Johannesburg, 03 Feb 2004
Vector Logistics, a specialist third-party logistics provider, has implemented an electronic trading system, which has been rolled out for it to all Shoprite Checkers stores in SA by Affinity Logic, a member of the UCS Group.
Vector Logistics was formed out of Irvin & Johnson`s (I&J) Customer Division on 1 July 2002 and is responsible for the distribution of all perishable goods on behalf of principals such as Rainbow Chicken Farms, McCain and I&J, to their retail, wholesale and foodservice/catering customers such as Pick `n Pay, Spar and Shoprite Checkers, among others.
"The fast-moving consumer goods (FMCG) retail industry generally experiences a high incidence of claims and resulting credit notes, largely as a result of price and quantity discrepancies that occur between distributors, their principals or trading partners and their customers," explains Shun Pillay, Chief Information Officer at Vector Logistics.
Pillay continues: "One of our main trading partners, Shoprite Checkers, identified electronic trading as a way of introducing operational efficiencies within their group at store level."
Ross Norton, supply chain consultant at Affinity Logic, adds: "Electronic trading has the added benefit of keeping pricing consistent throughout the supply chain, by identifying discrepancies at the point of order, rather than during the creditors process. Traditionally, identifying these discrepancies involves an extensive paper chase. By immediately highlighting any misalignment of systems or data, electronic trading allows corrections to be implemented prior to the following day`s trading."
Affinity initially assisted Vector Logistics with the implementation of an electronic trading pilot with two of its principals and all the Shoprite Checkers stores in the Western Cape in June 2001. Norton states: "At that stage, the roll-out to further regions was delayed until after the completion of Vector Logistics` SAP R/3 implementation. The first Vector depot went live on SAP R/3 in June 2002, which meant that the roll-out of electronic trading via Electronic Data Interchange (EDI) to Shoprite Checkers stores in the rest of the country was able to start soon thereafter."
Shelly Moore, supply chain director at Vector, says: "We appointed Affinity Logic to handle the implementation due to the group`s considerable understanding of the retail industry as well as its reputation for timeous and professional delivery. Affinity also has an in-depth knowledge of the Vector business."
Vector Logistics` electronic trading system was rolled out to over 350 Shoprite Checkers stores nationwide. To ensure a successful implementation, Affinity Logic had to implement a strong communications strategy with the operational staff within Vector Logistics and Shoprite Checkers, as well as a concerted training effort.
Norton says: "We trained merchandisers, telesales and sales representatives at all the Shoprite Checkers branches and also held communication sessions with the buyer in each region, as well distributing a circular to all the stores in each specific region."
The short shelf-life of perishable products, together with Vector Logistics` 24-hour service levels, presented particular challenges. This is especially so in the case of the distribution of fresh chicken, where each day`s orders need to be communicated to Rainbow Chicken plants for production in time for next-day delivery to the stores.
Pillay elaborates: "The electronic trading system replaced the previous manual ordering system, where orders were placed telephonically by merchandisers or perishables managers at the Shoprite Checkers stores with telesales clerks and call centre agents at the Vector branches. The new system enables the call centre agents to focus on matters of overall service rather than purely on order taking."
EDI orders are now accepted via a value-added network (VAN) provider and processed directly into Vector`s SAP R/3 system as soon as they are submitted by Shoprite Checkers. The EDI controllers, numbering between six and ten, actively use the system, while it indirectly impacts a further 30 to 40 users in Vector`s pricing, debtors and administration divisions.
Pillay comments: "The most significant part of this project was the introduction of new disciplines among staff members and successfully changing their behaviour at store level. Although there was some initial trepidation from the call centre staff, all the users (EDI controllers, merchandisers, perishables managers, telesales clerks and call centre agents) are now positive about, and benefiting from, the new electronic trading system technology."
Norton states: "As a result of the electronic trading implementation, claims from the Shoprite Checkers group have been reduced from over 5 000 per month to between 500 and 1 000, the majority of which relate to stock and not pricing. The industry cost per credit note ranges from R35 and R100, so this clearly represents a substantial cost reduction, and an improvement in operational efficiencies to Vector Logistics, its principals and Shoprite Checkers. They have also had a soft benefit in that the reduction in price claims and the overall streamlining and simplification of the supply chain processes have helped to improve Vector Logistics` relationship with Shoprite Checkers."
Owing to the success of this project, Vector Logistics plans to extend the same electronic trading system to as many of its customers as possible in the near future. This will assist the company to eliminate large volumes of waste currently prevalent in the trading environment, and enable the logistics specialist to add value to its principals and customers` businesses
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