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 centralized product catalog.
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 centers, 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 ToolsGroup and their 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: