2019 When Data Meets Delivery: How to Empower Retailers through Logistics
Oops, we forgot that urgent Just Great promo, No time to customer promised a we will triple unload now, order store a big volumes please wait order Logistics Category Commercial Store Distribution Replenishment Store receiving Management Strategy Operations Center Operations We want to Sorry, pallets AND Let’s add deliver daily could not be assortments to each store loaded ME? at 7:30 higher 8 March 5th, 2019 When Data Meets Delivery: How to Empower Retailers through Logistics
A strong company-wide planning and logistic steering tool will ultimately reduce costs in stores, DC and transportation by: • Structure in the process – embedding execution excellence • Collaborative anticipation – rather than reactive emergency mode • Maximizing utilization of resources • Real-time steering – solving the exceptions • Visibility – allowing structural optimization and fine-tuning • Decreasing costs and working capital while increasing service levels 9 March 5th, 2019 When Data Meets Delivery: How to Empower Retailers through Logistics
5 Areas of Opportunity 1. Provide bottom line improvement through increased trailer utilization and less miles 2. Provide smoother DC operation 3. Optimize the delivery process and spot backhauling opportunities 4. Improve store delivery frequencies 5. Improve in store staffing and DC staffing 10 March 5th, 2019 When Data Meets Delivery: How to Empower Retailers through Logistics
1. Provides bottom line improvement through increased trailer utilization and less miles • Logistic costs have historically been overlooked. • C- suite is recognizing that “not transporting air” and “driving less miles” carries significant savings. • An optimized load and route optimization process is essential to achieving best in class results. 15% - 25% of trucks on the road are empty 36% of trucks underutilized for non empty miles 11 March 5th, 2019 When Data Meets Delivery: How to Empower Retailers through Logistics
2. Provide smoother DC operation • Control tower technologies can address inefficient transportation planning issues up stream, reducing DC bottlenecks. • Large Grocery Retailer (>$15B Annual Revenues) Use Control Tower ✓ Reduced need for staging area (10%+ increase in space) techniques to create ✓ Saved 15% of forklift movements real-time transparency ✓ Saved 5% of drivers overall time at DC up stream ✓ Saved 5% of forklift equipment needed Take DC-capacity and throughput into account when creating distribution plan 12 March 5th, 2019 When Data Meets Delivery: How to Empower Retailers through Logistics
3. Optimize the delivery process and spot backhauling opportunities • Local route creation (DC), and central resource assignment. Vendor • Centralization creates closed loop routing opportunities. • Carrier portals and apps optimize retailer and carrier / driver synchronization. Store Inbound - TL Store DC Start = end location Outbound Grocery Route Example Closed Loop in Groceries 13 March 5th, 2019 When Data Meets Delivery: How to Empower Retailers through Logistics
4. Improve store delivery frequencies • Promotions, holidays and other sales variances can create many inefficiencies • Very often transportation is just “absorbing” these heavy loads manually. • Optimization can balance this workload by day/week, while clustering the deliveries per day. number of order lines number of departures and pallets per day shipped per hour number of departures number of pallets weekday hours 14 March 5th, 2019 When Data Meets Delivery: How to Empower Retailers through Logistics
4. Improve store delivery frequencies (Cont.) This is accomplished with a 3-step approach: 1. Create balanced and clustered regions to balance the workload over the week 2. Compute per store the optimal visit days and volume to be delivered per visit 3. Optimize the routes daily to maximize efficiency Territory Optimizer Routing Visit Day Optimizer “Assign clients to “Calculate optimal “Balance workload” regions” routes” Wednesday Monday T h Friday Tuesday 15 March 5th, 2019 When Data Meets Delivery: How to Empower Retailers through Logistics
5. Improve in store and DC staffing • Trailer unloading/product shelving are workforce intensive tasks requiring proper planning. • Truck delays create disorganization in workforce availability generating additional costs and potential out of stocks. Strong No Delivery More accurate Higher Better Transportation Delays / store staff Efficiency Execution in DC and Store Planning Errors planning 16 March 5th, 2019 When Data Meets Delivery: How to Empower Retailers through Logistics
Use data analytics engines on top for continuous improvement Monitoring Capacity Supply planning Chain redesign Planned vs actuals High impact Cost revenue allocation Order Forecasting intake Scenario Dwell time planning analysis Re- Planned Profitability optimized vs actuals Low impact past Trend analysis Performance Scenarios monitoring Low effort High effort 17 March 5th, 2019 When Data Meets Delivery: How to Empower Retailers through Logistics
One solution improves in various areas Example of achieved benefits in a Carrefour-country : Example of Carrefour project: Improved routing: average km per pallet • decreased by 12% ➔ 5,5% savings on - 9,900+ stores in 33 countries kms • - 365,000 employees • - €79 Billion Annual Sales Increased SLA: More on-time deliveries • - 10 million checkouts daily & reliable trips Centralization: 1 team of planners (instead of 2 during manual planning) Real-time KPIs: Stronger decision- making Decreased operational costs; savings: up to 7% 18 March 5th, 2019 When Data Meets Delivery: How to Empower Retailers through Logistics
One solution improves in various areas 45,000+ 150+ 75+ 50,000+ 5,000+ 5,000+ 4,000+ dry-van distribution transportation associates tractors drivers refer trailers trailers centers offices Results: How combining Load Building & Routing helps… ▪ Reduces the number of “empty miles” trucks drive ▪ Optimizes how merchandise is stacked in trailers As a results, drivers logged: 19 March 5th, 2019 When Data Meets Delivery: How to Empower Retailers through Logistics
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