AMERICAN IS UPGRADING TRANSPORTATION SYSTEMS

CHRIS O'LEARY

SALT LAKE CITY -- American Stores Co. here is streamlining transportation routing in several divisions and taking control of inbound manufacturer shipments.

The retailer is now preparing to roll out new client-server-based software that will enable divisions to access a data base of vendor transportation routes and schedules to determine the most cost-effective method of delivering products to distribution centers. The system is to go on-line early next year.

American is also implementing an integrated routing and scheduling system for its outbound transportation loop in all divisions by the end of this year. The Jewel Food Stores division, Melrose Park, Ill., was to have introduced the system last month, to be followed by both Lucky Stores divisions in San Leandro, Calif., and Buena Park, Calif.

The upgrades are part of the retailer's re-engineering program, known internally as the Delta project, which is designed to develop common technologies and business processes systemwide.

American Stores declined to comment for this article, but confirmed the company had purchased the software and intended to use it chainwide.

Because the client-server software from Manugistics, Rockville, Md., enables American Stores to control the planning and scheduling of its inbound deliveries, the retailer should gain substantial savings by consolidating loads of similar sizes and arranging routes to pick up as many shipments as possible in the same geographical area.

"The majority of products that move between manufacturers and retailers are still controlled by the manufacturer. That is what's changing under the new business practices of American Stores," said one source familiar with the situation.

"They're taking control of that link in the supply chain and telling their vendors who's going to pick shipments up and when."

Under the previous system, manufacturers typically created inbound routes and schedules for American Stores and the cost was added to vendor invoices. That system frequently resulted in less-than trailer-load deliveries, which was costly to the retailer.

Sources said American's increased use of continuous replenishment and computer-assisted ordering has led to an increase in less-than-truckload orders.

"If you don't consolidate those shipments and control transportation you're looking at really paying through the nose for them," one source said.

The new software will plot the lowest cost routes that fulfill all service requirements. "If the product's available today but it doesn't have to be here until Saturday I might not move it today," the source said. "I might want to combine it tomorrow with some other orders to get a lower truckload rate."

Because the retailer's operations span from coast to coast, a corporatewide system was needed to increase cooperation and efficiencies between the divisions.

For example, a truck delivering products to Acme Markets, Malvern, Pa., could be scheduled to haul back merchandise to other divisions on its return trip.

"If you don't control your freight you often don't know where it's coming from and it takes some research to find out," said one industry observer. "There are loading constraints and equipment restrictions to consider: If we're going to route a carrier we need to know they can take that size equipment at that dock.

"That link has a lot of dollars in it, and whoever can get some synergies there can have a greater effect on their own service and be able to control and save money because they can build truckload orders."