distribution in tesco it and logistics director philip …the big 5 supply chain projects the big 5...
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Distribution In TescoDistribution In Tesco
Philip Clarke
IT and Logistics Director
Philip Clarke
IT and Logistics Director
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TESCO TODAY
• To create value for
customers to earn their
lifetime loyalty
• To create value for
customers to earn their
lifetime loyalty
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Goods/Material FlowGoods/Material Flow
Information and Cash FlowInformation and Cash Flow
THE TOTAL RETAIL SUPPLY CHAINTHE TOTAL RETAIL SUPPLY CHAIN
DC delivery to stores
DC delivery to stores
Retailer SecondaryDC operations order assembly
Retailer SecondaryDC operations order assembly
Raw materialand supplier inboundRaw materialand supplier inbound
SupplierTransformationSupplierTransformation
‘Availability Costs�Markdown�Waste�Lost sales�Customer dissati
‘Availability Costs�Markdown�Waste�Lost sales�Customer dissati
Internal Supply Chain Participation:Internal Supply Chain Participation:
Retailer Inbound Logistics�Primary �Transport
Retailer Inbound Logistics�Primary �Transport
18%18% 19%19% 9%9%
In-store Logistics‘Back Door to Shelf’ In-store Logistics‘Back Door to Shelf’
46%46%
Ordermanagement
Ordermanagement
8%8%
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THE BIG 5 SUPPLY CHAIN PROJECTSTHE BIG 5 SUPPLY CHAIN PROJECTS
• Continuous replenishment (CR)
• In store range management
• Flowthrough
• Network Management
• Primary Distribution
• Continuous replenishment (CR)
• In store range management
• Flowthrough
• Network Management
• Primary Distribution
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AND IT ALL STARTS WITH THE CUSTOMER
….no longer a stranger….no longer a stranger
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WHAT DOES THE CUSTOMER WANT?
• Excellent availability
• Continuous Replenishment/TDD
• Customer oriented range
• SSPOGS, Store Specific Ranging
• Low prices
• Lean Logistics
• Makes for great stores
• Excellent availability
• Continuous Replenishment/TDD
• Customer oriented range
• SSPOGS, Store Specific Ranging
• Low prices
• Lean Logistics
• Makes for great stores
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REPLENISHMENT … “as was”REPLENISHMENT … “as was”
Store OrderCalculation Store OrderCalculation
Central OrderProcessing
Central OrderProcessing
ProductionSchedulingProductionScheduling
In DepotAwaiting Delivery
In DepotAwaiting Delivery
Production and Transportto Depot
Production and Transportto Depot
Batched - once per dayDelivery to Stores
Batched - once per dayDelivery to Stores
Current replenishment requires the arrival at depot of thefinal supplier's vehicle before delivery to store can take place
Current replenishment requires the arrival at depot of thefinal supplier's vehicle before delivery to store can take place
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ALL SUPPLIERSReceive ordersaccording to theirprofile, and morethan once per day.
ALL SUPPLIERSReceive ordersaccording to theirprofile, and morethan once per day.
PRIMARY DISTRIBUTIONSmoothed goods-in profileeliminates traffic logjam.
PRIMARY DISTRIBUTIONSmoothed goods-in profileeliminates traffic logjam.
TESCO DEPOTSSmoothed goods-inprofile. Store ordersassembled as stock
arrived and notheld pending
batched orders.
TESCO DEPOTSSmoothed goods-inprofile. Store ordersassembled as stock
arrived and notheld pending
batched orders.
DELIVERYMultiple deliveriesgiving more efficientfleet utilisation. Fasterreplenishment.
DELIVERYMultiple deliveriesgiving more efficientfleet utilisation. Fasterreplenishment.
