ebruary 20, 2019 · By 24/7 Staff ·
Retail Customer Portfolio
One of Canada’s largest retailers has been on a consistent growth and expansion path for nearly 100 years.
The company’s portfolio includes many of the country’s top retail, grocery and private label brands, and they proudly employ over 200,000 people across their expansive retail network. (for purposes of this client success story, this large Canadian retail client will be referred to as LRC.)
LRC was faced with an opportunity to expand into new market sectors, including apparel, general merchandise and ultimately into the online shopping world.
They needed a partner to add value in their dynamic supply chain and provide scalable solutions to help support their growth and expansion objectives.
The client sought LEGACY based on strength of the relationship with their vendor network and proven ability to service other well-known companies in the retail space.
Ultimately the third-party logistics (3PL) partner selection was driven by LEGACY’s expertise in developing supply chain solutions, combined with system enablers as it relates to a warehouse management systems (WMS) platform, order management, back end infrastructure, and integration.
New Expansion Opportunities
LRC was a long-standing expert in the grocery business and was looking to expand for the first time into new markets.
At the time, they were not equipped to serve market growth with their existing distribution network, technological systems, labor model & transportation network.
The seasonality of retail also created challenges. LRC needed a supply chain focused third-party logistics provider to partner and grow with.
Overcoming Supply Chain Challenges: Speed to Market, Technology & People
Systems & Technology Limitations: LRC’s technology environment did not allow for multidimensional SKU inventory management, or the ability to reserve & allocate inventory to individual store locations – ultimately limiting their ability to enter the rapidly growing online fulfillment arena of retail.
Distribution Network: Existing facility locations were not optimized either geographically or within each facility operationally to service this new market growth. A high level of network redundancy existed due to the utilization of satellite distribution locations.
Non-optimized Labor Model: this retailer’s labor model was not equipped to expand & contract in alignment with the seasonal demands of the new market. A need for a more flexible, scalable, & cost-effective model was required to support expansion.
Collaborative Retail Solution
LEGACY took a highly collaborative & consultative approach to build a full-scale supply chain solution – including network design & facility location engineering, systems & technology, labor optimization and eventually eCommerce enablement.
LEGACY leveraged its experience in the high volume, fast-moving Retail & Consumer Package Goods (CPG) supply chain segments to create value and support the client’s aggressive path for growth and expansion into new markets.
Developing a Customized Retail Supply Chain Solution
Capital investments – Real Estate & Infrastructure: Existing distribution centers within the network had to be redesigned to accommodate new product lines. A network study was conducted that resulted in a realignment of regional DCs, and overall network consolidation.
Technology Investment: LEGACY invested heavily in a custom technology solution designed around LRC’s dynamic retail business. The WMS solution integrated seamlessly with the client’s ERP to provide real-time inventory visibility, and support accounting & invoicing process requirements.
The solution provided automated shipping mode optimization and also integrated with couriers & postal services to provide shipment in-transit visibility, reducing costs and enabling efficient order fulfillment.
Labor Optimization: LEGACY’s labor solution included a flexible labor model with cross-trained personnel that can be redeployed in alignment with the seasonality of volume, as well as across product lines.
Transportation Consolidation: Rapid market growth had created an enlarged transportation network and multiple distribution sites, as a result, stores would receive several shipments per day including vendor direct deliveries.
Transportation synergies were created by consolidating inbound deliveries to store locations. This new collaborative design consolidated LRC’s distribution & transportation network, reducing the number of deliveries and labor handling requirements at the store level.
Planning & Forecasting: Marketing and promotional programs were incorporated to allow for proactive planning. The solution was developed with both the client’s supply chain and business units in an effort to support business strategy as it related to product release (dates, times), along with corporate marketing and promotional events.
Communication: LEGACY’s solution starts with mirroring & alignment across all levels of the client’s business. LEGACY’s President, VP of Operations, General Managers & Supervisors – all are involved in developing & implementing solutions, as well as being actively engaged in managing the business at all levels.
A collaborative monthly business review was instituted to ensure on-going dialogue between customer & 3PL leadership on all critical areas of the business, including:
- Operational metrics performance (quality, service, productivity, inventory)
- Financial metrics performance
- People & culture indicators
- Continuous improvement & cost-out project decks
- Safety & compliance performance
- Planning initiatives: including upcoming promotions & forecasting
Value & Results
Speed-to-Shelf = Sales Performance: The client was able to establish brand recognition and superior sales with the support of the LEGACY supply chain solution, ultimately becoming one of the top brand names in Canada.
The improved speed-to-shelf performance allowed LRC to achieve better in stock positioning in stores, thus improving sales and overall product visibility among consumers.
Cost Reduction: Client was able to drive down carrying costs by reducing on-hand inventory requirements for approximately 10,000 individual SKUs. DC network realignment and removal of redundancy resulted in the reduction of the overall footprint by ~20% – significantly lowering real estate, labor and operating cost structures in their network.
Technology Enablement = Increased Efficiency: As a result of technology enablement, enhanced operational processes, and labor optimization – the client has seen marked improvement across many levels of their supply chain.
New Market Opportunity: Ecommerce Fulfillment
6 years into the relationship, LRC approached LEGACY to partner with them to help scale the rapidly growing online segment of their business. Much like the initial expansion into new markets, the client was looking for a partner to develop the custom technology & operational platform to support their online business expansion.
This integrated solution provided real-time product availability to the online consumer while allowing LRC to meet the ever-tightening service level requirements faced by online retailers today.
Enhancement of Existing Distribution Operation: the beauty of the eCommerce fulfillment solution was that it was able to be developed within the existing framework of LRC’s network. No new locations were required, nor were massive investments in equipment & infrastructure.
While the technology solution solved new challenges the client faced around visibility & service – LEGACY’s deep knowledge of their brick and mortar retail business & supply chain network proved invaluable through the expansion into online order fulfillment.
Building eComm service requirements into existing operations allowed the client to increase the efficiency at which inventory was deployed across online and in-store delivery channels while existing integration with major courier and postal services further enabled eComm fulfillment success.
In addition to the successful expansion into the online shopping world – the client has since implemented many LEGACY operational best practices into other DC’s in their North American network, including enhanced flow and reverse pick processes.
The true testament to the successful 10 years plus partnership between LRC and LEGACY can be summed up in a quote from LRC’s VP of Operations;
“When we engage in new areas & markets, LEGACY is partnered to bring forth the solution expertise, development and ultimately execution.”
Related Retail Papers
Keeping Up with the Retail Consumer
6 supply chain disciplines retailers must master – developed by Adrian Gonzalez, founder and president of Adelante SCM and LEGACY Supply Chain Services, with a foreword from Rick Blasgen, president and CEO, CSCMP. Download Now!
Evolving a Large U.S. Retailer from Good to Great
LEGACY executed a comprehensive startup project plan to fully transition operational control of LSR Inland Empire operations, discover how this solution was executed with zero disruption to the business. Download Now!
Omni-Channel Logistics Leaders: Top 5 Inventory Insights
This research paper provides several valuable insights ranging from current challenges & best practices, characteristics of companies considered high performers, and opportunities for improvement from companies lower on the omnichannel performance curve. Download Now!
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