2. 1
Table of Contents
Executive Summary ....................................................................................................................2
Introduction ................................................................................................................................3
Company Background.............................................................................................................3
Mission ...................................................................................................................................3
Core Values.............................................................................................................................3
Environmental Analysis ..............................................................................................................4
Internal Environment...............................................................................................................4
Competitive Internal Conditions ..........................................................................................4
Supply Chain.......................................................................................................................5
Seasonality..........................................................................................................................5
External Environment..............................................................................................................5
Sustainable Sourcing ...........................................................................................................5
Offshore Sourcing ...............................................................................................................6
Food Safety.........................................................................................................................6
Sustainable Sourcing Strategy .............................................................................................7
Emerging Issues ..................................................................................................................7
General Overview of Distribution Operation at WDC .................................................................8
Winnipeg Distribution Centre (WDC) .....................................................................................8
Organizational Analysis ..........................................................................................................8
Inbound Goods or Receiving ...............................................................................................8
Outbound Goods or Delivery...............................................................................................9
Quality ..............................................................................................................................10
Inventory...........................................................................................................................11
Capacity............................................................................................................................12
Distinctive Competence.....................................................................................................12
Problems and Recommendation ................................................................................................12
Summary and Conclusion..........................................................................................................14
Appendix ..................................................................................................................................15
Figure 1 – Milestones............................................................................................................15
Figure 2- Loblaw’s banners and Brand names .......................................................................17
Figure 3 - Impact...................................................................................................................18
Figure 4 - Organization Chat .................................................................................................19
Work Cited............................................................................................................................20
3. 2
Executive Summary
This study was conducted to examine the operation function of Loblaw’s Winnipeg Distribution
Centre (WDC), specifically to investigate, how service is generated and delivered to their
customers. The Winnipeg Distribution Centre supplies products to Real Canadian Superstores,
Extra Foods, No-Frills and Real Canadian Wholesale Club in Manitoba. As supply Chain
consists of flows and transformations from simple raw material to purchase of end products by
consumers, these activities require logistical support like storage of finished goods, consolidation
of orders and transportation. Loblaw’s Winnipeg Distribution Centre plays vital role in
coordinating all these activities.
At corporate level, acquisition of Shoppers Drug Mart has significant impact on supply chain of
the organization. Grocery distribution centre process large multi-temperature store orders of dry
grocery, produce, fresh meat, frozen food, dairy product, general merchandise and health and
beauty product. The majority, eighty percent (80%) of the product shipped in full case format
meaning that the product are shipped in the same cases as it is received from the supplier with
the exception of some general merchandise and health and beauty product which constitute
twenty percent (20%) of the supplies. On the other hand retail drug distribution is exactly the
reverse of grocery distribution, where only twenty percent (20%) of products are shipped in full
cases and the remaining eighty percent (80%) are shipped in split cases.
Loblaw’s plan to standardize operations of its distribution centre is facing few hurdles. Since,
what is good practice for one location or facility is not necessarily the best practice for another
facility, besides local laws and Collective Bargaining Agreements (CBA) are some of the hurdles
in standardization of Distribution Centres.
Furthermore, grocery distribution centres are designed to support high volume multi-temperature
full case product delivery, whereas retail drug store also ship full cases, but they have material
handling systems designed to support split case picking. Though, Shoppers Drug Mart and its
distribution is out of scope of this study but it is taken into consideration because of its
significance on overall supply chain of the organization.
4. 3
Introduction
Company Background
Loblaw Companies Limited is formally incorporated in 1956 (See Appendix Figure 1) with the
acquisition of Loblaw Groceterias (Established 1919) in Ontario and Loblaw Inc. (Established
1924) in the United States is Canada’s food and pharmacy leader, Canada’s largest retailer, and
the majority unit holder of Choice Properties Real Estate Investment Trust. Loblaw provides
Canadians with grocery, pharmacy, health and beauty, apparel, general merchandise, banking,
and wireless mobile products and services. With more than 2,300 Corporate, Franchised and
Associate-owned locations, Loblaw, its franchisees and Associate-owners employees
approximately 192,000 full-time and part-time employees, makes it one of Canada’s largest
private sector employers.
Loblaw has more than 1,050 grocery stores that span the value spectrum from discount to
speciality, full-service pharmacies at more than 1,250 Shoppers Drug Mart and Pharmaprix
locations and more than 500 Loblaw locations, no fee banking with PC financial, Joe Fresh
fashion and family apparel, and three of Canada’s top consumer brands in Life Brand, no-name
and President Choice. (See Appendix Figure 2)
Through the PC Plus and Shoppers optimum loyalty programs, one in every three Canadians is
rewarded for shopping with the company.
