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LIDL STRATEGIC

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by

John Barlow

on 2 August 2016

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Transcript of LIDL STRATEGIC

LIDL STRATEGIC
ANALYSIS
Availability
Availability
Buying
Buying
Buying
Logistics
Logistics and Supply Chain
Logistics
Merchandising
(inc. future store)

Merchandising (inc. future store)
Merchandising (inc. future store)
Merchandising
(inc. future store)

Personnel
(inc. organisational
structures)

Property
Services
(QA/CR/CS)

Services
(QA/CR/CS)

Store Operations
Availability
Availability
Key Events
(Christmas)

Key Events (Christmas)
Key Events (Christmas)
Key Events
(Christmas)

Store Distribution (UK)
648 UK stores
126 Ireland stores
655 UK stores
182 Ireland stores
Logistics and Supply Chain
Store Distribution (UK)
Store Distribution (UK)
8 UK multi temperature Regional
Distribution Centres
Regional Distribution Centres - Current
8 UK multi temperature Regional Distribution Centres
1 produce site covering London and South East UK
1 dedicated rework and storage site for all returned and faulty Non-Food Special Buys

24 stores within the M25
76 stores within the M25
Greater London
Regional Multi-temp
DC
Regional Produce
Site
National Rework
Site
Logistics and Supply Chain
2 planned multi temperature sites:
Cardiff 2016/17
Isle of Sheppey in 2019
Single temperature national distribution: Under review
IRE: Naas & Mitchelstown
3 new multi temperature sites opening;
Wednesbury (West Birmingham) in 2017
Southampton in Sept 2016
Exeter in 2018
IRE: Charleville, Mullingar, Newbridge, Belfast
Future RDC Networks
Current RDC’s
Atherstone
Bolton
Darlington
Swindon
Chelmsford
Bathgate
Neston
Goldthorpe
Naas
Mitchelstown
Future RDC’s;
Cardiff 2016/17
Isle of Sheppey in 2019
Current RDC’s
Livingston
Bridgend
Enfield
Newton Aycliffe
Runcorn
Lutterworth
Weston-super-Mare
Northfleet
Belvedere
Charleville
Mullingar
Newbridge
Belfast
Future RDC’s;
Wednesbury (West Birmingham) in 2017
Southampton in Sept 2016
Exeter in 2018
Bristol in 2017

This will replace Weston-super-Mare
Future RDC Networks
Lidl UK RDCs
- Based in the Midlands area

- Walsall RDC is used as a
Non-Food Specials re-work
and storage site.

- 100% agency staff
Walsall
Single temperature NFS rework / Storage
Lidl UK RDCs
Lidl Lutterworth RDC
Wellington Parkway, Magna Park, Lutterworth LE17 4XW
Multi-temp RDC
servicing the Midlands
Lidl UK RDCs
Lidl Lutterworth RDC
Wellington Parkway, Magna Park, Lutterworth LE17 4XW
Electronic POD System
No Gatehouse, Hauliers have to manage themselves in the yard
Aisle
picking
Gravity Fed Racking
Freezer Pods
Lidl Livingston RDC
Lidl UK RDCs
Tailend Farm, Deans Industrial Estate, Livingston EH54 8SE
Multi-temp RDC servicing Scotland including; Berwick-Upon-Tweed, Dumfries & Galloway, Highlands, Orkney Islands, Scottish Borders
Servicing approximately 90 stores across Scotland as well as home to the new Scottish Buying department
Lidl UK RDCs
Lidl Livingston RDC
Tailend Farm, Deans Industrial Estate,
Livingston EH54 8SE
Lidl UK RDCs
Lidl Wednesbury RDC

Currently under construction

Possible location for e-commerce FC
Lidl UK RDCs
Lidl Ireland RDCs
Ballyhea, Co. Cork, Ireland
Goods out section has approximately
40 bays.

Goods in section has approximately
35 bays.
Lidl Charleville
Secured white pallet store.
Lidl Ireland RDCs
4sr, 10 Dundrod Rd, Crumlin BT29 4SR
Neither ambient or chilled goods in/dispatch running near capacity.

Outdoor secure pallet store.
Lidl Belfast
Recruitment within Regional Distribution Centres for Aldi and Lidl.

