Due to the rise of home delivery within the food retail business, Jumbo – expert on customer fulfillment – has been faced with novel challenges. A close collaboration with Pipple made it possible for Jumbo to acquire the intricacies of the home delivery market.
Customers, who choose for home delivery of their groceries, do not want to receive a large drum of sprinkles the first day and one with toilet paper the next day. They should receive a crate, nicely filled with small quantities of all demanded products. Also, the bag of chips should be packed on top of the carton of milk, and not the other way around.
“In the food retail business the margins are paper thin, while the quantities are very large. Ten seconds of waste or win are already substantial.”
Jumbo already recognized in an early stage that home delivery of products to customers is a very different line of work than supplying grocery stores. In order to cope with the growth of e-commerce, Jumbo has built two e-commerce fulfillment centers (EFCs). Achieving the same level of effectiveness as within a classical distribution center is a learning process, says Rob Jacobs, manager Supply Chain Development & Performance at Jumbo. “In the food retail business, the margins are paper thin, while the quantities are very large. Ten seconds of waste or win are already substantial.”
Therefore, Jumbo wanted to be able to experiment with adjustments in the process without disturbing the workflow. For that purpose, they asked Pipple to construct a virtual environment representing their EFC. Within fourteen weeks, Pipple established a perfect model of reality.
Then the simulations could start: they have been investigating the effect of using distinct product collection areas for fast- and slow-moving goods. Furthermore, they have been testing the consequences on the stockpiles of using different replenishment times. Jacobs: “The simulations exposed possible improvements which we had never thought of.” The results are significant: Jumbo now requires less crates to handle the products, the productivity of the EFCs is improved and the warehouses are more effectively and efficiently replenished. By implementing some adjustments to the simulation model, it can moreover be used to design future EFCs.
Jacobs is, besides the results, very keen on the flexible, cooperative attitude of Pipple. Since his focus is on agile working, after each period of time, there was an evaluation to see what was needed from Pipple at that time in order to further improve performance. “Not ideal for a company like Pipple, but it was never an issue for them.” According to his own words, Jacobs has been a strict business owner. “For me there is nothing to a perfectly executed regression analysis only. Each intermediate product should have instant surplus value.” Pipple succeeded in that. To Jacobs, it was notably special that the consultants at Pipple were swiftly familiar with the simulation software. “That testified of an enormous drive, which was contagious on the rest of the team.” He will call in Pipple more often in the future. “They do not make things more complicated than necessary. When it fits on the back of a beer mat, they simply do it. That mentality fits in well with the Jumbo DNA.”