SAFEWAY GEARING UP INBOUND FREIGHT-MANAGEMENT SYSTEM

LINDA PURPURA

PLEASANTON, Calif. -- Safeway here is installing an inbound freight-management system to optimize inbound transportation for the company's 1,368 stores from its headquarters here.

By implementing a supply-chain management solution, "Safeway will be able to optimize freight movements more effectively into our distribution facilities," said Brian Smolenyak, director of corporate traffic at Safeway. Safeway views the new software "as the building block in our effort to achieve an integrated supply-chain management system."

With a single view of its supply chain, Safeway will be able to take advantage of synergies across its entire operation, such as consolidating less-than-truckload orders into full truckloads and linking trips together for carriers. Previously, the company was using an in-house system to assist manual planning efforts on inbound freight management.

Using the new system, Safeway expects to reduce transportation costs, improve customer service and increase its competitive advantage in the market. The retailer anticipates the system will pay for itself in less than six months of operation, according to a source familiar with the situation.

The new inbound freight-management system affects its distribution facilities in Tracy, Sante Fe Springs and El Monte, Calif.; Tempe, Ariz.; Denver; Landover, Md.; Clackamas, Ore.; and Bellevue, Wash. Safeway's Canadian operations and a new facility opening in late October in Collington, Md., reportedly will also be integrated into the new inbound freight-management system.

One example of optimizing freight movement could involve Safeway arranging for a carrier to pick up a full load at a vendor location and deliver half a load to each of two different distribution centers, the source explained. In this case, savings would arise from one truck making two stops, vs. two trucks making one stop each. Previously, those orders would have been delivered on less-than-truckload carriers at greater expense.

The new system, from Manugistics, Rockville, Md., affects all inbound freight that Safeway controls and routes, which includes dry grocery, frozen, produce and perishables and general merchandise.

Safeway currently uses Manugistics routing and scheduling to optimize store deliveries at all its facilities in the United States.