Over a period of six months, retail chain Blokker has completely restructured its supply chain from the Far East. Using Yellowstar’s Star Flow Supply Chain, every order is now fully transparent and controllable, from the factory in China to the warehouse in Geldermalsen. As a result, Blokker is much better able to anticipate the demand of Dutch consumers, say Supply Chain Director Hans Danhof and Import Manager Helle Luijpen.
Retail chain Blokker is working hard to become a healthy, profitable company again. By means of a smart omnichannel strategy, it aims to win back consumers. Blokker’s operations are now fully demand-driven. Danhof: “In the past, Blokker was highly successful using a procurement-driven approach. The range of products on offer in our shops was dependent on purchasing opportunities and the stock that consequently ended up in our warehouse. Today’s retail landscape with fierce competition from low-cost retailers, supermarkets that are increasingly offering non-food products and online channels requires a different, smarter approach.” For Blokker, consumer demand is now the main factor. The associated sales forecasts determine its purchasing. “We have shifted from a procurement-driven organisation to a demand-driven one,” explains Danhof.
For the new approach, Blokker has had to completely restructure the existing internal processes and systems. This has substantially impacted the logistics as well. In the former situation, the available stock was the leading factor for the store supply; the production of the folder factually determined the time to the store shelf. The products were already waiting in the warehouse. Now, based on the needs of the consumer, Blokker first devises the folder and then places the required orders. This creates a much longer planning horizon and greatly increases the importance of logistics whilst simultaneously making the execution far more challenging.
How it used to be: limited insight with Excel
This challenge particularly relates to that segment of the product range that Blokker has produced in the Far East. About 2000 of the retail chain’s 6000 items hail from there; often specially made for Blokker under its own private label. A process that comprises many different parties, numerous documents and, until recently, many limitations. From the first contact with the supplier, the placing of the order and the manufacturing to the logistics process: all information was exchanged via Excel. Luijpen: “Blokker had no insight into the whereabouts of goods in the logistics chain. We had zero information. Containers would often unexpectedly arrive at the quays in the port.” To ensure sufficient stock, Blokker therefore kept almost a year’s supply of many products at its warehouse. “This operational approach was simply not scalable in view of the future,” says Danhof. “Furthermore, we were only able to order one item per container. That’s fine for products with a high turnover, but not for a tea strainer, for example.” An impossible situation for the new demand-driven organisation.
How it is now: every step transparent
Blokker has therefore completely redesigned its Far East supply chain. As a first step, Slim4 from Slimstock was implemented for stock control from the supplier to the store shelf. Next, Flexport was selected as the logistics service provider for the route from the port of loading in the Far East to the warehouse in the Netherlands; Yellowstar’s Star Flow Supply Chain was chosen as the order management platform for this flow. To this end, Star Flow Supply Chain has link-ups with Slimstock, Flexport and via the ERP with all relevant Blokker departments. Danhof: “We approached this professionalisation of our Far East sourcing as one single project. Practically speaking, two processes were involved though: replacing Excel with Yellowstar’s order management system and outsourcing logistics to one single end-to-end forwarder instead of managing this ourselves. With that, the use of e-mails and Excel sheets has been fully eliminated.”
Every Far East process now starts with a purchase advice from Slimstock in Star Flow Supply Chain; in this application, a provisional order for the item in question is then created. This order immediately becomes visible in real time for Blokker’s purchasing offices in Hong Kong and Shanghai. The buyers next get to work with the local suppliers. As soon as the purchase order is definite, it will show up again in Star Flow Supply Chain together with all the documents and is immediately accessible to Flexport as well. From the port of loading to the warehouse, this forwarder takes care of the logistics from their own system. Flexport automatically provides feedback on about twenty pre-agreed milestones. This allows Star Flow Supply Chain to inform Slimstock, but also Blokker’s warehouse management system so that it can plan receipt of the shipment, the financial department for invoice processing, etc. All parties involved continuously have access to the real-time information that they need for their specific task. Action can be taken at the right time.
On the other side of the supply chain, in the Far East, Star Flow Supply Chain oversees the process from the manufacturer to the port of loading as well. From the factory in China to the warehouse in Geldermalsen, every order is thus fully transparent and traceable for Blokker. “On my laptop, I can see in real time what is being scanned in the warehouse in China at the box level,” says Danhof. “I have insight into the entire supply chain from the Far East. This is often at a better level than is the case for local European orders, where suppliers frequently share much less data.”
Separate tariff module
Within Star Flow Supply Chain, Yellowstar has also delivered a tariff module. The tool gives Blokker insight into the total costs (landed costs) of an item up to delivery to the distribution centre. This allows for a realistic comparison between production in the Far East with all the additional costs for transport, import duties, etc. and suppliers from Europe who deliver the articles to the Blokker warehouse themselves. The tariff module thus supports Blokker’s category managers in making the best sourcing decisions.
Higher quality and substantial cost savings
The implementation of Star Flow Supply Chain and Flexport at Blokker was completed in six months. Luijpen: “For all three parties, this has been a very intensive process that involved a lot of mutual coordination.” As a result, Blokker’s complex logistics flow from the Far East is now fully transparent. For each article from the Far East, the location in the chain is perfectly clear. Every external link and internal department has the right information at all times. Consequently, Blokker can benefit from much smarter logistics and actual supply chain management.
Danhof: “The business case pays off considerably. The new operational approach guarantees the timely availability of products and structurally saves Blokker several million euros of working capital.” Due to the lack of insight into the logistics chain, Blokker lost enormous amounts of money in the past, for example because of demurrage. The entire Far East logistics operation is now also much more scalable. “Fewer people are able to do more at a higher quality level.” Furthermore, the work has become much more enjoyable for employees. “Previously, managing our Far East flows was not a popular job. It more or less resembled a forensic treasure hunt, with continuous digging in Excel sheets for the right information. As a result, the number of personnel changes in the department was high. Now, everyone wants to do this work. You have all the necessary data at your disposal at any time via your screen.”
Real supply chain management
With the implementation of Star Flow Supply Chain and Flexport, supply chain management has become truly tangible for Blokker in one fell swoop. Danhof: “In terms of supply chain, it is fantastic to see where we came from and where we are now. The implementation meant a couple of challenging months, but we are really leading the way in the market with this.”
The benefits of Star Flow Supply Chain for Blokker
- Full insight into the entire supply chain from manufacturer to warehouse
- Every relevant link and department is in control
- Substantial savings on working capital
- No unnecessary stock build-up
- Improved availability of products in stores
- Scalability for further growth
- Fewer people are able to do more at a higher quality level
- Tariff module provides insight into landed costs