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FINAL REPORT
JULIANTO HALIM OLUROTIMI OLAOGUN GANESH RAMKUMAR PATRICK TRAIN MATTHEW VIDOTTO CHRISTOPHER WATSON
TABLE OF CONTENTS
EXECUTIVE SUMMARY
Overview of Mission & Strategy The Longos Way
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A sophisticated technology infrastructure allows for superior inventory control and an efficient Distribution Requirements Planning (DRP) process. These strategies and their impact on business operations and bottom-line profit margins are explored in the sections that follow. Emphasis is given to the forecasting, replenishment and inventory management techniques applied to Longos produce category.
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ACYF encompasses three distinct methods: descriptive, regression and crop simulation. While descriptive forecast models classify weather conditions and assign thresholds to their effects on key variables, regression models use historical data to compute optimal forecast equations using key weather variables. Crop Simulation Models (CSMs) are more complex they forecast crop yield by extrapolating patterns in meteorological, physiological and the quantified impact of managerial conditions. (Basso, 2013)
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providing real-time inventory and supply chain visibility, exchanging information between POS, qdata WMS and Retail.Net ERP, delivering BAM2 and BI3 functionalities that aid in strategic development, transmitting Grocery Gateway orders to the picking system, streamlining distribution and inventory management operations, eliminating expedited shipments and freeing up their private fleet, and reducing support time and boosting IT staff productivity by 30%4.
These improvements and added capabilities have resulted in lower staffing costs, more efficient distribution, greater accuracy in order fulfillment, and a 1.5% increase (to 98%) in their distribution centre fill rate (Mark, 2008).
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Business Activity Monitoring functionality provides near -real-time exception reporting and helps automate the planning process (Mark, 2008) 3 Business Intelligence functionality allows Longos to spot trends and patterns t hat help planners develop corporate strategy (Mark, 2008) 4 Before BizTalk, IT staff would spend 40% of their time to support and maintain the system. Now down to about 10%, they can focus on more value-added activities (Ken, 2008)
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Longos maintains a 24-hour lead time for the majority of their produce by sourcing it from the Terminal5. They aim to source perishables locally since it keeps transit times low. During the summer months when crop yields are at its peak in Ontario, locally sourced produce accounts for up to 40% of Longos stock (Kwon, 2009).
Before, (buyers) used pieces of paper to keep track of their purchases. The warehouse did not know what they had bought until it showed up on the loading dock. But now the system is paperless since the buyers create POs on their handhelds. And with visibility into store inventories, they focus on their actual needs. Once the POs are complete, the system transmits the information to the WMS so people in the warehouse can start planning loads
for individual stores. Since produce is perishable, it is simply repacked and rerouted for immediate delivery to the stores.
60% of Longos produce SKUs are sourced from the Ontario Food Terminal; the remaining 40% are sourced directly from local and international (California and Florida) growers. (Kwon, 2009)
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The buyers purchase what they're ordering, but they aren't necessarily just order takers; they're looking for opportunities.
(Kwon, 2009)
Products with higher elasticity are more open to sales promotions because their demand is more responsive to a price drop; Pat emphasized that the use of Price Elasticity is a key factor in Longos promotional strategy. 7 According to Pat, Produce Managers check the quality of their stock throughout the day to ensure only the freshest produce is available to their customers.
