When Data Meets Delivery: How to Empower Retailers through Logistics - - PowerPoint PPT Presentation

When Data Meets Delivery: How to Empower Retailers through Logistics

March 5th, 2019

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Introductions

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• Dr. Goos Kant

ORTEC: Partner & Board member Chief strategist Logistic Solutions Tilburg Univ.: Professor Logistic Optimization

Aaron Geiger

ORTEC: Managing Director Manufacturing | Retail

Chris Tuttle

ORTEC: Manager, Business Consultant March 5th, 2019 When Data Meets Delivery: How to Empower Retailers through Logistics

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When Data Meets Delivery: How to Empower Retailers through Logistics

March 5th, 2019 When Data Meets Delivery: How to Empower Retailers through Logistics

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• “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.”

“We’re in the most dynamic era in retailing”

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To help you to stay ahead of the curve

The opportunities

• f omnichannel

Understand your customer Focus on cost reduction and sustainability Do it together Treat your people well

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Logistic operations is perceived as a small cost – But it’s not!

Controlling cost is about life or death for a retailer

Growing Volumes Faster Response

More Smaller Stores Multi Format Multi Channel Larger Assortment Shorter Expiry Dates Smaller Drop SIzes Smaller Expedition Units Less Consumer units/collis 3 main drivers for shareholder value (none of them alone being enough)

growth % time

revenues costs

A strong cost culture is in all times important to avoid a cost / sales squeeze

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Logistics and transportation are the second most important cost factor (as % of sales, food retail, store delivery) Store Operations (*)(**) 13.0% - 18.0% Logistics &Transportation 3.5% - 5.5% Administration 1.5% - 2.5% Losses 0.9% - 3.0% IT 0.8% - 1.4%

(*) includes also shelving (**) main components are lease/rent costs, staff costs, energy

Logistic operations is perceived as a small cost – But it’s not!

Transport

31% 32% 34% 3%

DC Fresh DC Dry Others

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Category Management Commercial Strategy Replenishment Store Operations Distribution Center Logistics Operations Store receiving

Let’s add assortments Great promo, we will triple volumes We want to deliver daily to each store at 7:30 Just promised a store a big

• rder

Sorry, pallets could not be loaded higher No time to unload now, please wait

AND ME?

Oops, we forgot that urgent customer

• rder

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• 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

A strong company-wide planning and logistic steering tool will ultimately reduce costs in stores, DC and transportation by:

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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

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• 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

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• 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)

✓ Reduced need for staging area (10%+ increase in space) ✓ Saved 15% of forklift movements ✓ Saved 5% of drivers overall time at DC ✓ Saved 5% of forklift equipment needed Use Control Tower techniques to create real-time transparency up stream Take DC-capacity and throughput into account when creating distribution plan

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• 3. Optimize the delivery process and spot backhauling opportunities
• Local route creation (DC), and central resource assignment.
• Centralization creates closed loop routing opportunities.
• Carrier portals and apps optimize retailer and carrier / driver synchronization.

Vendor Inbound - TL Outbound Grocery Route DC Store

Example Closed Loop in Groceries Start = end location

Store

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• 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 departures and pallets shipped per hour hours number of departures number of pallets number of order lines per day weekday When Data Meets Delivery: How to Empower Retailers through Logistics

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• 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

T h Wednesday Monday

Friday

Tuesday

Visit Day Optimizer “Balance workload” Routing “Calculate optimal routes” Territory Optimizer “Assign clients to regions”

When Data Meets Delivery: How to Empower Retailers through Logistics

Strong Transportation Planning Better Execution No Delivery Delays / Errors More accurate store staff planning

Higher Efficiency in DC and Store

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• 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.

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Use data analytics engines on top for continuous improvement

Cost revenue allocation

Low effort High effort Low impact

Supply Chain redesign Dwell time analysis Order intake Performance monitoring Re-

• ptimized

past Trend analysis Capacity planning Scenario planning Planned vs actuals

High impact

Monitoring Forecasting Profitability Planned vs actuals Scenarios

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Example of Carrefour project:

• 9,900+ stores in 33 countries
• 365,000 employees
• €79 Billion Annual Sales
• 10 million checkouts daily

Improved routing: average km per pallet decreased by 12% ➔ 5,5% savings on kms Increased SLA: More on-time deliveries & 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%

One solution improves in various areas

Example of achieved benefits in a Carrefour-country:

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Results:

One solution improves in various areas

50,000+ associates 5,000+ tractors 45,000+ dry-van trailers 150+ distribution centers 5,000+ drivers 4,000+ refer trailers 75+ transportation

• ffices

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:

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Discover more

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Webinar – Walmart leads the way by integrating Load Design and Routing Webinar – Retail home delivery / E-commerce innovations Retail brochure - Our vision on Retail Whitepaper – 7 Opportunities to improve Retail Store Delivery Whitepaper – Workforce Planning and Scheduling in Logistics

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Webinar – Discover the value of a Transport Optimization Control Tower

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Thank You!

Please direct any questions or comments to: ORTEC info@ortec.com

When Data Meets Delivery: How to Empower Retailers through Logistics

Let’s optimize your world!

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