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Effektivisering af distributions- og emballagesystemet til dagligvarer med fokus på udnyttelse af transportsystemet

Summary and conclusion

Distributing grocery products involves considerable costs and resources. Due to the fact that grocery products are relatively cheap, the distribution costs account for a large proportion of total costs. It is mainly the transport packaging used and the transportation systems that determine the total costs of the distribution process. Actors in each link in the total supply chain make constant efforts to improve their own sub-processes, but it is not certain that what is best for the individual part of the supply chain is also the best solution for the entire supply chain. Only by co-operation between the links of the chain - e.g. on the use of common packaging and transportation systems - can important efficiency gains be achieved in the future. This project examines thoroughly how overall efficiency improvements can be made in the total grocery supply chain.

Background and purpose

The development of warehousing and distribution processes has to a large extent taken place within each individual part of the supply chain, without any consideration about the other actors in the supply chain. This has made it difficult to fully utilize the transportation systems and the returnable packaging systems and has hampered the development of systems that to a larger extent focus on environmental aspects.

The Danish Environmental Protection Agency has launched and financed a project that focuses on the distribution of grocery products in the future.

The purpose of the project was to collect information regarding efficient distribution and packaging systems for grocery products, and to develop a catalogue of ideas. The project was focused on the entire supply chain, from production to consumer access, and on the packaging that the retail shops and consumers receive, i.e. among other things the transportation process, transport packaging, returnable packaging systems, and systems for the handling of groceries. The starting point was an assessment of logistical, practical and economic factors with the aim of securing and developing continued efficient cooperation in the entire supply chain, taking into account the total use of resources.

The primary result achieved during the project was the development of a catalogue of project ideas that could be developed further in order to optimize the distribution of grocery and reduce the use of transport packaging.

The survey

The participants were a wide range of leading suppliers, retailers and a third party logistics providers. The project participants were the companies: Carlsberg A/S, Container Centralen A/S, Frode Laursen A/S, Kraft Foods Danmark A/S, Netto A/S, SuperGros A/S and LOGISYS A/S, who were also project leaders.

The project was carried out as a co-operation project, where the participants took active part in workshops and study tours to the UK, the Netherlands and Sweden.

During the project, focus was on the conditions that must be expected to prevail in the future grocery market place.

Main conclusions

The project reached the following conclusions:

  • In the future, grocery market retailers will to a large extent set the agenda, and the suppliers will have to comply with their demands.
  • The retailers will become even more international.
  • It is crucial for the suppliers that the retail chains can agree on common solutions regarding the utilisation of packaging and transportation systems.
    • The following topics are relevant:
      • Greater understanding of the inter-dependence in the total supply chain
      • Establishment of shared packaging systems
      • Establishment of a common standard for load heights
      • Focus on working environment aspects
      • Development of appropriate unit loads

Project results

The logistics of groceries in the future

Great focus has been on co-operation between the different links in the grocery supply chain. However, the conclusion was drawn that the competition between the different sales channels will become increasingly intensified and that each sales channel will focus more on comparative efficiencies rather than on the overall efficiency of the entire grocery market.

In the countries embraced by this study - excluding Denmark - great focus is on the internal shop logistics and not least on shops being able to always have adequate quantities of fresh products. This implies that the quantity of goods delivered to the shop meets the demand for products expected to be sold within the coming period, often down to 4-5 hours. Most shops receive one delivery from the distribution centre per day as a minimum, and bigger shops get as much as three deliveries per day all days of the year. This close focus on the shops implies that transportation is not optimized e.g. by ensuring that boxes are fully loaded with products. Instead the boxes contain the quantity that can be sold in the coming period.

The future distribution of groceries will to an increased extent be developed in a way that fits exactly the type of shops it serves. A distinction must be made between discount shops with an assortment that includes perhaps only around 1,000 products, and shops with a full grocery assortment of 10-20,000 different products. When a chain of discount shops has to handle and distribute only a limited number of products, there are much better possibilities for automating processes with the purpose of reducing costs.

The use of returnable packaging systems

In Europe a wide variety of returnable packaging systems are used. Normally, the background for using returnable transport packaging is consideration for environmental and economic aspects. Some retailers run their own returnable packaging systems, and the suppliers are forced to packing products into the returnable distribution boxes provided by the retailer. For the suppliers, this implies that the same product must be packed differently depending on the demands of the customers. In other countries, national returnable box systems are used by several retail chains. An example of such national returnable transport packaging systems is the Swedish "Svensk Retursystem", a company that is owned by the entire Swedish retail trade. The advantage is that suppliers only have to use one type of returnable boxes.

In most returnable box systems, handling, washing and transportation of empty returnable boxes have been outsourced to companies specializing in these areas.

However, as the big international retail chains are competing against each other across national borders, the national systems will often be "overruled" by e.g. the chain-based returnable packaging systems. The implication of this fact can also be described as follows:

  • More sales channels increase the complexity for the suppliers and make the use of returnable packaging systems more difficult

Catalogue of ideas

The project also highlights a number of topics, where the distribution of grocery products can be made more efficient in other areas than returnable transportation packaging. These topics are also included in the idea catalogue developed.

The catalogue of ideas includes the following items:

  • Create greater understanding of implications of logistics at both suppliers and retailers
  • Establish standards for the height of pallet loads
  • Associated to the height of pallet loads, assess the possibilities for utilizing double-deckers in transportation
  • Assess the possibility of using ¼- and ½-pallets with wheels, to facilitate handling in shops
  • Assess the consequences of implementing city logistics concepts
  • Assess the possibility of coordinated development of new units, that e.g. facilitate the handling in automated warehousing and production systems
  • Assess the possibilities of automating the handling of especially boxes – aiming at improving the working environment
  • Develop a new ¼-pallet unit – taking the international development into consideration
  • Re-assess whether the EUR pallet is the best size for the future distribution, alternatively examine the use of ½ pallets
  • The use of plastic pallets to replace wooden pallets

These ideas are made open to anyone with an interest in these matters, for the purpose of further elaboration.

 

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Version 1.0 Januar 2006, © Miljøstyrelsen.