Saturday 25th Nov 2017 - Logistics & Supply Chain

Winner: J Sainsbury

As always there was a crowded field in the Retail and Distribution category, with finalists including Rexel Senate, Deutsche Woolworth, Mexx, Asda, and Sainsburys.
Rexel Senate has 95 UK branches wholesaling and distributing domestic and industrial electrical products, primarily to electrical contractors. The company’s supply chain background reflects the ‘relatively primitive’ state of logistics in this sector, by comparison with consumer retail and historic culture whereby branch managers were sole decision makers. Between 1999 and 2003 Rexel Senate attempted to address these issues through a strategy based on a National Distribution Centre – this was unsuccessful, and in the past three years a revised and decentralised supply chain infrastructure has been created with much stronger management of purchasing and inventory control, a more proactive approach to product flow, and a philosophy of micro-networks rather than the previous ‘centralise and move’ approach.

By contrast, Mexx, part of Liz Claiborne Inc, has had considerable success in supporting its apparel business through a state of the art highly automated warehouse at Voorschofen in the Netherlands. This picks and packs over 34 million units a year or around 85 per cent of business (the balance being returns, promotions etc outsourced to third parties but handled internally). Mexx has used its supply chain to shake up the apparel industry – its stores effectively change or revamp their collections every month, rather than the traditional Spring and Autumn.

The judges had high hopes of seeing impressive things from the entry from ASDA. The entry focused on consolidation centres, and although there was evidence of good ‘lean’ thinking, there was a mix of the very manual and the highly automated. There was evidence of good collaboration with suppliers and shippers, but the supply chain isn’t represented at Board level – as such, the organisation was unclear, and although there was a strong metrics focus, it wasn’t obvious that the numbers were being used in a hierarchical way. They may have misjudged what the judges were looking for, but on the evidence presented the judges could not give ASDA the Award. Perhaps, a fresh
approach next year would be good.

The two remaining entries were both highly regarded by the judges, so much so that they both went forward for Awards in the functional categories as well.

Deutsche Woolworth GmbH and Co OHG is a low-price department store chain with around 330 outlets in Germany and a dozen in Austria. It has a line of around 80,000 skus, 44 per cent textiles and 55 per cent non-food and drugstore items. Deutsche Woolworth has integrated the supply chain from definition of strategy, through planning and steering of all material flows, all transport activities world-wide from the supplier, to the stores and, where necessary, returns, all value-added activities in the distribution centres, classification and customs clearance. The company also displays a wide range of innovative (for the country and sector) behaviours, and was considered further under ‘Innovation’.

The winner in this section, therefore, was Sainsburys. Their supply chain requires the effective management of over 2,000 suppliers at one end, and 12 million stocking points at the other, in the process of which the supply chain handles around 18 million cases and makes 15,000 deliveries every week. As home shopping and different store formats, have developed so has the complexity of the supply chain: whereas there used to be six channels from suppliers to Regional Distribution Centres, there are now over 30 including primary consolidation centres and stockless cross-docking hubs.

Historically, Logistics teams were responsible for managing supply chain information flows, while Distribution handled physical storage and delivery. These now form a single division. There has been a focus on people, IT, strategic collaboration and not least the environment. Sainsburys’ supply chain was front page news for all the wrong reasons only a few years ago. The judges could not fail to be impressed at the way a lean, responsive and dynamic supply chain has since been created, and its contribution to the three year ‘Making Sainsbury’s Great Again’ business turnaround programme. The programme continues but so far is to time and to budget, no mean feat when many major changes had to be implemented in parallel, increasing the risk to customer service. The judges commented ‘In retail, availability is the key driver of performance, and this supply chain has been successfully set up to deliver this’.

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