The Spar Gran Canaria Logistics team was faced with a paradigm shift: mainland suppliers were adopting policies to contain distribution costs and were no longer distributing directly to the point-of-sale (POS). As an island-based retailer, this would have a major impact on Spar's supply chain. Consequently, an expanded island-based distribution complex was in the works that could more than double their centralised product catalogue.
Faced with this challenge, the Logistics team’s main objective was to be able to absorb the incremental planning load of the new product catalog with the same departmental structure and to do it efficiently. And they wanted to avoid unnecessary inventory growth in distribution centres, despite the portfolio growth.
The head of the team stated, "In order to cope with the company’s strategic plan, we needed to not only redesign our planning processes but also add advanced planning technology to support them." Looking for a supplier with proven experience in the retail sector, Spar GC chose Service Optimizer 99+ (SO99+) solution.
SO99+ performs a daily forecast at maximum level of detail (by Item-POS) and determines the stochastic components that define the demand signal. Then based on a calculated stochastic forecast, it adds the effect of promotional activities to the forecast, as well as other exogenous variables.
Once the demand is planned, it is aggregated at the distribution platform level and inventory requirements calculated based on the service level policies planned by Spar. To provide the high levels of product availability required by the business while maintaining minimum inventories, it is critical to have highly robust and reliable stock-to-service models for each of the warehouse items.
Finally, SO99+ monitors and controls a time-phased procurement process for both local and mainland suppliers considering the restrictions imposed by the supplier, such as filling containers.
The project has achieved:
In addition, with better data analysis and clear visualisation of demand, inventory, and procurement information, planners can now make data-driven decisions and defend them internally within the company or use them as bargaining tools with suppliers. They are able to better analyse information, control sales forecasts, and forecast the effects of promotional campaigns. They can also create their own reports without relying on the systems department.
According to the Logistics leader, "The key to the success of this project has been the close collaboration of Spar GC's supply team; a young team open to change and willing to learn, and the highly knowledgeable consulting team who facilitated the system implementation."
Spar Gran Canaria (Cencosu) is a food distribution and retail trading company with a total of more than 60,341 square meters or retail space, more than 23.7% of the commercial area in the Island of Gran Canaria.
With annual revenues of more than €300 million and 2600 employees, they have 170 points of sale covering more than 95 per cent of the island.