The South African solution to supply chain - Supermarket.co.za

Benefits from
centralised
distribution include
better on-shelf
availability, while
at the same time
holding lower overall
inventory levels
in stores
Just in time (JIT) delivery is a growing trend in retail to reduce inventory at store level.
A lot of stores are now built with more floor space and less backroom.
SUPPLY CHAIN
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■ Unskilled, non-permanent
labour force
Many of the key personnel involved in
critical supply chain processes are either
casual labour or unskilled. “This leads to
unpredictable turnaround times, stock
losses, damages, lack of ownership of
process and security threats,” comments
Kelly. These pressures are exacerbated
further by the strong presence of trade
unions and the resulting downtime thanks
to the inevitable industrial action.
■ Diverse physical
operating environments
“It is as though every receiving, dispatch,
back-up area and processing zone has been
designed and built differently,” he says.
This adds confusion and restraints to the
planning and delivery execution processes.
For example, stores located next to each
other that are receiving a delivery on the
same day may have to be planned on
separate vehicles due to physical receiving
constraints, adding to the cost of logistics.
Centralised efficiencies
In 2012, Pick n Pay opened its new
distribution centre (DC) in Philippi, Cape
Town – the second of a planned four across
the country.
Commenting at the May launch,
divisional director of supply chain, Cobus
Barnard said: “It will allow us to operate
Most retailers began embracing centralised distribution years ago. However, not all vendors can
go through a DC so there will always be a need for direct to store delivery (DSD), especially in
provinces where retailers don’t have their own regional DCs.
more cost effectively and improve our
ability to serve our customers at the same
time. Benefits from centralised distribution
include better on-shelf availability, while
at the same time holding lower overall
inventory levels in stores. This means less
congestion at our stores’ receiving centres
and importantly lower transport costs in
our supply chain.”
Logtrix provides scheduling and supply
chain productivity services to Pick n Pay
nationally across all divisions and has
been integrally involved in the retailer’s
direct store delivery (DSD) planning and
operations over the past 24 years.
Centralised distribution is also great from
a delivery point of view for carriers as they
have a single delivery point per region rather
than having to send vehicles all around the
country. “Also, vehicles make bookings so
you don’t spend the entire day at a back
door because of queues,” explains Aling.
However, there are cost implications
within the DC model. “Because retailers
know that suppliers want to ship to DCs,
they can charge DC allowances. But it
definitely still makes economic sense to
deliver bulk loads to the retailer DCs and
let them consolidate their store orders and
ship themselves,” he says.
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SUPERMARKET & RETAILER, APRIL 2013