Issue 12 

Pick n Pay rolls out a sustainable distribution centre

Pick n Pay has launched its R628-million sustainable distribution centre in Longmeadow, Gauteng. The efficiencies and successes of this centre will enable the rapid roll-out of four distribution centres around the country within the next three years. The centre was built with an emphasis on sustainability, in terms of energy management, water management, refrigeration and the physical materials used for the building.

Green credentials

•  Daylight harvesting – the groceries warehouse roof lights and south lights provide natural lighting and reduce the required daytime electrical lighting by 50%, and internal lights have motion sensors with dimming and energy-saving lamps.
• Photo Voltaic roof mounted cells are being implemented for the Groceries Battery Charging and External lighting and signage – these cells are charged using solar energy, thereby reducing the use of grid electricity, providing savings on costs and environmental impact.
• Waterless urinals have been installed in the grocery extension, which rely on the use of chemicals to keep clean and hygienic.
• Electronic food-safety Geberit taps have been installed in the preparation kitchen, which only switch on when needed to prevent excessive water loss.

Longmeadow, the company’s blueprint centralised DC, currently services 284 stores. Building on this success, a second centre is planned, as well as facilities in the Western Cape, KZN and Eastern Cape regions. In addition, a perishables inland distribution centre is scheduled. This total investment comes at a cost of over R2-billion.

Said CEO Nick Badminton: “Pick n Pay’s move to centralised distribution is pivotal to the group-wide transformation programme which we launched three years ago, as part of a fundamental review of the way we do business. The purpose of this project has been to improve the efficiency of our core retail business, reducing the cost of doing business, simplifying our organisational structures and enhancing the way we use information technology.

“Our decision to move to centralised distribution was motivated by changes in South Africa’s retail landscape which had seen us fall behind our competitors, who were investing significantly in their supply chains and in improved service to their stores through centralised distribution systems. Throughout the world, the most successful retail groups have unlocked massive value from their supply chains, and most of them have moved away from direct-to-store delivery distribution. Our current distribution operations are running over capacity and have become inefficient, resulting in stores being overstocked and in deterioration in customer service levels as a result."

Changing with the times

Badminton said that Pick n Pay was the last of the major supermarket groups to commit to a streamlined supply chain. “While this inevitably compromised our efficiency in the short term, it has enabled us to learn from the experience of others and to build a world class distribution centre, deploying the most up-to-date and state-of-the-art warehouse management software solutions. It was no light decision, as it has required considerable capital investment and represents a significant change in the way we’ve done business for more than four decades, with the investment in Longmeadow to date totalling R628-million”.

Badminton said that beyond technological advances and the logistical achievements, it is the benefit to its customers that remains top of mind. “For the hundreds of thousands of shoppers who pass through our doors every day, the most significant benefits of centralised distribution have included the improved availability of stock, lower prices and a streamlined ordering process which has freed up our store staff to spend more of their time concentrating on shopper engagement. All the latest independent surveys confirm that over a basket of goods, Pick n Pay is quite clearly cheapest of all the major retail chains.”

A great start

The retailer has completed its supply chain vision and strategy, with early success at the Longmeadow facility which has resulted in a streamlined operation and significant improvements in efficiency. Product availability to stores has risen by 20% due to more efficient supply chain processes and robust business practices. “We are constantly re-engineering our technology and business practices within the supply chain to ensure increased productivity and reduced costs. The implementation of SAP within Pick n Pay has allowed the development of an enhanced demand planning competency, taking into account a full range of information to accurately manage demand. This has improved the stock availability in the supply chain resulting in improved delivery to stores.”

The centralisation of suppliers has been a significant success, with 23 grocery suppliers centralised to date and over 40 planned by October 2010. “We have seen significant benefits in centralisation, with a 20% increase in stock availability to stores.”

Tony Domingo, Director of Supply Chain at Nestlé Southern African Region, said the Longmeadow facility has created the capability that drives consistent stock flow and optimises availability, which is ultimately of great benefit to consumers. “I believe that with the mutually authentic partnership that exists between Pick n Pay and Nestlé, we can jointly entrench the supply chain architecture and build a robust strategic alliance,” he said.

All eyes on the green goal

Critical to this initiative since its inception has been its environmental sensitivity. As South Africa’s largest food retailer, Pick n Pay is committed to minimising its environmental impact by decreasing carbon emissions, improving energy and water efficiency and lessening its impact on the environment.

Says Rohland: “Longmeadow is just another example of how Pick n Pay is operationalising sustainability within the company, and all of these goals have been incorporated into the design, construction and operation of Longmeadow, making it one of the greenest facilities of its type in the world.”

“Throughout, our vision has been to embed a sustainable green building strategy that will not only reduce the carbon footprints of our stores and distribution centres through the identification and implementation of best industry practices and products, but to provide us with a working environment which is more efficient, more streamlined and more profitable.