Woolworths wanted to improve its supply chain sustainability and competitive advantage. It developed a strategy to vertically integrate its supply chain by taking ownership of primary transport from suppliers. Woolworths partnered with logistics companies to establish a Logistics Integration Centre to house advanced planning capabilities, provide visibility and reporting, and enable the supply chain integration strategy. Over time, Woolworths worked to increase supplier adoption, further integrate transport operations, and continue optimizing the supply chain through initiatives like scenario modeling, data improvement, and green initiatives.
3. Woolworths Pty (Ltd) is a leading and respected retail chain
• Over 400 retail stores, including franchise stores
• Range of quality clothing, food, homeware, beauty and financial services
(in partnership with Absa Bank)
• Operations in South Africa, Africa and the Middle East
4.
5. • Unsustainable / unreliable transportation solutions
• Not cost-effective, limited collaboration between
suppliers
• Limited inbound / outbound integration
• Limited visibility of operations and reporting
capabilities
6.
7. Woolworths wanted to achieve the following:
• improved service levels to stores
• competitive advantage
• supply chain sustainability
8.
9. Therefore they set the following strategy:
• Vertically integrate the supply chain
• Take ownership of primary transport
(inbound from suppliers)
• Improve tactical and operational
planning and execution
management
10.
11. • In 2008 Woolworths, with assistance from
Volition and IMPERIAL Logistics Refrigerated
Services (ILRS), quantified the current logistics
cost imbedded in COS
• The result was a business case for Woolworths
to also own the primary leg of the supply chain
12.
13. During 2009 / 2010, the team modeled tactical scenarios to find ways to
achieve the necessary efficiencies
Integrating inbound / outbound distribution emerged as the most
promising alternative
It was agreed that a Logistics Integration Centre (LIC)
should be established to:
•House the advanced planning capabilities
required to integrate the SC
•Support reporting and provide granular
visibility of operations
•Thus be the key enabler of the strategy
14. Scenario Efficiency Ad-hoc Dashboards
Modelling Tracking Analysis (KPIs, CO2 etc.)
Values
Operations 145.0
144.0
143.0
-
0.16
- -
1.75
Region Business NDC / DU Budget NDC/DU NDC / DU
Sum of Volume
Sum of 2011 Actual Sum of FY12 WW Sum of 2012 Actual Impact on Budget
NDC
Maxmead C&GM R 5.45 R 5.78 R 5.64 R 132 797
YTD Woolworths Costs (Rm)
142.0 3.09
141.0
Foods R 1.88 R 1.90 R 1.95 R -66 901
-
0.56 143.8
Maxmead Total R 2.38 R 2.40 R 2.49 R 65 895
IMPERIAL
140.0 -
0.40
142.0
139.0 Midrand C&GM R 5.99 R 7.10 R 6.43 R 390 797
139.6
138.0 Foods R 2.80 R 2.87 R 3.01 R -637 349
137.0
2012 WW Budget Adjust for volume Adjust for Add fuel Additional vehicle YTD FY12 Internal efficiency 2012 WW Actual
Midrand Total R 3.04 R 3.15 R 3.25 R -246 553
Net Distribution distance surcharge shortfall baseline YTD Cost
Montague C&GM R 1.89 R 2.03 R 2.05 R -41 593
(TMS, Key-
Costs
Foods R 1.81 R 1.98 R 1.88 R 626 933
Montague Total R 1.82 R 1.99 R 1.90 R 585 340
Grand Total R 2.63 R 2.76 R 2.79 R 404 683
Nuggets)
Woolworths
(Triceps, Extract, Repository
Cognos, SAP) • Activity-based allocation of actual and
Transform, budget costs (for FY2011 and FY2012 YTD)
& Load – • Per site, Foods and C&GM, per store, per
External Including Data supplier, per discipline
Benchmark Scrubbing and • Inbound, outbound & trunking
Calculations • Supplier cost determination
Data
• Enabling competitive advantage and
sustainability
18. • Supplier adoption activity has been increasing since 2009/2010
• Development on a Logistics Integration Centre started in late 2011
with:
• Dashboard reports
• Data repository (provides additional granularity and analysis capabilities)
• Advanced planning and reporting capabilities (start of planning office)
• “Operationalisation” first half 2012:
• Tracking YTD efficiencies, taking corrective action
• Integration of outbound transport
• Continued supplier adoption
19.
20. • Testimonials:
• Woolworths KZN DC Manager: “Fair Field have contacted me and [are] very
impressed with the thermometer that Imperial is using for probing product. So
much so they now are looking for the contact details of the manufacturer so
they can purchase one for themselves.”
• Key Supplier: “Thanks Johan, we are keen to make this work and would like to
finalise the operational detail as soon as possible. We would like May the 1st to
be the starting date if we can get everything in place in time.”
21.
22. • Involve suppliers in the journey upfront
• Don’t under-estimate the importance of change management
• Support from Exco levels
• Ownership to drive the process
• Fair compensation / remuneration between supply chain partners to
ensure win-win…drives correct behaviour
• Support for- and understanding of longer term vision rather than
short term gains
23.
24. All parties remain engaged on initiatives to support
supplier adoption and broader supply chain improvement:
•Further integration of transport
•Tactical modeling of supplier adoption impact on primary, trunking
and secondary
•Establishment of planning office
•Equipment centre optimisation
•Master data improvement
•Improving DC labour planning and control
•Green Supply Chain initiatives