Centralised distribution model helps Pick ’n Pay drive down costs

There is no doubt that the
current road infrastructure
in the country will not be
able to cope with the future supply
chain demand, necessitating a
mode switch by various industry
role-players if they want to
continuously and sustainably
develop South Africa’s freight
industry.
This is just one of the challenges
facing Pick ’n Pay in the near
future when it comes to moving
goods by road, says Cobus
Barnard, general manager: supply
chain for the retailer. “Road has
been our key mode of transport
as it has allowed us to effectively
deliver to each store regardless of
where it is situated.
“In recent months, however, we
have met with rail stakeholders
to discuss using rail if and where
possible, but for the meantime we
will still only be using road – for
the movement of our imported
goods as well as the delivery of all
our store merchandise.”
Like many other companies
in the country Pick ’n Pay is not
unwilling to move its cargo to rail,
but the mode has to be reliable
and trustworthy at all times. And
in its present format it is just not a
viable or effective option.
“Road remains a reliable means
of delivering on time not only to
our South African stores but also
our stores in neighbouring
countries such as Botswana,
Zimbabwe and Swaziland.”
Currently in the process of
opening a new store in Zambia,
which is expected to be operational
before the end of July, Pick ’n
Pay is finding itself entering the
cross-border market where road
is even more important due to the
complete lack of rail infrastructure
in southern Africa.
“We will be trucking most of the
produce, including the perishables,into Zambia and will use airfreight
for very specific and urgent
deliveries. This is the first major
store we are opening outside South
Africa bar the shops we have in
Namibia and Botswana and we
are very excited. Of course we are
expecting some teething problems
that will come with its own set of
challenges, but we are convinced
that this expansion strategy will
stand us in good stead.”
Barnard believes it is imperative
for companies to continuously
focus on the value add that can
be created by focusing on one’s
supply chain development.
“Supply chain is a key enabler to
drive efficiencies out and in so
doing, reduce one’s overall cost
to supply.”
In a post-recession South
Africa it is even more opportune
to look at initiatives that drive
out cost especially when it
comes to transportation, which
remains a high cost factor for
any retailer. ”The recession has
forced us to look at implementing
initiatives much quicker than
we had anticipated. It is about
finding ways to improve on shelf
availability.”
According to Barnard one of the
ways Pick ’n Pay has decided to
achieve this is by implementing
a new regional centralised
distribution model. “Until now our
suppliers have delivered goods
directly to stores. Our new model
means that grocery suppliers will
in future deliver to our network
of regional distribution centres,
while general merchandise will
be delivered to our distribution
centre in City Deep, Johannesburg.
Selected suppliers are already
centrally distributing product
to our inland stores through our
Longmeadow distribution centre
in Gauteng.”
This is a major change for the
company, says Barnard. “Our
competitors have been using this
model for some time. “We are
rapidly implementing centralised
distribution and are very positive
about the change and our
expectations around it.”
For Barnard it is all about
bringing about an efficient supply
chain where one can sustainably
balance cost and acceptable
service levels to one’s customers.
“In a retail environment it comes
down to the balance of on-shelf
availability, inventory holding
cost as well as the ability to
replenish your stores as and when
stock is needed in a cost-effective
way – all to service our
customers better.”