distribution in tesco it and logistics director philip clarke · all suppliers receive orders...

Distribution In TescoDistribution In Tesco

Philip Clarke

IT and Logistics Director

Philip Clarke

IT and Logistics Director

TESCO TODAY

• To create value for

customers to earn their

lifetime loyalty

• To create value for

customers to earn their

lifetime loyalty

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%

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

AND IT ALL STARTS WITH THE CUSTOMER

….no longer a stranger….no longer a stranger

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

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

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

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

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

EXPLOITING CUSTOMER DATAEXPLOITING CUSTOMER DATA

CUSTOMERDISAPPOINTMENT

CUSTOMERDISAPPOINTMENT

INSIGHT- SEGMENTATION

INSIGHT- SEGMENTATION

SUPPLY BUY DISTRIBUTE SELL

AVAILABILITY

• Promotions• Space• Range• Price

• Promotions• Space• Range• Price

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

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

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 3 Fast moving regional 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 2 medium moving sites




• Average 9m cases p.w.

• Daily deliveries to all stores

(twice to 400)

• Sufficient capacity until 2006



(twice to 400)

• Sufficient capacity until 2006

TEMPERATURE CONTROLLEDTEMPERATURE CONTROLLED

• 11 locations 7 fresh foods




• Capacity until 2001




• 11 locations 7 fresh foods 3 fresh and frozen& 1 new frozen

• 11 locations 7 fresh foods 3 fresh and frozen& 1 new frozen








TEMPERATURE CONTROLLEDTEMPERATURE CONTROLLED

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



Frozen chambers havebeen removed at othercomposite sites andare now serviced fromDaventry

Frozen chambers havebeen removed at othercomposite sites andare now serviced fromDaventry






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


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

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:

• 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

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

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

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

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

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

distribution in tesco it and logistics director philip clarke · all suppliers receive orders...

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