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Unformatted text preview: o Loblaw, and its sales potential. Generally speaking, Loblaw requires the
vendor to choose which products to replace in order to make room for the new item.
Performance assessment of new products occurs after six months and is based on sales volume,
profit margin, and change in overall profitability of the product category. Supplier-selection
managers in the industry monitor national brand vendors in the same way that they monitor
private-label vendors (see Table 3 for performance measures). Summary of Logistics and Distribution Management Interviews
The logistics and distribution management team (“physical distribution” in Figure 3 and
Appendix II) is responsible for inventory movement at Loblaw. The team determines whether
inventory will be delivered to the retail stores by direct shipment from the vendor or through
Loblaw’s distribution centers. The buzz words for Loblaw’s logistics and distribution are “fast,
fresh, and quality” signifying that Loblaw wants the best mix of fast delivery to retail stores, the
freshest product available to the customer, and the best value for the customer’s money.
Loblaw is in the middle of a multi-year program to reduce logistics and distribution costs per case
substantially through a combination of leveraging volume growth and operation process changes.
A key part of this initiative is to address supply chain costs by shipping from Loblaw distribution
centers to stores instead of directly from vendors to stores.
The movement of goods from vendors to grocery stores is a complex process involving several
options. A grocery chain has to decide whether to have goods delivered to one central
distribution location and then sent to other distribution centers, use commercial carriers or their
own fleet to pick up goods from vendors, or have vendors deliver goods to various distribution
centers. To assist in the decision-making process, Loblaw requests that vendors give price quotes
for the various distribution options.
Consistent with industry practice, Loblaw is continuing its efforts to increase the amount of flowthrough and cross-docking at its distribution centers. Flow-through requires the vendor to break 21 n KPMG/University of Illinois
Business Measurement Case Development and Research Program July 1999o down their products into “store-ready” skids (i.e., each skid contains all products from the vendor
going to a specific store). Flowthrough allows the product to move from the vendor truck across
the loading dock into the Loblaw truck going to the store. Cross-docking means a product arrives
in the warehouse and departs for the stores on the same day. Cross docking requires that vendors
make their deliveries to Loblaw on a very tight schedule.
Loblaw has been revamping its inventory management system for three reasons. First, some of
the systems were not year 2000 compliant. Second, as a result of Loblaw’s fast growth, systems
were not fully integrated resulting in some manual data transfer between systems. Third, Lobla...
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This note was uploaded on 01/27/2014 for the course ACCY 405 taught by Professor Staff during the Fall '08 term at University of Illinois, Urbana Champaign.
- Fall '08