Mission
Be Canada’s best food, health and home retailer by exceeding customer expectations through
innovative products at great prices. Driven by responsibility to:
Respect the Environment; Source with Integrity; Make a Positive Difference in Our Community;
Reflect Our Nation’s Diversity; Be a Great Place to Work.
Core Values
Company’s Values clarify what is important in organization, and guide its behaviour and
decision making.
5. 4
CUSTOMERS matter most
RESPECT each other
Getting BETTER every day
Care for COMMUNITY and environment
Environmental Analysis
The Company employs environmental risk assessments and audits, using internal and external
resources together with effective employee awareness programs throughout its operation
locations.
Internal Environment
Loblaw carries on business in the food distribution industry by operation across Canada through
company owned store (“corporate store”), franchised independent stores (“franchised stores”),
and associated stores and by servicing independent accounts. The Company has developed a
highly successful line of control label products and services which are sold or made available in
corporate stores, franchised stores and associated stores and are available on a limited basis to its
independent account customers.
Competitive Internal Conditions
The food distribution industry in Canada is a changing and competitive market. Consumer needs
drive changes in the industry, which is impacted by changing demographic and economic trends
such as changes in disposable income, increasing ethnic diversity, nutritional awareness and time
availability. In a word, consumers have demanded more quality, value and convenience.
The Company’s focus is on new store growth, expansion of departments and services and the
renewal of the existing store base, while controlling operation costs and through the
rationalization and centralization of certain functions. This allows performing well in an
increasingly competitive market, which is continuously evolving with the addition of warehouse
clubs, the growth of discount food formats and the increasing marketing of food by mass
merchandisers and other specialty retailers. Another competitive advantage is its quality control
6. 5
program, which promotes customer loyalty and allows pricing flexibility with respect to national
brands.
Supply Chain
Loblaw’s’ supply chain and distribution group is responsible for the flow of goods and
information between its vendors and suppliers and the warehouses and distribution centres and
ultimately to its stores. In some cases certain goods flow directly to the stores from the vendors
as they delivery directly to the stores rather than to the warehouse, ensuring optimal usages of
the supply chain and distribution network. The DC system allows the Company to response
quickly to changing market conditions in a manner that provides the highest level of service and
optimal inventory levels at the lowest possible cost.
The Company continuously evaluates its methods of distribution including its relationship with
vendors and suppliers, technology, facilities and modes of transportation including its own
trucking fleet and the use of third party common carriers, railway and ship.
Seasonality
Loblaw’s operation, specifically inventory levels, sales volume and product mix, are impacted to
some degree by certain holidays periods in the year especially for food items. As the Company
expands its offerings of non-food items, it increases the number of seasonal products offered,
therefore, its operation is subjected to more seasonal fluctuations.
External Environment
Sustainable Sourcing
Climate change, population growth and human activity are putting enormous strain on land,
water and biodiverstiy resources – in Canada and around the world. By sourcing sustainability,
Loblaw aims to conserve their resources and improve their supply chains. Its strategies and
processes continously evolve with changing consumer expectations, regulatory requirements and
emerging risk and opportunities. Loblaw commitments drive change in the retail industry and it
takes that responsibilty very seriously.
7. 6
Offshore Sourcing
Loblaw took strong action in the wake of the 2013 collapse of the Rana Plaza complex in Savar,
Bangladesh, by committing $5 million in relief efforts and increasing the standards of its
building fire and safety assessments for factories producing its products.
It is also the first Canadian signatory to the Bangladesh Accord on Fire and Building Safety in
2013, which legally binds them to factory inspections and improvements. In 2014, it extended its
building fire and safety assessments for factories in Thailand, Cambodia, Sri Lanka, Vietnam and
India. No new factory will be listed as a supplier in these countries unless an assessment is
completed. A major outcome of these assessments has been fire and safety training paid for by
Loblaw, for managers and employees in the factories. The covers fire safety protocols and
processes such as maintaining fire exits evacuation procedures and the proper use of a fire
exitinguisher.
Loblaw continue to monitor and evaluate all offshore suppliers using the internationally
recognized Workplace Conditions Assessment (WCA) standard and its own Supplier Code of
Conduct. The WCA audits assess labour, wages, hours, health and safety, and work environment.
Suppliers that do not conform to both the WCA and Loblaw standards are given a time frame in
which to make neccesary improvements if they fail to comply, they discotinue the relationship.
It also implemented an initiative with its global logistics service provider to ensure products
deliveries are accepted only from Loblaw approved factories. At every port of origin where
Loblaw procures goods from outside of Canada or the United States, its logistics provider
validates the supplier name and specific factory name and addresss against its list of approved
factories, which is updated weekly.
