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MOS 3330 : Operations Management

Instructor: Burjaw

Supply Chain Managemet:

Company Overview

Loblaws is Canada's largest food distributor and supermarket chain. Carrying everything from groceries, to a full-service meat and produce department, health and beauty products, it’s own line of housewares and small appliances (PC home line), magazines, prepaid long distance mobile services, and recently it’s own line of apparel introduced in 2006 called Joe Fresh.

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- Their product lines have expanded exponentially over the last 10 years and with that so have their supply chain strategies.

By: Mandy Ho, Mathew Zanfini. Amy zhao , Usman Mehboob & Jeslene Bryant

Logistics

Supply Chain Challenges

What is supply chain management?

- Loblaws logistics team uses and manages many modes of transportation for shipping & delivery: land, sea, and rail, to get their product into the distribution network of over 1000 stores across the country.

Operating in an intensely competitive market provides many challenges to Loblaw's profitability. In 2005 supply chain problems affected Loblaw's profit. In 2006, Loblaws announced that they would "close six warehouses and cut 1,400 jobs as it replaced smaller distribution centers with a network of larger facilities"

- First, a supply chain is a network of facilities, functions and activities involved in producing and delivering products or services from suppliers to customers.

- Supply chain management is the coordination of the movement of goods through the supply chain, and the control of information such as sales data, sales forecasts, promotions and inventory levels.

- Distribution operates 18 corperate and six 3rd party operated distribution centers ( DCs) across Canada.

Loblaws focused on how to make changes in their supply chain in order to:

1.) Cut cost

2.) Cut the time it takes from producers to store shelves

3.) Have better information about the logistical processes involving, communication, on-time delivery, quantities and distribution.

-These DCs ship over 737 million cubic feet of product annually.

-The 3rd party logistics providers are used at 11 distribution centers, but Loblaws is NOT dependent on any one particular( reducing risk).

Purchasing

The purchasing process for Loblaws varies by product. The replenishment team works with purchasing agents to ensure that sufficient quantity and variety of products are purchased from suppliers. Regardless of product, the steps in purchasing cycle are still the same.

Results

- Loblaws received the Top supply chain award in 2008

-5% improvement in labour efficiency, reduced receiving time by 23%, and a reduction inventory shortages by 50%

Works cited

- Through flowcasting and cross-docking, lead time was reduced and inventory volume improved, resulting in total saving of 5 million annually.

http://www.cp24.com/news/loblaw-cuts-700-jobs-at-toronto-area-head-office-1.997570#ixzz2MPcpBTJ3

- Improved supply chain management has resulted in lower average inventory time, shorter cycle times, lower total cost, higher service levels, and stronger relationships with supply chain memebers.

http://www.loblaw.ca/files/4.%20Investor%20Centre/Financial%20Reports/2012/Q4/Loblaw%20-%202012%20Annual%20Information%20Form_v001_a8gz9j.pdf

THE END

http://www.witiger.com/internationalbusiness/SupplyChainManagement.htm

http://www.canadiangrocer.com/top-stories/loblaw-wins-top-supply-chain-award-10970

http://www.canadianmanufacturing.com/distribution-and-transportation/news/loblaws-claims-supply-chain-overhaul-successful-56654

Thank you

http://www.financialpost.com/story.html?id=65573c81-1600-48e0-88fb-8ca878b8c87c&k=0

Solutions, continued

Solution

-The company decided to invest in IT infrastructure as part of their long term improvement strategy.

As a result of these problems, Loblaws announced 1000 layoffs and invested 128 million into restructuring their IT department and supply chain infrastructure.

- Collaborative, Planning, Forcasting and Replenishment (CPFR), was implemented to form partnerships with suppliers in an attempt to share forecasting and replenishment information with supplier schedules.

- Loblaws doubled its warehouse size and changed its forecasting model to" flow-casting"; managing the way products move through its supply chain using RDIF( radio frequency identification system). The goal was to track products from warehouse to where they landed in individual stores.

- Now using 1 single national operation centre Loblaws inventory forcasting model predicts 99 % of all products daily to within 6 units of actual sales

- There was a need to revamp corporate culture by centralizing business processes, eliminating duplication and harmonizing the buying and selling departments.

Sourcing

Bullwhip Effect

Loblaws in 2006 was experiencing various problems associated with Bullwhip effect. Including:

- With a large variety of products, Loblaws uses multiple suppliers and vendors both on shore and off that provide competitive prices, dilute risk, lower dependence and volume flexibility. e.g( P&G, Unilever, Pepsi ect)

1- Stock outs & high order costs.

2- Poor information systems and processes for forecasting.

3- Time issues e.g (deliveries & lead time)

4. Conflicts with management layers and accountability.

-Although contractual arrangements, sourcing guidelines, supplier audits and Corporate Social Responsibility (“CSR”) guidelines are in place, the Company has no direct influence over how the supplier or vendors are managed.

Identify the demand

- Loblaws uses Point of sale technology to record sales, and forecast replenishment orders.

Receive the order

Select suppliers

- Products are collected at receiving docs and shortly after placed on store shelves as need be.

- Cross-docking is also used to receive orders where one large shipment can supply multiple Loblaws locations within a close physical proximity.

- Loblaws has a network of multiple suppliers and tiers in their supply chain. Relationships in some cases have been established for over 20 years.

- New suppliers are selected with careful consideration by the Procurement Department,

with a proven track record for providing on time delivery and the right balance of price and quality.

Purchasing Cycle

Monitoring the order

Placing an Order

Loblaws electronically places order using " SAP-SCM" software.

- " SAP-SCM" software allows for Mobile barcode scanning and customizable packing slips for streamlined operations and improved accuracy for deliveries.

- Inventory is managed by lot number, serial number and expiration dates.

- It also meets the growing customer demand for real time data access as well as offering barcode scanning and other features necessary for cutting edge inventory management.

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