WITH CONTINUOUS REPLENISHMENTWITH CONTINUOUS REPLENISHMENT
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FEATURES OF CRFEATURES OF CR
• Batch to flow
• Multiple daily deliveries
• One system all products
• Centrally controlled, locally operated
• Batch to flow
• Multiple daily deliveries
• One system all products
• Centrally controlled, locally operated
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PROGRESS OF CR DEVELOPMENTPROGRESS OF CR DEVELOPMENT
1999 2000 2001 2002 2003 Retek Trade
Management &Merchandise
Planning
Retek Trade Management &Merchandise
Planning
Ambient Grocery
Ambient Grocery
Fresh FoodsFresh Foods
Direct Store Deliveries
Direct Store Deliveries
ClothingClothing
Bread and Morning Goods
Bread and Morning Goods
ProductionPlanning
ProductionPlanning
TransformationTransformation
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EXPLOITING CUSTOMER DATAEXPLOITING CUSTOMER DATA
CUSTOMERDISAPPOINTMENT
CUSTOMERDISAPPOINTMENT
INSIGHT- SEGMENTATION
INSIGHT- SEGMENTATION
SUPPLY BUY DISTRIBUTE SELL
AVAILABILITY
• Promotions• Space• Range• Price
• Promotions• Space• Range• Price
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EXAMPLE - CUSTOMERSEGMENTATIONEXAMPLE - CUSTOMERSEGMENTATION
Store A
Core range
value finest
Store B
Core range
value finest
Store C
Core range
value
In 2 years ranges will be store (customer profile) specificIn 2 years ranges will be store (customer profile) specific
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RANGING DEVELOPMENT SCHEDULERANGING DEVELOPMENT SCHEDULE
OverlaysOverlays
2002 2003 2004 20052002 2003 2004 2005
Complete CR rollout
Complete CR rollout
Store specific planograms
Store specific planograms
Store specific ranging
- pilot
Store specific ranging
- pilot
Store specific ranging- rollout
Store specific ranging- rollout
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AMBIENT GROCERY NETWORKAMBIENT GROCERY NETWORK
• Latest Mega site at Thurrock- opened Q3 2002- cost £43m- capacity of 2.3 million cases p.w.
• Latest Mega site at Thurrock- opened Q3 2002- cost £43m- capacity of 2.3 million cases p.w.
• 9 locations 4 Mega sites
• 9 locations 4 Mega sites
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• 9 locations 4 Mega sites 3 Fast moving regional sites
• 9 locations 4 Mega sites 3 Fast moving regional sites
AMBIENT GROCERY NETWORKAMBIENT GROCERY NETWORK
• 9 locations 4 Mega sites
• 9 locations 4 Mega sites
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• 9 locations 4 Mega sites 3 Fast moving regional sites 2 medium moving sites
• 9 locations 4 Mega sites 3 Fast moving regional sites 2 medium moving sites
• 9 locations 4 Mega sites 3 Fast moving regional sites
• 9 locations 4 Mega sites 3 Fast moving regional sites
AMBIENT GROCERY NETWORKAMBIENT GROCERY NETWORK
• Average 9m cases p.w.
• Daily deliveries to all stores
(twice to 400)
• Sufficient capacity until 2006
• Average 9m cases p.w.
• Daily deliveries to all stores
(twice to 400)
• Sufficient capacity until 2006
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TEMPERATURE CONTROLLEDTEMPERATURE CONTROLLED
• 11 locations 7 fresh foods
• 11 locations 7 fresh foods
• Average 9m cases p.w.
• Daily deliveries to all stores
• Capacity until 2001
• Average 9m cases p.w.
• Daily deliveries to all stores
• Capacity until 2001
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• 11 locations 7 fresh foods 3 fresh and frozen& 1 new frozen
• 11 locations 7 fresh foods 3 fresh and frozen& 1 new frozen
• Average 9m cases p.w.
• Daily deliveries to all stores
• Capacity until 2001
• Average 9m cases p.w.