Food Safety
Loblaw want its customer to have every assurance that the food they buy from Loblaw is safe
and meets their expectactions. To this end, it introduced enhanced product testing and nutrition
8. 7
verification programs in 2014. The programs are aimed at assuring that Loblaw control brand
food products consistently meet quality, safety and regulatory specifications.
The product testing program requires that all food products be tested at lauch and then annually
by a designated third-party testing lab for compliance with product specifications, labelling and
claims accuracy. The nutrition verification program requires analytical testing at least every two
years to validate the nutrition facts table and label claims.
Sustainable Sourcing Strategy
Loblaw,s strategy is aimed at ensuring the the sustainability of its supply chains and offering
customers product choice that fit their values. This strategy often leads with its control brand
products to drive change.(See Apendix Figure 3)
Emerging Issues
As a large retailer and owner of four of Canada’s biggest control brands (President’s Choice,
Life Brand, no name and Joe Fresh), Loblaw is regularly faced with new and emerging issues
that influence consumers’values and behaviours. To this end it need to evaluate these issues and
ensure its conrol brands are advocating for its customers.
Amongst such emerging issues are
• Genetically modified organisms (GMOs)
Loblaw is dedicated to helping customers feed themselves and their families in ways that meet
their personal standards. As such, it know customers have many questions about food – about
nutrition, production methods, ingredients and more. One area of consideration relates to
genetically modified organisms (GMOs) and genetically engineered (GE) ingredients
• Pollinator Conservation
Loblaw collaborates with external stakeholders to address the issue of pollinator health which is
of considerable importance
• Chemicals of Concerm
In the wake of consumer health and wellness concerns associated with certain chemicals in
health and beauty and household products, Loblaw have begun to develop a plan action for its
9. 8
control brand. Two years ago, Shoppers Drug Mart made a commitment to eliminate
dibuylphihalate (DPB) from its comestic and personal care control brand products.
General Overview of Distribution Operation at WDC
Winnipeg Distribution Centre (WDC)
The Loblaw Winnipeg Distribution Centre supplies products to Real Canadian, Superstore, Extra
Foods, No Frills and Real Canadian Wholesale Club in Manitoba. The Centre supplies these
retail partners with grocery products.
There are five main departments in the Distribution Centre, which include: Receiving, Assembly,
Shipping, Inventory Control and Maintenance.
Organizational Analysis
The Winnipeg Distribution centre works according to the flow of work as appended in the
following flow diagram 1 and 2 for Inbound and outbound supplies respectively.
Inbound Goods or Receiving
As the product is ready for delivery to the distribution centre according to the quantity and
specifications specified in the purchase order, product integrity check is being done at the vendor
facility before the departure of goods. When distribution centre received the goods, temperature
check is performed for frozen and perishable products from front, middle and rear before
unloading and also repeated while product is unloaded from the trailer. Temperature check is
based on temperature threshold of that particular product. Items are counted and reconciled and
if found correct then it is taken into Inventory. Pallet is tagged and put away into the designated
location according to the location layout. Different equipment like Crown double or single
hauler, and Crown counter balance forklift or Crown deep reach forklift is used for movement
and placement of goods.
10. 9
Inbound Flow Chart
1
Outbound Goods or Delivery
Distribution Centre received Computer Assistance order into its Manhattan software from stores
through SAP and orders are routed through JDA. Order size measures in Cube and loads are built
based on cube and order cube per trailer. The size of single pallet is 72 cubic feet and a trailer
can hold up to 2000 cubic feet of goods. Once work is released to the floor, Assembler begins
pick process receiving orders on Head set and verifying it by repeating the order he picks. Order
picker uses single or double haulers to pick the order. When the pallet reached the maximum
cube setting 72 cubic feet, assembler placed the pallets on the dock for loading. Loader loads the
pallets in the trailer to its maximum capacity to get it ready for delivery. Same inspection process
for perishable and frozen goods are implied during loading of trailer as performed for receiving
goods. All delivery trailers are equipped with ISOTRAK and GPS tracking system, providing
stores and distribution centre visibility into when deliveries are expected and this in addition,
help to monitor the efficient use of the truck with regard to speed, location and stoppage as well
as prompt product delivery to the stores.
Same quality checks is performed on the products received at the stores to ensure conformance
of quality of products which Loblaw stores are known of.
1
a. Product Integrity check is done at the vendor Level.
b. Temperature Checks are done prior to product unload.
c. Temperature Checks are done while product is being unloaded. F, M,R
11. 10
Outbound Flow Chart
Quality
Food safety and accuracy of delivery of goods is ensures at the distribution centre all the time.
