As Steve Banker mentioned in his post earlier this week, the two of us attended the Manhattan Associates user conference in Las Vegas last week. The theme of the conference was “active solutions for an active world.” It was a pretty fitting theme when you consider how active today’s supply chain and commerce environments are, and how rapidly they are shifting and changing. During the conference, Manhattan’s CEO Eddie Capel introduced the new product strategy for the company – active solutions. The key question asked was why make the change? The simple answer was the need for speed. Customers need continuous innovation, continuous improvements, and continuous delivery. That is precisely what the new solution offer; they are versionless, upgrades are essentially non-existent, and any customizations are written outside of the base code, allowing for seamless updates.
Since Steve re-capped the conference in detail, I will take a look at one of the sessions at the conference that stuck out to me – a case study featuring Ann-Marie Daugherty, Senior Director of Transportation at Giant Eagle.
Giant Eagle is a supermarket chain headquartered in O’Hara Township, Pennsylvania, serving the states of Pennsylvania, Ohio, West Virginia, Indiana, and Maryland. The company uses seven distribution centers to service its more than 400 stores. One of the main issues the company had was in the way it replenished stores. Store orders were based on individual inventory thresholds, which meant that each store would place orders when it needed specific items, rather than using a system based on pre-existing routes or orders.
In 2010, Giant Eagle introduced daily delivery to its stores as part of an overhaul to its replenishment processes. The deliveries were categorized by grocery, health and beauty, dairy, produce, meat, and frozen items. The company offered two-hour delivery windows to ensure that each store was ready for the incoming order. One of the biggest benefits the company saw immediately was a huge reduction in driver overtime pay. Before, they were not consolidating orders, which meant running trucks whenever a store needed some items. The result was they were paying drivers an incredible amount of overtime. It was an inefficient way to replenish stores and was taking a financial toll on the company. Once the company introduced daily deliveries, the stores could plan better as they could expect the same deliveries on the same days at the same time.
Another issue that the company had was with its TMS; Giant Eagle was using a different TMS for inbound and outbound, trying to integrate several technology platforms. The company decided to consolidate inbound and outbound into a single TMS and ultimately decided to use Manhattan Associates. The implementation was chaotic, but they were able to pull it together for the go live date. The company created a supply chain planning team, bringing inbound and outbound together in one location to improve visibility. There were two key things the supply chain planning team accomplished.
First, they centralized routing. This meant they were able to build better routes, and each driver was not left to determine the optimal routes to create. The second thing they did was to introduce “dynamically static” routes. This means that it is mostly the same deliveries every trip, but allows for some flexibility. With these routes, if the delivery timeframes for stores were flexible, the company was also able to group store deliveries together, which greatly improved their ability to deliver full trucks.
For Giant Eagle, the move to seven day deliveries has also greatly increased backhaul opportunities for the company, as the same truck is in the same place at the same time on the same day. Combined with the consolidation of inbound and outbound, the company has seen some significant results since 2015. Namely, their cube has improved 7 percent, empty miles have been reduced 8 percent, total miles have been reduced 7.7 percent, and the incremental revenue from all of this amounts to $2.2 million per year.