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Loblaw Companies Limited is Canada’s largest food retailer and a leading provider of drugstore, general merchandise, and financial products and services.
Through its portfolio of store formats, Loblaw is committed to providing its customers with a wide, growing and successful range of products and services to meet their everyday household demands. Loblaw operates more than 1,000 corporate and franchised stores, and employs more than 135,000 full-time and part-time employees. In 2012, Loblaw generated revenues of approximately CAD$32 billion (US$32 billion).
Loblaw operates 30 distribution centers and runs the largest fleet of trucks in Canada. Loblaw is constantly working to improve the efficiency of its supply chain in an effort to ensure that the freshest products get to its customers, quickly and at the lowest cost.
Loblaw long has acknowledged that supply chain management is an essential contributor to operational excellence. The retailer recognized that inadequacies within its existing supply chain capabilities were taking a toll on its ability to effectively serve its customers and deliver value to shareholders. Challenges were particularly pronounced in three key areas:
Transportation. Loblaw’s legacy transportation network was fragmented and managed regionally, with few standardized processes and no common technology platform. Transportation planning activities were conducted independently at distribution centers—inbound and outbound operations were rarely integrated and transport assets were not optimally utilized.
Warehousing. As its sales volumes grew, so did the number of products that needed to be efficiently managed and distributed; however, the retailer’s legacy distribution center network was supported by an aging infrastructure and comprised a fragmented collection of regional centers and outside storage facilities, which ran separate IT systems.
Forecasting and replenishment. Loblaw recognized the need to improve its demand planning capabilities and specifically, its ability to accurately forecast product demand and replenish inventory in a timely and optimal manner. To maintain the company’s position as a best-in-class retailer, address its operational cost pressures, and better meet its customers’ demands for product availability and freshness, Loblaw’s leadership team knew that a complete supply chain transformation was required. Loblaw turned to Accenture for assistance due to its deep operational supply chain capabilities, strong local team skills, and collaborative approach to delivering value and high performance.
Accenture quickly assembled a global team of professionals with deep supply chain and technology knowledge to work with Loblaw to define the retailer’s vision for its supply chain. Loblaw and Accenture agreed that the transformed supply chain capability needed to be national in scope, comprehensive in its functionality, and highly responsive to rapidly changing market conditions and customer demands.
Because it was important to generate immediate results, the team focused on implementing simple solutions, delivered in a fast, yet manageable, sequence. Accenture supply chain professionals were embedded in the Loblaw business and worked hand-in-hand with client teams to facilitate the transfer of knowledge and insights, as well as to accurately understand the retailer’s challenges, the solution requirements and how the transformation would affect all stakeholders. The joint team carried out the transformation in three key phases:
During the first phase, solution design, Loblaw and Accenture identified core supply chain business requirements and capabilities and designed the end-to-end processes needed to support the “flow supply chain” vision.
In the second phase of the transformation, capability delivery, the team implemented a deployment plan that was designed to enable Loblaw to begin slowly and then accelerate change through a “crawl, walk, run” model.
The third phase of the transformation, value acceleration, was a critical component of the overall transformation plan and was designed to deliver fast results, maintain the transformation momentum, and produce cost savings that could be used to fund the subsequent delivery of new supply chain capabilities.
With Accenture’s help, Loblaw has successfully transformed its core supply chain capabilities. With a focus on improving transportation, warehouse management, and forecasting and replenishment, the retailer has not only improved supply chain performance, but also has implemented a robust and end-to-end set of skills that effectively enables the flow of products to the market place. According to Rob Wiebe, senior vice president of supply chain at Loblaw, “To retain our position as a best-in-class retailer, we knew we needed to move away from a supply chain that was focused primarily on the storage of products. Accenture helped us manage that transition—and did so in a way that generated both quick benefits and long-term value.” Throughout the transformation program, the Accenture team applied deep skills in supply chain operations, management consulting and technology integration, proven methodologies and alliance relationships with leading technology suppliers to deliver a solution that addressed Loblaw’s business requirements. Importantly, the team focused on crafting a program that delivered quick results.
Accenture’s experience and ongoing High Performance Business research have confirmed that leading retailers use the power of their supply chains to win the war for customers and achieve competitive advantage. These companies build specific capabilities that enable them to achieve superior service and in-stock performance, relentlessly manage costs, react quickly to customer trends and capitalize on growth opportunities. With Accenture’s help, Loblaw has developed just such capabilities and, in the process, charted a clear course toward high performance.
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