HANNAFORD INSTALLS ELECTRONIC LOGISTICS

PETER PERROTTA

SCARBOROUGH, Maine -- In a move that could save it up to 12% a year on transportation costs, Hannaford Bros. Markets here said last week it will switch to a Web-based service to manage its transport logistics.

Hannaford officials said the new Web-based, digital system, which can track orders in real time, will be used to coordinate all inbound and outbound transportation activity for the 115-store chain that operates under the banners of Hannaford Bros. Markets and Shop 'N Save stores.

It will also coordinate transport logistics at the chain's four distribution centers and the 136-store, Tampa, Fla.-based Kash N' Karry Food Store chain. Hannaford and Kash N' Karry are subsidiaries of Delhaize America, Salisbury, N.C.

Hannaford has contracted with Elogex, Charlotte, N.C., to take over responsibility of coordinating about 120,000 shipments each year, said Manny Ohonme, director of business development and strategy, Elogex. Ohonme said he expects the new logistics system to be operational in April.

Hannaford officials declined to give specifics on the system's implementation, but in a prepared statement, Rich Zaffarano, director of supply chain services, Hannaford, said the new system "addresses the specific needs of our business from the time the order is placed until we receive delivery in our warehouse."

Sources told SN that Hannaford spends about $100 million annually in transportation costs. Ohonme said Elogex is looking to save Hannaford anywhere from 5% to 12%, or $5 million to $12 million a year.

Elogex will host the system on its computer network and Hannaford will install software to link into Hannaford via its current order management system, Ohonme said. Officials would not comment on the cost of installing the transport logistics network.

Once the system is set up, Elogex will receive all purchase orders for shipments electronically. Elogex will then be responsible for selecting carriers, obtaining freight costs, scheduling appointments and making sure orders arrive on time and intact, Ohonme said.

Ohonme said Hannaford was formerly using a manual system that didn't coordinate the entire transport network from a central platform.

The new, comprehensive, integrated platform is expected to reduce carrier rates by coordinating more efficient routes, Ohonme said. The system should also give Hannaford more visibility into its supply chain by enhancing freight-tracking methods.

Ohonme said the system is the same one Shaw's Supermarkets, West Bridgewater, Mass., installed in January to manage transportation of inbound produce.

However, Ohonme pointed out that Hannaford's implementation is more widespread, encompassing all inbound and outbound transportation for stores and DCs.

Richard Kochersperger, director of the Wallingford, Pa.-based Food Marketing Group, a logistics consulting company, said retailers like Shaw's and Hannaford are beefing up their transportation networks to better compete with Wal-Mart, Bentonville, Ark.

"Wal-Mart is definitely a concern for these supermarket chains in the New England area," Kochersperger said. "[Elogex] is a good system if it works."

Currently, only 131 of Wal-Mart's stores are in New England. But, Wal-Mart has plans to open about 10 stores in the area this year and a new DC as well.