Distribution centre has set high standards for delivery. The acceptable limit for delivery error is
1.2 per 1000 cases of goods delivered. It has achieved minimum service level of 95 percent.
Audits for quality standard is performed quarterly to maintain service standard.
The Distribution centre carries out quality audits-documentations on every process of the
delivery system to ensure efficiency and effectiveness of delivery system. Routine information
systems on the different process are kept daily, weekly, monthly and yearly to provide basic
service provision data.
Loading process checks: loads and transformations must be scheduled and processed in a
specific order; the process flow of each individual record in the warehouse can be reconstructed
at any point in time.
12. 11
Training program
All levels (See Appendix Figure 4) of employee are given on the job training, depending
on the job types
They co- sponsor a full time employee for career advancement at Universities and
Colleges in their respective chosen career
Presently working on a training module for supervisors – “Supervisory Development
Initiative”- Efforts are being made to collate the curriculum to be used for the program
from Harvard University.
o This will enhance efficiency and adequate supervisory roles from their
supervisors
o It will boost their revenue generation drive as well as
o Develop the employee’s potential for growth in their chosen career
Inventory
Winnipeg distribution centre maintains seven (7) days inventory for groceries, three (3) days for
perishable goods, one day for milk, and breads are received and delivered the same day.
Forecasting and replenishment:
Loblaw Winnipeg Distribution Centre recognized the need to improve its demand planning
capabilities and specifically, its ability to accurately forecast product demand and replenish
inventory in a timely and optimal manner.
To this end the Distribution Centre is constantly working to improve the efficiency of its supply
chain in an effort to ensure that the freshest products get to its customers, quickly and at the
lowest cost.
Software
Different types of software are used by the WDC to manage the distribution operation process.
These include; Manhattan, SAP, JDA, and ISOTRAK to maximize efficiencies, effectiveness,
customer satisfaction and profit margins.
13. 12
Capacity
The Winnipeg Distribution Centre is 425,000 square feet in size covering several stores across
Manitoba.
It employs 115 Union and 40 Non Union employees of which 25percent are of management
level.
Distinctive Competence
Loblaw distinctive competency lies in their quest to improve on the following attributes which
distinguished them from their competitors:
• Best product
• Best price
• Good customer service
• Clean stores
• PC loyalty and optimum programme in all the stores
• Customized brand name/label
Problems and Recommendation
One main problem observed in the supply chains of Loblaw is the differences between grocery
distribution and retail drug distribution:
Grocery distribution centres process large multi-temperature store orders of dry grocery,
produce, fresh meat, deli meats, dairy, frozen foods, general merchandise and health & beauty
care. For the most part, grocery distribution centres are designed as conventional facilities that
support high volume multi-temperature full case throughput while retail drug distribution centres
also ship full cases, but they tend to have material handling systems designed to support split
case picking.
Of equal importance to understand is the outbound transportation characteristic of retail grocery
versus retail drug. Grocery supermarkets typically receive deliveries from the supporting
distribution centres that are loaded onto 48′ or 53′ full size trailers. On the other hand, retail drug
14. 13
stores are often smaller format stores located in urban cities such that there are constraints on the
type and size of truck that can be used to service the store. Thus a mix of smaller delivery trucks
and larger trailers is common within retail drug store distribution.
To solve this problem we suggest:
Developing a common IT infrastructure that reduces the cost and complexity of running
two firms on different systems and platforms.
Secondly, it was observed that the distribution operations of the 22 distribution centres across
Canada are not standardized. Loblaw’s empower its distribution to centres focus more on
regional customer preference and less on unified operating procedures. This to a large extent do
not allow for uniformity in the DCs of Loblaw. Loblaw made effort to standardized operation of
different DCs through learning from each other and meeting among management team.
We think a number of best practices do apply to many warehouses and distribution centers, our
recommendations in this regard are the following:
Implement a vendor compliance program. This way, suppliers help them achieve
maximum throughput and maximum efficiency, in a minimum amount of time.
Having multiple facilities in their distribution network to conduct monthly best practice
conference call between DCs to share and discuss internal best practices.
15. 14
Summary and Conclusion
The operation function of Loblaw’s Winnipeg Distribution Centre, specifically ensures products’
quantity and specifications as specified in the purchase order is delivered by the vendor, having
carried out product integrity check (temperature threshold checking, product’s physical damages
and reconciliation) at the vendor facility before the departure of goods and upon the receiving of
the products at the facility into its inventory.
