Annual Report2013

4.4 // Logistics

Efficient and innovative logistics delivering optimal service

DIA boasts a proprietary, efficient and innovative logistics system which handles all the links in the supply chain, from supplier to end customer. In 2013 the company opened new distribution centres, continued to introduce improvements with a view to making its supply operations even more efficient, standardised the quality audits conducted in the supply chain in each of its operating markets and facilitated store management by providing supervisors with mobile devices. With these new facilities, DIA currently operates 44 warehouses spanning 870,000m2.

DIA plans, implements and controls its stores’ supply operations by intervening in all the links in the value chain. At each step it introduces front-running technology and organisational systems to accelerate processes, reduce costs and increase overall system efficiency.

DIA continued to upgrade its logistics system and fine-tune processes in order to accentuate its competitive advantages: quality, price and proximity

Continual fine-tuning of procedures coupled with in-house software developments underpin DIA’s efficient, flexible, convenient and fast supply model, which enables the company to offer all its stores the highest levels of service.

In 2013, DIA continued to upgrade its system and streamline its processes in order to defend and accentuate its competitive advantages: quality, price and proximity. In an attempt to further entrench these advantages, it is leveraging economies of scale and powering the 3.0 management model in its stores.

The integration of Schlecker’s four warehouses in Spain and Portugal not only added to the group’s logistics capacity in the Iberian Peninsula but also expanded the scope of store supply operations.

In Latin America, sales growth prompted the need for two new logistics platforms in Brazil and Argentina. These new facilities are a testament to DIA’s strategic commitment to emerging markets and its goal of continuing to win market share in these countries.

04-numero-de-almacenes-por-paises-en.jpg

In 2013 the group also made progress on the standardisation and systematisation of its audit system which is currently applied on a standard basis across all of the group’s operating markets. Supervision of supply chain procedures in terms of the quality dimension had already been standardised in 2012.

During the year the company also improved logistics management at the store level by equipping store supervisors with tablets so they can access all relevant store information using mobile applications custom-developed in-house by DIA.

4.4.1. Efficient, flexible, local and rapid supply

DIA’s logistics system is defined by four key characteristics: flexibility, efficiency, proximity and speed.

  • Flexibility:

    All the IT systems used in the logistics area were developed by and for DIA. This strategic focus on IT autonomy and innovation enables rapid adaptation to market demands and customised configuration to ensure constant efficiency gains across the overall model.

    The software developed by DIA enables the continual exchange of information between all the parties involved in the value chain.

    In 2013 DIA reinforced the 3.0 management model at the store level by equipping its supervisors with a tablet and custom-developing mobile applications to facilitate store management

    Meanwhile, the organisation promotes excellence in the supply arena by powering the 3.0 management model in its stores. Accordingly, in 2013 all store supervisors were equipped with a tablet so that they can access information specific to DIA’s establishments in real time. Thanks to the development of proprietary apps, supervisors can verify store checklists, view performance indicators and upload basic data for the stores under their purview into the system, among other capabilities.

  • Efficiency:

    Innovative order preparation at the warehouse level is one of the cornerstones of the efficiency of DIA’s logistics operations. In order to reduce order preparation circuits, sometimes by as much as 40%, the company uses a number of systems, such as designing warehouse layout around article turnover indicators and voice-activated product picking, to make the system more efficient.

    Another factor that makes a decisive contribution to supply chain efficiency is the development of new transport formats, such as the so-called Red Combi, which increases load capacity by 15%, and the use of multi-temperature trucks equipped to carry different types of products at once.

  • Proximity:

    The average distance between the warehouses and stores in the major capital cities in which DIA operates ranges between 30 and 50 kilometres.

    La proximidad entre centros logísticos y la red comercial de DIA es uno de los factores clave de la eficiencia de su sistema porque supone una importante reducción de kilómetros recorridos y de emisiones de CO2 y permite dar un servicio óptimo en las tiendas.

  • Speed:

    DIA’s stores are restocked daily, with a response time of less than 24 hours, guaranteeing optimal service standards and the freshness of perishable products.

    In recent years the company has made a huge effort to adapt its facilities and transportation formats to ensure that the fresh products it sells are preserved and stored in perfect conditions.

    Meanwhile, the fact that its product packaging is designed so that the products are ready for immediate sale once they arrive at their destination stores (shelf-ready packaging) further speeds up supply operations and enables in-store handling without the need for superfluous unwrapping.

4.4.2. New warehouses around the world

In order to provide logistics support for DIA’s store expansion in Latin America and for business diversification in the household, health and beauty segment in Spain and Portugal, DIA inaugurated six new distribution centres in 2013.

The acquisition of the Schlecker business in Spain and Portugal implied the integration of the four distribution centres the German retailer formerly owned in Spain (3) and Portugal (1) into DIA’s logistics network.

This integration effort posted both a competitive advantage and a challenge for the company. An advantage because the deal increased the company’s storage capacity and enabled cost cutting by adding the servicing of DIA stores to the equation. And a challenge because it entailed the replacement of the traditional order picking and storage systems used by Schlecker with the new technology used by DIA in record time. In addition, because Clarel products require different handling, the company’s IT systems had to be adapted to enable compartmentalisation. All in all the system can stock nine stores in one go.

The addition of new warehouses in Brazil and Argentina confirms DIA’s strategic commitment to Latam

In Latin America, where DIA is registering more rapid growth, the group inaugurated nine new distribution centres to service the new stores. A new warehouse was opened in the Avellaneda district in Argentina, while in Brazil a new 16,280m2 logistics platform was inaugurated in Riberao Preto in the state of Sao Paulo.

The warehouse in Avellaneda, Argentina, with a surface area of 27,340m2, is located at a privileged average distance from the stores located in the Buenos Aires metropolitan area of just 20 kilometres.

4.4.3. Quality guarantees throughout the supply chain

DIA standardised supervision of supply chain procedures in terms of quality in 2012. In 2013 it proceeded to standardise and systematise its audit system which is now applied on a standard basis across all of the group’s operating markets.

In Spain, the quality audits conducted in the group’s stores and warehouses enabled it to identify opportunities for improvement and define action plans designed to prevent incidents and correct deviations.

The quantitative improvement in the results of the audits performed in-store evidences the effectiveness of these action plans. The average store audit score improved by 5% in 2013.

Bringing franchisees into the quality audit process

Although initiated in 2012, it was in 2013 that the group consolidated its franchisee quality control audit process; the number of franchisee audits increased by 34% year-on-year.

These audits are conducted to the same stringent food safety standards as the company applies to its proprietary stores.

Lastly, the company has rolled out a warehouse audit format which implies greater and more specific controls over product quality.

Credits

Edit:
DIA, S.A.
Parque empresarial de las Rozas - Edif. TRIPARK
C/ Jacinto Benavente 2 A 28232 Las Rozas. Madrid - España

Production and coordination:
DEVA | Comunicación financiera y sostenibilidad

Design:
STROCEN.COM | New Corporate Design

Web development:
efe6 <Rebuilding ideas/>

Translation:
Tara O’Donoghue

Photography:
Jesús Umbría / DIA

×