• Daily deliveries to all stores
• Capacity until 2001
• 11 locations 7 fresh foods
TEMPERATURE CONTROLLEDTEMPERATURE CONTROLLED
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Daventry is supportedby a network ofconsolidation centresthat facilitateflowthrough operationsfor supplier deliveries
Daventry is supportedby a network ofconsolidation centresthat facilitateflowthrough operationsfor supplier deliveries
FROZEN FOODSFROZEN FOODS
Daventry• Fully automated frozen
foods distribution centre
Daventry• Fully automated frozen
foods distribution centre
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Frozen chambers havebeen removed at othercomposite sites andare now serviced fromDaventry
Frozen chambers havebeen removed at othercomposite sites andare now serviced fromDaventry
Daventry• Fully automated frozen
foods distribution centre
Daventry• Fully automated frozen
foods distribution centre
FROZEN FOODSFROZEN FOODS
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These composite sitesare now used astrunking centres toservice stores with frozenfood along with allother fresh foods
This has helped us toextend the life of thecomposite network by4 years to 2005
These composite sitesare now used astrunking centres toservice stores with frozenfood along with allother fresh foods
This has helped us toextend the life of thecomposite network by4 years to 2005
FROZEN FOODSFROZEN FOODS
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Slow moving lines arecentrally located and,like frozen food, aretrunked to stores usingthe grocery network
Average 3m pluscases per week
Slow moving lines arecentrally located and,like frozen food, aretrunked to stores usingthe grocery network
Average 3m pluscases per week
NATIONAL - SLOW, NON-FOOD, BONDEDNATIONAL - SLOW, NON-FOOD, BONDED
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ALL CHANNELSALL CHANNELS
• Made better use of all assets
• Selected the right ‘valuestream’ for appropriateproducts
• Extended the life of each DCby continual improvement
• Made better use of all assets
• Selected the right ‘valuestream’ for appropriateproducts
• Extended the life of each DCby continual improvement
By integrating this networkwe have:By integrating this networkwe have:
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• Non Food - towards the north
• Fresh foods - in the northernhome counties
• Non Food - towards the north
• Fresh foods - in the northernhome counties
To cater for growth, our 5 yearplan will see new depots for:To cater for growth, our 5 yearplan will see new depots for:
- FUTURE DEVELOPMENTS - FUTURE DEVELOPMENTSALL CHANNELSALL CHANNELS
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50%50%
100%100%
0%0%
0%0% 50%50% 100%100%
Cumulative SKUsCumulative SKUs
Cum
ulat
ive
Vol
ume
Cum
ulat
ive
Vol
ume
SKU POPULATIONS: FLOW, STOCK & PBLSKU POPULATIONS: FLOW, STOCK & PBL
FLOW
STOCK PICK BY LINE
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WE’VE BEEN GOING 1 YEARWE’VE BEEN GOING 1 YEAR
• Team of 30 executives and state-of-the-art IT
• Prioritised Frozen Food, 80% now live
• 240 suppliers on board representing 4.5 million cases per week
• 60% of all volume is ambient merchandise
• Reviewing ambient & fresh consolidation network
• Current KPI’s for delivery on time & pick up on time are
• tracking above plan
• All KPIs tracking to plan
• Team of 30 executives and state-of-the-art IT
• Prioritised Frozen Food, 80% now live
• 240 suppliers on board representing 4.5 million cases per week
• 60% of all volume is ambient merchandise
• Reviewing ambient & fresh consolidation network
• Current KPI’s for delivery on time & pick up on time are
• tracking above plan
• All KPIs tracking to plan
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PRIMARY DISTRIBUTIONPRIMARY DISTRIBUTION
• Significant Cost Savings
• Simpler job for Manufacturers
• New Opportunities for Efficient Distributors
• Lower Prices for Customers
• Significant Cost Savings
• Simpler job for Manufacturers
• New Opportunities for Efficient Distributors
• Lower Prices for Customers
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THE SOLUTION - OUR PRIMARY VISIONTHE SOLUTION - OUR PRIMARY VISION
• In-bound Supply Chain which is:
_ Visible
_ Low Cost
_ Efficient
_ Effective
• In-bound Supply Chain which is:
_ Visible
_ Low Cost
_ Efficient
_ Effective
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SUPPLY CHAIN IMPROVEMENTSUPPLY CHAIN IMPROVEMENT
• Delivered 18% of the benefits in step change
• Targeting a further significant amount 2003 - 2006
• Simultaneously delivering TDD, Flowthrough and
• Non-Food Growth
• Delivered 18% of the benefits in step change
• Targeting a further significant amount 2003 - 2006
• Simultaneously delivering TDD, Flowthrough and
• Non-Food Growth
Never a Quiet Moment!Never a Quiet Moment!
Supply
Buy
Distribute
Sell