Project example – Controlling material flows

An hour before the doors open at any branch of a popular chain of stores in Switzerland, the trucks are lining up to unload their goods quickly so that these can be on the shelves before the first customer is admitted. But where do the containers and packets come from? To be sure from the suppliers, but what route do they take? There are several possibilities. In most cases in the past many goods would be sent separately by direct transport from each individual supplier, which caused a lot of complications for the department stores, which were having to deal with a large number of separate deliveries.

New delivery chains were set up in which the goods from various suppliers were bundled, mainly with the aim of reducing the workload of the personnel taking in the deliveries. One classic way of doing this is to store all the goods in a central logistics centre, but it is also possible to use modern supply chains involving cross docking or transhipment in which the goods are not stored in a central location but are only unloaded and redistributed to the recipients. In the past, the choice of the supply chain for the chain stores in question was usually based on gut feelings.

The question for our client was now which supply chain would be most appropriate for which supplier. In addition to qualitative criteria, this would above all involve taking cost factors into consideration. With a team of three ZLU personnel, we first gathered the necessary data in cooperation with the client. On the basis of a method of calculation which had already been used successfully by ZLU in various DIY markets, we developed a tool which was specially tailored to meet the client’s needs.

Using this tool the costs were calculated for the various possible options. All costs were considered which arise along the supply-chain, from the costs to the supplier of putting the dispatches together, through the transport, and possibly also warehousing, to picking and shipping to the store.

The purchasers who were responsible for choosing the delivery chain and for coordinating the suppliers under their care were given training in the use of the tool. The first calculations and sample discussions with the suppliers were carried out with support from ZLU. This already highlighted possible savings though changes to the previous supply chain in the order of tens of percentage points.