Supply Chain Management

The Group has created and continues to increase its strategic lead in the supply chain, through its ongoing investment and recognition of the supply chain’s strategic importance.
  
A highly sophisticated supply line services the group’s outlets in 17 countries where the Group trades. Improved levels of product availability contributed to market share gains while the drive to reduce inventory levels, despite the growth in both sales and the number of outlets, is paying dividend. In its most basic form the supply chain consists of strategically placed distribution centres linking the flow of product from vendors to stores at which customer demand ultimately drives the movement of product.
 
Information technology and a fleet of refrigerated and ambient trucks enable the movement of product and the flow of information. The Group prides itself in running a state-of-the-art distribution operation and becoming the first South African retailer to receive the much acclaimed ISO 9002 accreditation for import and export handling.
Centralised distribution is now regarded as a competitive advantage for the Group enabling it to stabilise supply lines in times when supplier service levels drop. By controlling its supply line, merchandise can be buffered, countering vendor out-of-stocks and volatile trading patterns, while offering an opportunity to buy in against price increases. The desired result is inevitably, to consistently allow customers to find the items on their shopping list – thereby keeping their custom and their loyalty. Controlling the whole supply chain has also made it possible to introduce a great many cost-saving efficiencies, thus providing the mechanism to drive prices down daily.
 
The Group’s supply chain presents the opportunity to re-engineer its retail stores and improve its utilization of space by dedicating the minimum area to storage and the maximum area to trading space.
 
Merchandise is delivered to stores by a variety of trucks and trailers based at distribution centres throughout the country. The fleet is owned by the Group and operates 24 hours a day, seven days a week. A highly sophisticated transport route planning and scheduling system, optimises store deliveries and integrates the operations of the distribution centre and the transport division. This channel to market is not only environmentally friendly by reducing the number of trucks on the road, but it empowers small to medium sized suppliers, who can now deliver to one point and avoid the need to heavily invest in either warehousing or vehicles.
 
A substantial portion of the investment in information technology and logistics infrastructure has been devoted to the upgrading and extension of the Group’s distribution centres in Centurion, Gauteng, Cape Town and Durban. Of these the largest is located in Centurion, between Johannesburg and Pretoria, where distribution facilities have virtually doubled from 80 000 m² to 145 000 m². The main building of 114 000 m² is the largest distribution centre under one roof on the continent.  The facility serves as the distribution point for about 90% of ambient products delivered to stores in the Gauteng area and beyond. More than 1,100 suppliers deliver their products to the centre where they are stored, collated, and then distributed to retail stores on a high-frequency basis.
 
The Centurion distribution centre was developed in a responsible manner using environment-friendly approaches to construction. This was followed through with further investment in environment-friendly design that includes treatment of waste water and an ability to recycle waste. Central reclamation forms part of the Group’s safety and recycling programme, for the removal of damaged stock at the earliest opportunity, to avoid possible contamination of other products and control waste.
 
In Cape Town approximately 45 000m² of new space is being added, allowing the consolidation of three existing leased centres, reducing costs and inefficiencies.
 
Freshmark opened its distribution centres in Durban and Port Elizabeth during the latter part of 2012. 
 
The facility in Canelands, Durban, contains a number of firsts for the group as well as worldwide. These include that the DC is the first perishable DC in the group designed to operate with 13 m-high reach trucks under a clear operating height of 14.7 m. This is significantly higher than the existing facilities, which operate in the 6 m to 8 m range. The operators received extensive and intensive training to operate effectively and safely at this height.
 
The facility also covers 11 500 m2 and there is room on the site to add a further 23 000 m2 of growth, which has been incorporated into the overall logistics-flow planning. The site furthermore utilises all the latest thinking in terms of environmental efficiency and operational sustainability.
 
A world first is the design and development of a three level-high banana-ripening facility serviced by robotic shuttles. Up to now, all Freshmark’s banana-ripening facilities have been single level, which occupy significant floor space. The design team, however, engineered a unique solution that uses robotic shuttles, which is much safer and occupies one third of the original footprint.
 
The 4 500 m2 PE Freshmark facility utilises the same technology and can be expanded to provide up to 20 000 m2 of perishable distribution in a composite facility with a capability of up to 30 000 m2 of ambient storage.
 
The Group’s customers will enjoy the benefits and rewards of these strategic supply chain initiatives. The trading partners are critical to this collaborative platform and equally benefit in the efficiencies and savings.