Web-Based EDI No Panacea For Small-to-Medium Retailers

For A&P, which has had stagnant sales over the past few years, this is a time of "Great Renewal," which is the name of the venerable grocery chain's initiative to reinvent itself through technology.

"Great Renewal focuses on all aspects of the company, including the supply chain and the enabling software that allows the right product to reach our customers in a timely manner," says Ralph Brander, director of transportation and transportation management systems for A&P. "It is a way for us to stay competitive and attract new customers."

As part of this effort, A&P is installing a planning and execution system—NetWorks Transport, from Manugistics, Rockville, Md.—that will enable warehouse managers to collaborate with manufacturers on consolidating loads and delivering inbound and outbound shipments more efficiently.

The NetWorks system, which is integrated into the retailer's client/server network, relies on algorithms to analyze purchasing patterns and come up with the best mode of transportation, carrier equipment, rates and pallet sizes to deliver shipments into the warehouse and out to the stores.

The algorithms also allow the system to combine partially loaded trucks that may be on the same route or in the same vicinity and headed into local distribution centers. "This is where A&P will gain big benefits as they will save money per pound or per pallet for product loaded on a full truck vs. product on a half-filled truck," says Kerry Wigginton, senior business consultant for Manugistics.

Once a transportation plan is created, manufacturers and carriers receive an email from A&P describing the loads expected at the warehouse, and the carrier can indicate through a secure Web site whether it accepts or declines the delivery. A&P and manufacturers can monitor shipments in transit through the Web site as updates are posted on shipment status, estimated arrival times, whether orders are on time or running late, or whether they have been checked into the loading dock.

The system is being phased into A&P's 11 distribution centers. Its Canadian facility is currently running the system, and units within the Midwest and Mid-Atlantic regions will follow. All depots will be live by summer 2001.

Prior to using the system, each of the retailer's distribution centers managed its own inbound and outbound shipments by manually handwriting and posting purchase orders on a paper spreadsheet report. "We had many less-than-truckloads, and often ended up with more inventory than we needed," explains Brander.

"By doing our planning manually, we also accounted for a longer lead time of up to six or seven days to get those deliveries from multiple carriers," he adds. "With the new automated system we can consolidate more orders and we are able to reduce our lead time to two and a half days."

By cutting cycle time, the automated system could save retailers between 10% and 15% in transportation costs, Wigginton says. Brander expects to see a return on investment within two years.

A&P's next step is to add a freight payment solution that will enable the retailer to receive invoices from carriers for fulfilled orders. The invoices will be automatically audited and, upon approval, an electronic voucher will be passed along to A&P's accounts payable department alerting it to each carrier's payment fees.—Deena M. Amato-McCoy