Lidl currently do not offer an apprenticeship programme within their Regional Distribution Centres.
Lidl UK RDCs Recruitment
However Lidl do offer a graduate entry position for Assistant Section Manager.
Has a section for recycling bales of cardboard and plastic.
As well as a separate store for waste disposal.
In 2012 SSI Schaefer installed an automated picking warehouse system for Lidl in Kirchheim/ Teck, Germany.

As well as installing Schaefer Case Picking (SCP) System, the warehouse includes a high bay racking system with five aisles and around 15,000 pallet storage spaces plus a Schaefer Tray System (STS) with 16,000 storage position on five storage levels.

The system guarantees optimally packed pallets for transporting and unloading goods at the store.

See below link for a video of the exact system Lidl have trialled.

Lidl uses the Schaefer Case Picking System for order picking
Lidl RDCs - European
Lidl have 3 European hubs run by 3rd parties to consolidate and distribute products

Valencia (specialist site for produce)
Rotterdam (Port centric – Rotterdam is Europe's largest container port)
Austria

Their RDC network is fully integrated across Europe to allow freight diversion (trunking) opportunities.
Use of Consolidation Centres
Lidl have announced plans to invest around €70 million to develop a new Regional Distribution Centre in Spain.
Currently under construction in Alcalá de Henares – Spain this will become the biggest distribution centre in Europe. The 71,800m2 facility will employ 275 workers and supply more than 150 stores in central Spain.

The distribution centre will have a storage area for 10,000 pallets, as well as 12,000 square metres set aside for cold-room storage.

“This will be the biggest distribution platform in the whole of Europe, the most technologically advanced and the most sustainable,” said Javier Suárez, Lidl’s director of expansion and real estate.

Lidl RDCs - European
Lidl’s non-food specials are partly imported from Asia using standard containers which are shipped to the pan European distribution hubs for consolidation. Using a centralised delivery control system the goods are then loaded onto inland navigation vessels, goods trains or lorries.
All listed lines are focused primarily on German and UK production whilst the transportation of the goods are also controlled by the pan European hubs.
Lidl currently communicate directly to suppliers when placing orders, however they have recently been dealing with Armstrong Logistics directly.
Transportation and Consolidation
Use of Platforms
Lidl mainly work directly with suppliers for inbound logistics.
Armstrong's, CML and Oakland's all deliver stock to Lidl contracted by suppliers.

All European Suppliers are controlled centrally through Germany. (similar to IB and Aldi UK Buying from IB).

Buying terms are DDP/ DAT into the 3 hubs, then transferred to regional distribution centres across Europe.
Lidl currently contract third party hauliers to trunk goods between the pan European distribution centres (Valencia, Rotterdam and Austria) to local RDCs and between RDC to RDC

This enables Lidl to import smaller amounts whilst maximising their vehicle capacity ensuring minimum amount of haulage on the roads. This also guarantees the best possible freshness of products whilst reaming efficient and environmentally friendly

The example given is of produce sent from Valencia via short sea through the port of Bilbao in North West Spain for distribution across the U.K

Trunking
Produce to Ireland

Lidl buy on a Day 1 for day 3 basis.

Lidl currently use McBurney Transport Group based in Liverpool to complete their Produce to Ireland shipments using the Liverpool to Dublin crossing. As McBurney’s are located so close to the Liverpool port this is the cheapest and most efficient option for them. Suppliers deliver into McBurney for transportation to Lidl using the suppliers transport at the suppliers cost.

They currently receive orders from Lidl by 16:30pm on day 1 and deliver into Ireland from 06:00 on day 3. This leg is charged to the supplier at an average £50 per pallet. All produce is ordered in full pallets.

Produce
Aldi currently deliver Long Life Chill products to Naas and Mitchelstown regions at a cost of £45 per pallet from CML to Naas, £55 per pallet from Oakland's to Naas, £50 per pallet from CML to Mitchelstown and £55 from Oakland's to Mitchelstown.

McBurney’s are currently shipping 10 – 20 loads per day for Lidl. Currently running a cross stock operation only storing Ambient, Produce and Frozen goods.
ay 3 into Irish regions
Aldi currently buy all produce sold within the Irish business through a dedicated Irish Buying Team based in Naas.