From the inventory, assembler picks the goods with caution avoiding mistake, using single or
double haulers to pick the order into the pallet. When the pallet reaches its maximum cube
setting, the pallets are placed on the dock for loading into the trailer, for onward delivery to the
stores. The stores also perform quality checks on the products received to ensure conformance of
quality of products which Loblaw stores are branded for.
However, Loblaw DCs are faced with challenges of merging with Shoppers which has resulted
into non profitability of some outlets. Hence, the recent decision of Loblaw management to close
down 52 stores over the next 12 months using the cost cuts to shore up profits in a fast-changing
merchandising landscape with more e-commerce and competitors that can pinch margins.
In conclusion, we recommend that efforts should be geared towards developing a common
platform or standardized operation management system that will work for both the grocery and
drugs. This will go long way to increase the performances of the distribution centres.
16. 15
Appendix
Figure 1 – Milestones
1919 The first Loblaw Groceterias store opens in Toronto
1924 Loblaw Groceterias expands throughout Ontario and into New York State, forming an
American company headquartered in Buffalo
1928 Loblaw Groceterias expands into Chicago, Illinois
1933 Loblaw introduces its new “market stores,” with full-service meat and produce departments
T. P. Loblaw, dubbed the “Merchant Prince” by the press, dies at age 60
1939 The name Loblaw’s appears on storefronts for the first time, replacing Loblaw Groceterias
Co. Limited
1947 W. Garfield Weston, president of George Weston Limited, acquires 100,000 shares of
Loblaw stock from company co-founder J. Milton Cork
1949 Loblaw leads the way with the introduction of “healthfully-cool equipped air-conditioning”
in its new “super markets”
1956 Loblaw Companies Limited is incorporated and acquires Loblaw Groceterias in Ontario
and Loblaw Inc. in the United States
1959 Loblaw enters the trading-stamp wars with its own “Lucky Green Stamps”
1967 Loblaw celebrates Canada’s Centennial
1978 The no name brand is introduced
1981 The first Loblaw pharmacy opens in Winnipeg
1983 Dave Nichol’s Insider’s Report debuts
President’s Blend Coffee is launched
1984 The debut of President’s Choice products
1985 PC Teddy is born
1988 The Decadent Chocolate Chip Cookie goes on sale for the first time
1989 President’s Choice G.R.E.E.N products make their debut
President’s Choice Children’s Charity is created
1998 Loblaw acquires Quebec-based grocery store chain Provigo
2001 PC Organics is created
2002 The PC Home line is launched
17. 16
2005 The PC Blue Menu product line is launched
2005 Loblaw begins offering prepaid long distance and mobile services
2006 Joe Fresh Style arrives in stores
Presidentschoice.ca is one of the first grocery brand websites to incorporate consumer-
generated content
2008 The premier issue of Loblaw’s Corporate Social Responsibility Report is launched
Loblaw opens its environmental flagship Superstore in Scarborough, Ontario
2009 Loblaw installs the first wind turbine at a Canadian grocery store
Loblaw acquires T&T Supermarket
2010 Empty trays at seafood counters highlight “at risk” fish
2011 PC® black label collection is launched
Loblaw’s at Maple Leaf Gardens opens
2013 PC Plus™ loyalty program is launched
2014 Loblaw acquires Shoppers Drug Mart
20. 19
Figure 4 - Organization Chat
Warehouse Operations DC
Inventory Control
General Manager
R O’Connor
Operation Manager
D Todaro
Training & Development
Supervisor
M Zawislak
Maintenance Mgr
M Poloski
Sr. Supervisor
S King
Sr. Supervisor
B Wirth
Maintenance SS/S
G Dankochik
WMS Clerk
S Nazar
Warehouse
Supervisor
R Uminga
Warehouse
Supervisor
M A Henke
Maintenance SS/S
M Maryniuk
General Manager
R O’Connor
I.C.Manager
R Capacete
I.C.Manager
R Levesque
Inventory Analyst
M Norico
(Non-union)
Inventory Analyst
J Ladera
(Non-union)
Level 3
E Oquendo
(Union)
Level 3
J Magnaye
(Union)
21. 20
Work Cited
Supply Chain and Distribution. (2011). Retrieved July 27, 2015, from
http://www.loblaw.ca/English/Careers/your-career-opportunities/supply-chain-and-distribution/
Harps, L. (2015, May 1). Best Practices in Today's Distribution Center. Retrieved July 27, 2015,
from http://www.inboundlogistics.com/cms/article/best-practices-in-todays-distribution-center/
Organization Chart & Product Flow Charts provided by Mr. Riley O’Connor, General Manager
of Loblaw Winnipeg DC.