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5.0 APPENDIX | 5A 5G
5A The Retail.Net Demand-Driven Continuum
Appendix 5A: The Retail.Net suite integrated modules based on Demand Driven Retail Continuum Source: As advertised in the February 2006 issue of NRF Stores Magazine
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Appendix 5B: Crop Availability Calendar for Southern California Source: (Doncaster, 2006)
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Appendix 5C: Flowchart approximation is based on information gathered from the following sources: (Garry, 2007) ; (Kwon, 2009) ; (Mark, 2008) ; (qdata Inc., 2002)
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Appendix 5D: Timeline approximation is based on information gathered from the following sources: (Kwon, 2009) ; (Britt, 2009)
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Appendix 5E: Example of a Crop Growth Monitoring System (CGMS) that uses meteorological data, World Food Studies (WOFOST) growth models, and harvest stats to drive the ACYF process. [ Source: Chart can be found at http://www.e-agri.info/activity_01.html ]
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Appendix 5G: Longo's current partners for its CSR program [ Source: http://www.longos.com/Careers/Corporate%20Social%20Responsibility.aspx ]
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6.0 BIBLIOGRAPHY
Agrawal, R. (2005). Forecasting Techniques in Crops. New Delhi: I.A.S.R.I. Basso, B. (2013). Review of Crop Yield Forecasting Methods and Early Warning Systems. Michigan State University, Department of Geological Sciences. Food and Agriculture Organization of the United Nations. Retrieved from http://www.fao.org/fileadmin/templates/ess/documents/meetings_and_workshops /GS_SAC_2013/Improving_methods_for_crops_estimates/Crop_Yield_Forecasti ng_Methods_and_Early_Warning_Systems_Lit_review.pdf Britt, P. (2009, January). Retailers look to KM to DRIVE BUSINESS. KM World, 18(1), 14-15. Retrieved from http://search.proquest.com/docview/197282040?accountid=11530 Business Wire. (2005, October 19). Longo's Takes Descartes Challenge and Improves Delivery Productivity and Customer Service. Retrieved November 12, 2013, from The Free Library: http://www.thefreelibrary.com/Longo's Takes Descartes Challenge and Improves Delivery Productivity...-a0137701781 Doncaster, L. (2006). Cooksmart. London: Anness Publishing Ltd. Du, S., Bhattacharya, C., & Sen, S. (2007). Reaping Relational Rewards from Corporate Social Responsibility: The Role of Competitive Positioning. International Journal of Research in Marketing, 24, 224241. Retrieved from http://ssrn.com/aabstract=2333555 Enis, M. (2005). BEARING FRUIT. Supermarket News, 57(17), 31-36. Garry, M. (2007). INITIATIVE 5: Computer-Assisted Ordering. Supermarket News, 55(51), 45. Retrieved from http://web.ebscohost.com.rap.ocls.ca/ehost/delivery?sid=272b3a06-b23c-404496fd-7c85cb09941b%40sessionmgr114&vid=5&hid=126 Jameson Publishing. (2007, October 4). Retail Solutions: Retail 2.0 Solutions Focused On Business Value Unveiled At Visibility 2007. Retrieved from Integrated Solutions for Retailers: http://www.retailsolutionsonline.com/doc/retail-solutionsretail-20-solutions-focused-0001 Kwon, N. (2009, April). Longo's... A Day in the Life. Canadian Grocer, 123(3), 19,21-24. Retrieved from http://search.proquest.com.rap.ocls.ca/docview/222862532?accountid=11530
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Mark, K. (2008, May). Bearing fruit. Canadian Transportation Logistics, 111(5), 14-15. Retrieved from http://search.proquest.com/docview/203024811?accountid=11530 Produce perfection: how you can turn your produce department into a destination customers want to shop. (1996, December). Canadian Grocer, 110(10), 3-5+. Retrieved from http://search.proquest.com.rap.ocls.ca/docview/222849003?accountid=11530 qdata Inc. (2002, 11 09). Longo's Customer Snapshot - qdata Inc. Retrieved from qdata.com: http://www.qdata.com/PDFs/Longos%20Customer%20Snapshot%2002-1109.pdf Longo Brothers Fruit Markets Inc. (2013). About us. Retrieved from http://longos.com/SiteMap/AboutUs.aspx Parks, L. (2004). Predicting perishables; fresh-item management systems are helping retailers to cut perishables waste by forecasting demand and managing production. Supermarket News, 52(2), 67. Retrieved from http://go.galegroup.com/ps/i.do?id=GALE|A112206050&v=2.1&u=humber&it=r&p=G RGM&sw=w&asid=b5186ced252c463cb1098b62d10d25d3 Duff, M. (2008). Longo's sets model on moving from 'burbs to city streets. Retailing Today, 47(1), 4,26. Retrieved from http://search.proquest.com.rap.ocls.ca/docview/228542818?accountid=11530 Li, Y., Cheang, B., & Lim, A. (2012). Grocery perishables management. Production and Operations Management, 21(3), 504-VIII. Retrieved from http://search.proquest.com.rap.ocls.ca/docview/1021424349?accountid=11530
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6) Reducing lead time - Julianto Communication with producer key to make sure they know when the food will be picked and ready As well as reducing lead times by sourcing from Ontario Food Terminal and direct sourcing from local vendors whenever possible 7) Sourcing from local & international vendors - Chris For fresh foods must look at local weather patterns, and work with supplier, to determine, availability of product, order times and quantities Suppliers are mostly growers; different harvest times and peak seasons for all produce items. Vendors also forecast crop yield; important in determining sku availability and pricing. - Lower prices during produces peak - Although for forecasting usually based off of previous seasons numbers, in conjunction with predicted outputs from the farmers - Transmit info to vendors and receive notices via EDI Tomax forecast data used to determine needs 8) Grocery Gateway replenishment, etc. - Ganesh Use demand patterns of weather, snowstorm the next day means a spike up in demand Fill rates are different due to very much elastic demand Challenge as well is next deliver Warehousing for the items is similar just done a smaller scale as the quantities requested are smaller
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