April 2, 2004, 12:00 AM

Finding a goldmine of savings in web-based logistics

Using a web-based logistics system, Giant Eagle has cut its safety stock from 10 days to 3 and saved tens of millions of dollars.

In the retail grocery business, where tight profit margins challenge managers to operate as efficiently as possible, a dollar saved can give those margins a healthy boost. Just ask Bill Parry, vice president of logistics for Giant Eagle Inc., which operates more than 200 supermarkets and five distribution centers in four states.

To assure it always had sufficient goods on hand to keep its shelves stocked with the products its customers demand, Giant Eagle used to operate under a strategy that kept several days of safety stock in its stores’ warehouses. If there were disruptions in the flow of goods from suppliers into its distribution centers - information on which might take days to get to Giant Eagle’s logistics and merchandise managers - Giant Eagle could pull the safety stock while awaiting late deliveries or placing new orders.

But now, with a web-based logistics management strategy coordinated by logistics and merchandise managers, it can view disruptions almost immediately after they occur and, therefore, cut its lead time for placing and receiving orders in more than half - to a period of 2-3 days from 7-10 days. “We’ve identified it’s worth tens of millions of dollars to cut lead times to 2-3 days,” Parry says.

Giant Eagle went live early last year with the web-based Global Command and Control Center, or GC3, logistics management system from G-Log. Following a 100-day implementation period started last fall, the retailer began tracking shipments throughout the purchase order and delivery process, including the points when a supplier accepts a purchase order and assigns a carrier, and when products arrive at one of Giant Eagle’s distribution centers.

Under the G-Log system, vendors and carriers enter information about shipments at several points along the supply chain onto a web page in the GC3 application, providing Giant Eagle managers with real-time visibility into shipment status, including scheduling and quantities. Now, if they see a disruption in supply, Giant Eagle managers can schedule a subsequent delivery a few days sooner than in the past, Parry says.

Parry notes that suppliers and carriers have been cooperative in participating with the GC3 application, which takes a couple hours of training to learn how to use the web-based data-entry form. In some cases, carriers have portable web-access devices on-board trucks, though some drivers will call in shipment status to a home office for entry into the GC3 system.

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