A&P GEARING UP FREIGHT SOFTWARE TO DRIVE DOWN COSTS

DAN ALAIMO

MONTVALE, N.J. -- A&P is implementing a centralized software program for its transportation network that is expected to increase capacity at fleet and distribution centers, improve service levels and reduce costs.

Part of Project Great Renewal, announced earlier this spring, the program will help optimize the flow of inbound and outbound goods across suppliers, distribution centers and stores, the company said. Project Great Renewal, now in its second phase, is costing A&P more than $250 million over a span of four years to update its supply-chain and business-management infrastructure.

Previously, each of A&P's divisions performed its own transportation function. Centralized control will enable the retailer to use the Internet to communicate shipment information to carriers and replace electronic data interchange transactions or phone calls.

The retailer will use the NetWorks Transport component of Manugistics Retail Solution from Manugistics Group, Rockville, Md. "Manugistics displayed a great depth of knowledge and understanding around the dynamics of the retail environment," said John Metzger, vice president of supply and logistics at A&P. "Not only did they understand the grocery retail environment, but they brought their considerable experience with other retail segments to bear in crafting a transportation solution to fit with A&P's Great Renewal Project."

The decision-making capabilities of the system will help A&P control inbound freight movements from a centralized location. The result of this improved visibility across the transportation network is expected to contribute to the reduction in transportation costs. By increasing the size of shipments, capturing and consolidating inbound movements, and performing better carrier selection and performance analysis, A&P projects savings in the millions of dollars.

Overall, A&P expects to achieve cash benefits over the four-year period of $325 million net of tax, derived from improved margins, lower operating costs, reduction of working capital and improved product availability. Upon completion of the second phase of the project, A&P anticipates improving its ongoing annual pre-tax operating income by about $100 million. These initiatives are expected by A&P to enhance its ability to increase sales by attracting more customers and by increasing sales per transaction.