The UK Produce buying team are currently exploring the opportunity to improve the quality of produce in Ireland through adopting the buying of Irish sold produce within the UK buying infrastructure. This includes a project with CLD to identify the best supply chain solution.
Lidl do not use crates for produce in Ireland. All fresh produce is expected to be delivered in card.  This enables the theatre in store of a market scene.
Lidl use a white pallet pool (re-usable euro pallets) which is managed on an exchange system.
Produce
Aldi currently deliver Long Life Chill products to Naas and Mitchelstown regions at a cost of £45 per pallet from CML to Naas, £55 per pallet from Oakland's to Naas, £50 per pallet from CML to Mitchelstown and £55 from Oakland's to Mitchelstown.

Crates and pallets
A supplier buys into the pool, buying 33 of their own pallets to a standard as prescribed by Lidl.
A supplier will deliver 33 pallets in and the region will give them 33 pallets back out of the wider pool.
The supplier will not be charged for this issue of equipment as they essentially own the product.
Lidl also reuse the cardboard corner posts for stabilising the pallets, giving the posts back to the suppliers who deliver in using them. This cuts the extra cost for the supplier by re-using the corner posts.

The UK Produce buying team are currently exploring the opportunity to improve the quality of produce in Ireland through adopting the buying of Irish sold produce within the UK buying infrastructure. This includes a project with CLD to identify the best supply chain solution.
McBurney’s are currently shipping 10 – 20 loads per day for Lidl. Currently running a cross stock operation only storing Ambient, Produce and Frozen goods.
ay 3 into Irish regions
Aldi currently buy all produce sold within the Irish business through a dedicated Irish Buying Team based in Naas.
Returnables
No evidence of Lidl owning returnable equipment in the UK & Ireland, however Lidl are currently renting Teacrate’s from PHS Group for their Fresh Meat and Poultry products, these are equivalent to Aldi’s black crates.
This rental contract includes the washing and issuing of all crates.

Returnables (Lidl)
Lidl currently use 8 different types of equipment in store;

Euro Pallets (LPR & CHEP)
D Pallets (LPR & CHEP)
White Pallets (Lidl Pool)
2 litre beverage trays
Plastic UDP
Plant Trollies
Nestable Euro Pallets (Cabka and Pooling Partners)
PHS issue the crates to suppliers, who then deliver goods into Lidl where the empty trays are stacked to be collected by PHS for washing.

Currently Lidl’s charge to supplier for the rental of crates is £0.40 per crate in comparison to Aldi’s £0.25 per crate.
Lidl currently merchandise all produce in cardboard crates to create a market stall feel.
Returnables
Aldi rent UDP’s from Polymer Logistics, generating over £170,000 per annum in revenue to Aldi.

In 2015 the produce team requested an investigation into the use of plastic equipment for imports from key European countries. The utilisation of a major European pooler was identified as the most efficient solution. The two European poolers identified issue equipment in 27 to36 countries on behalf of major European retailers. This scale makes the model credible. The two business identified were IFCO and EPS, these are summarised in the table below

Returnables (Aldi)
Aldi own 10 different types of returnable equipment;

Produce trays
Meat trays
Potato shippers
UDPs
1 litre beverage trays
2 litre beverage trays
Euro Pallets
D Pallets
UK Pallets
Plant Trollies

Non-Food Specials
Lidl have a centrally controlled reverse logistics team, co-ordinating recalls and reworks of old stock to a central warehouse.

Lidl operate a 35 day backhauling policy for specials, whereby a picklist is sent to stores for products to be returned

Products that have been returned to rework warehouse are stored until the products next OSD up to a maximum of 2.

Clearance car park sales have also been used in the past to clear out old returned special buys, however this need is reduced with old product sent to specialist clearance stores.
Repair
Rework
Resell
Logistics and Fleet Information
Vehicle Fleet
UK Store deliveries are nationally controlled by head-office in Wimbledon using SAP TMS (Transport Management System)

RDC receives all delivery instructions from head-office
All store deliveries are centrally controlled and contracted to Third Parties Haulage providers

CSL Logistics - Lidl Case study
One of a number of 3PLs Lidl use for store deliveries and waste collection

Lidl UK do not own any transport fleet themselves

Lidl liveried vehicles are owned by 3rd Parties

All DC to store routing and scheduling is controlled centrally using SAP TMS through their Wimbledon HQ

Backhauling goods from suppliers is also controlled centrally.
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