ALBERT HEIJN LOWERS INVENTORY AND RAISES ITS SALES SPACE

DEENA AMATO-McCOY

BOSTON -- Since migrating toward a "just-in-time" store replenishment program, Albert Heijn, a division of Ahold, Zaandam, Netherlands, has been using customer purchase data to streamline deliveries, a move that has helped reduce shrink and inventory levels throughout the supply chain.

Albert Heijn's program, "Today For Tomorrow," delivers all goods to retailer stores within 18 hours. The process is "triggered and orchestrated by consumer purchase data collected as items are scanned during checkout at each store," said Tom Schaumberg, vice president of supply chain initiatives for Ahold USA, Atlanta.

"Scanning data is transmitted to the supplying distribution centers through electronic data interchange," he added. "We have a point-of-sale-driven supply chain, and it is the POS data that is driving and steering our ordering and delivery system."

Schaumberg spoke about the program at a session, "Comparing U.S. and European Supply Chains," at the Global Logistics Conference here June 17-19. The conference was sponsored by CIES, the Food Business Forum, Paris, and the Food Marketing Institute, Washington.

Since deploying the replenishment process, Albert Heijn has cut shrink in half.

"By having increased speed in the supply chain, especially in the area of fresh product, we have reduced our shrink by 50%," said Han Willemse, senior vice president of logistics for Albert Heijn. "When dealing with fresh product specifically, you can imagine the problems associated with keeping product fresh. This program helps that."

Before implementing the replenishment program three years ago, the 650-unit retailer would store product in distribution centers to fulfill up to four days of demand. "The program is producing a significant decrease in stock levels throughout the supply chain, which produces reduced costs," Schaumberg said.

"Albert Heijn has also experienced an enormous reduction in store space, which gives them more selling space," he added. "Only selling space can raise incremental dollars."

Albert Heijn has three regional distribution centers that supply retailer stores with 3,000 dry grocery items and 7,000 perishable items, according to Schaumberg. In addition, a national distribution center supplies 12,000 slow-moving items to the 650 stores.

The program has also reduced store deliveries from 60 per week to 20 per week, which also reduces fuel consumption of delivery trucks.

"The real issue is that timely trucks deliver the right products at the right time,"said Schaumberg. "Too-early trucks cause storage problems in the stores, and too-late trucks cause empty shelves. Only the right answer will do."

The right answer revolves around only shipping product needed for one day, and guaranteeing delivery within 15 minutes. "This target is attained for at least 95% of deliveries," he explained. "This is a high result based on a country that has incredible traffic congestion problems."