Articles

Interesting articles about One Network Enterprises
and the industry

03.24.03

High-Tech Collaboration

Michael Garry, Supermarket News

Supervalu and Hannaford Bros. explain how technology can be used to collaborate with suppliers on transportation and inventory control

Cutting Inventory at Hannaford

Scott Craig, director of Logistics for Hannaford Bros., knows firsthand about how the Scarborough, Maine-based chain collaborates with vendors. Prior to joining Hannaford, he spent 15 years at Proctor & Gamble, the last five based at Hannaford, where he worked on a variety of projects.

“Hannaford’s willing to try different things and share information with vendors,” said Craig, at a Logicon presentation. “It’s been a competitive advantage for them.”

After joining Hannaford, Craig was asked by the vice president of merchandising to help figure out ways to cut millions of dollars in excess inventory. He explained how changes in supply chain practices and collaboration helped to accomplish that.

Craig’s first initiative last June was to adopt a Web-based load-tendering system from Elogex, Charlotte, N.C., which automated a manual, unscalable process, cut empty miles and reduced costs. “This provided visibility so that everybody can see where a product is and where it’s moving,” he said. Then in October of last year, the Elogex system was used to automate payment of freight bills. Craig said that adopting the Web-based system provided a visibility to information that enabled Hannaford’s merchandisers to make better decisions.

Last fall, Hannaford launched collaborative programs with two manufacturers – one a CPG firm, the other a perishables/trucking vendor. He declined to name the vendors.

The program with the CPG company amounted to CPFR (collaborative planning, forecasting and replenishment). In particular, it addresses new item introductions, execution of major events, order cycle time, forecasting and data synchronization. “We looked at every system that touched each other and identified areas where we could drive out costs,” he said.

So far, the CPG vendor program has resulted in a 72% reduction in order cycle time that cuts “a couple of million dollars in inventory out of the system,” said Craig. In addition, the vendor “had their most successful execution of a major merchandising event ever, during the Super Bowl season,” he said. The CPFR process with this vendor “continues to evolve,” he said.

Craig added that Hannaford expects to be able to roll out this type of CPFR initiative to other vendors, though the process is not yet scalable and is still “very work-intensive.”

The program with the perishables vendor, which went live on Jan. 1 after running in pilot for four months, has enabled Hannaford to optimize perishables shipments; it saved “well in to the seven figures” during the test, Craig said.

“Perishables buyers were in silos,” he said. “Oranges and strawberries on the West Coast would be bought by individual buyers” and shipped individually. Working with the vendor, Hannaford was able to consolidate purchase orders and figure out the best way to ship goods across the country to reduce costs. The chain also knows ahead of time if deliveries will be late and thus can arrange alternative shipments.

The two programs have served as building blocks, he said. “They helped us gain credibility and trust with the organization and add staff.” Craig helped make this happen by providing senior management at Hannaford with a weekly score card on what the perishables program was accomplishing financially. “We made it easy to read, showing them what we saved each week by optimizing loads,” he said. “It really caught their attention.”

Craig said that not all vendors are willing to invest the time and energy into collaborative programs like these. “We talked to a few vendors who didn’t want to take people away from their regular work,” he said. But it’s not necessary to collaborate with everyone. “Ten to 15 of your top vendors would be enough,” he said.