In its second-largest acquisition, Amazon buys the company for $970 million.
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Under its old way of trying to coordinate its own freight operations, Kroger processed a daily batch of shipment orders into a freight optimization software system overnight, then reviewed a report the next morning that recommended how to best allocate shipments. But the web-based OneNetwork system allows new orders to be entered at any time. And because the system provides real-time visibility into the location and capacity of individual trucks, a new order could be immediately allocated to a particular truck that, for instance, happens to be in the right place with enough capacity to handle a pick-up.
After testing the system for a year on a few of its distribution centers, Kroger expects to have the Elogex system deployed companywide by the end of this year. That will entail adding several hundred carriers as well as dozens of suppliers to the network, which already serves freight movements from Kroger’s entire private label manufacturing business. For suppliers and freight forwarders, getting connected to the OneNetwork system requires them to have Internet access to enter their shipment data as well as to view communications such as shipment requirements from Kroger. Kroger’s partners also log onto the network to download, for a fee based on number of users, a 30-minute computer-based training program that instructs them how to use the system. Kroger also needs to similarly train a few of its own employees.
Having seen the benefits the web-based system brings to its freight operations, Kroger is also planning to use the OneNetwork to integrate information from its merchandising, distribution and transportation systems.
More retailers also are using web-based supply chain systems to implement cooperation among departments, Overcash says. For example, under traditional methods a merchandise manager might order extra containers of blue jeans in anticipation of large demand, but without considering whether the transportation department has the freight capacity or if the distribution department has the warehouse capacity. With visibility in the OneNetwork of each department’s needs and capacities, department managers will be able to take actions after considering the impact on other operations, Overcash says.
At Neiman Marcus, Howell is also looking forward to additional benefits stemming from his new ability to better coordinate imported shipments through Customs. Just as imported products must be classified for their materials’ country of origin and for harmonized tariff codes, they must also be checked against the U.S. Fish & Wildlife Service’s restrictions regarding endangered animal species. “One of the nice things the system does for us that we hadn’t expected is it can identify every shipment that requires entry through the U.S. Fish & Wildlife Service,” Howell says. “If anything has a feather, shell, horns, bones or exotic skin, it’s Fish & Wildlife material. They check to make sure the species is not endangered and that we have proper documentation, and that a vendor is not telling us that this is an alligator skin when it’s a crocodile.”
This saves time in directing shipments for the proper processing, assuring they’ll get into stores as soon as possible. Without the web-based logistics system, Howell says, gathering the documentation for F&W can be time-consuming and laborious, requiring phone calls, faxes and mailed correspondence. “It can be a document nightmare, but with the Qiva system, we get all the paper work in line much quicker,” he says.
Howell figures the flexibility of a web-based system will continue to come in handy in unexpected ways. While issues like global terrorism and SARS burst on the world scene to cause potentially major disruptions to supply chains, there are also more subtle surprises popping up all the time, he says.
“Take men’s shirts, you’d think there could be no way Fish & Wildlife would be concerned about them,” he says. “But now more of them are made with mother of pearl buttons, so they need to go through F&W.”
Retailers have been using the web to minimize their buyers’ exposure to SARS. But sometimes you just have to send someone to meet with buyers. And in those cases, retailers still find the web useful-this time in minimizing the exposure that a traveler could bring to the staff back home.
Wal-Mart Stores Inc., for instance, requires merchandise buyers and other employees returning from SARS-infected areas of China to quarantine themselves at home for 10 days. But they don’t experience a 10-day vacation: Wal-Mart keeps them working through e-mail and web-based access to corporate information.
Because many of them still need to stay in touch with foreign suppliers, they continue to communicate through e-mail and by connecting into web-based systems for checking product and order records. Wal-Mart has also increased its use of video-conferencing to compensate for employees in the U.S. who want to view products and make visual contact with suppliers.
So far, use of the alternate means of communication has not disrupted Wal-Mart’s supply lines, a spokesman says. “It hasn’t had an impact on us in terms of our ability to get products,” he says.