Recommendations at the Divisional Level

Divisional warehouses, or as they are sometimes called, Distribution Centers (DC) act as the fulfillment centers for stores in their region and also receive and inspect products from suppliers. DCs also manage the critical tasks of breaking down large shipments and allocating specific levels of inventory to each store. From a supply chain integration perspective, this is the most critical link in the entire chain between supplier and store. In the case of re-vamping Albertson's approach to DC supply chain integration the following tasks need to be completed.

First and foremost, there needs to be real-time item and lot coordination across all DCs so each can stock balance accordingly and also respond quickly to the needs of the specific stores they serve. Albertson's needs to consider a distributed order management application that provides for this level of real-time cross-DC visibility into their supply chain processes if they are to be more effective in fulfilling retail demand. Second, Albertson's needs to look to suppliers and the suggested DDSN framework to create enough inventory visibility through forecasting on the front end, and Vendor Managed Inventory (VMI) approaches on the back end of fulfillment to DCs to ensure the highest level of efficiency possible. Third, the DCs must have space optimization plans by retail store in their inventory mix calculations to ensure that the DC does not prematurely run out of products being heavily promoted and featured in the store. A major reason for this is that DCs need to act as the buffer between the retail location not running out of products and the suppliers who provide them. This tight level of coordination is critical, and accomplishable in the context of having a DDSN platform from which to work from. Fourth, DCs need to have real-time pricing and return information to gauge the value and turn levels of their inventory...

Finally, the DCs must have a highly focused approach to managing the pick, pack and ship functions through integration of their tracking systems with the company-wide analytics layer or platform mentioned earlier in this paper. Once all five of these top objectives are accomplished, a DC will have a best-in-class level of integration both with the corporate-wide Albertson's system and most importantly with suppliers and the stores.
Recommendations at the Retail or Store Level

The ability to quickly gauge what demand levels are for high volume products is critical at the retail level, as is the capture and transmitting of POS data to corporate is critical, as is shelf and space planning (sometimes called planagrams), in addition to computer-generated ordering of products from DCs based on inventory optimization models. Retail locations need to be seen as data capture points in the broader DDSN networks, and the "proof points" of optimization as they relate to pricing and quantity planning. The use of POS data and the capture of RFID-based data in turn also need tight integration into the MDM repository at the corporate level so analytics can be generated on a per-store level to see performance trends. Ultimately Albertson's needs to see the store as a prime opportunity to both listen to the customers' needs and also validate pricing and product selection optimization defined from more precise and thorough analysis. Underscoring all of this is a pervasive DDSN framework for organizing and optimizing collaboration between suppliers and Albertson's.

References

Griswold, Sirkisoon. The State of Fast-Moving Consumer Goods Retailers: the 2007 Technology and Process Review. AMR Research Report. Boston, MA. April, 2007

Griswold, Suleski. Fresh Item Management Technology: Are You a Caveman or a Spaceman? AMR Research Report. Boston, MA Thursday, March 15, 2007