Sharing of Experiences

1
Sharing of Experiences Benefits Enjoyed through
The ECR Standard Pallet Implementation Pilot
Project(Jan to Dec 2000)

• By Mr Alankovan
• Operations Manager
• Grocery Logistics of Singapore Pte Ltd

2
Introduction

• Davids Distribution was formed in March 1993 and
  it was a joint venture between NTUC Fairprice
  Co-operative Ltd and Davids Investment Asia.
• In 1998, NTUC Fairprice Co-operative Ltd took
  full ownership of Davids Distribution, its
  central warehouse and distribution company, and
  renamed it Grocery Logistics of Singapore (GLS)
  Pte Ltd.

3
Introduction

• GLS is a central distribution facility supplying
  to existing NTUC Fairprice supermarkets and
  franchise stores.
• GLSs priorities are to achieve better inventory
  control, streamline orders from operations,
  improve goods deployment procedures so as to
  achieve a higher level of staff efficiency.

4
Objectives for this Project

• To gauge the level of cost savings in using the
  ECR Standard Pallet.
• Using the resulting increased in productivity to
  convince its other suppliers to adopt the ECR
  Standard Pallet to deliver goods to GLS.
• To optimise the overall efficiency and
  productivity within GLS when most or all
  suppliers use the ECR Standard Pallet.

5
Process Map before and after adoption of the ECR
Standard Pallet
6
Manpower Savings

• Before the implementation of ECR Standard Pallet,
  goods arrive at GLS require the receiving staff
  to restack the goods onto ECR Standard Pallets
  used by GLS before storing it onto the storage
  bay.

7
Manpower Savings

• After the implementation of ECR Standard Pallet,
  goods arrive at GLS do not require the receiving
  staff to restack onto standard pallets.
• Therefore workload is reduced and time is saved.
• GLS enjoyed a 20 reduction in manpower costs
  during the project (absolute amount of savings is
  about 24,000 per annum).

8
Reduced Cost of Ownership through leasing pallets
20,800
16,240

The no. of standard pallets used to transfer
goods from other non-standard pallets will be
further reduced when most suppliers deliver goods
by standard pallets to GLS warehouse. There is
therefore a potential for greater savings by GLS.
9
Reduced Cost of Ownership through leasing pallets

• The diagram shows a comparison of the amount of
  pallets needed before and after implementation.
• Savings can be obtained from the reduction of
  leasing cost for the total number of pallets
  needed.
• Previously, GLS needed more standard pallets for
  the suppliers as each company have their own type
  of non-standard pallets.

10
Reduced Cost of Ownership through leasing pallets

• The standard pallets required by GLS was reduced
  from 20,800 to 16,240 pallets after the pilot
  implementation project.
• 67,540 of leasing cost was saved during pilot
  period from Jan to Dec 2000. This worked out to
  23 of cost reduction.

11
GLS has an IRR of 226 over 5 years on a
recurrent basis
12
GLS has an IRR of 226 over 5 years on a
recurrent basis

• IRR (internal rate of return) is computed based
  on the cost incurred for the implementation of
  this project and the benefits reaped after
  implementation.
• GLS achieved an IRR of 226 over 5 years on a
  recurrent basis. This translates to a return of
  2.26 times the investment in this project.
• The payback period for this investment is 5
  months.

13
Other Benefits

• Standardisation simplifies business processes,
  enhances business practices and creates greater
  efficiencies and effectiveness.
• Improve in productivity creates better service
  for consumers.
• Streamlining of warehouse and distribution
  systems.

14
Further Benefits when all suppliers used the ECR
Standard Pallet to deliver goods to GLS

• Single material handling systems using only ECR
  Standard Pallet
• Save more time and labour in transferring goods
  to ECR Standard Pallet from other non-standard
  pallets
• Improved turnaround time for suppliers, so better
  dock utilisation
• Better utilisation of working capital and human
  resources

15
Before Implementation
Goods arrived at GLSs warehouse were being
transferred onto ECR Standard Pallets before
storage
16
Before Implementation
Empty pallets sorted according to companies
outside GLSs warehouse, awaiting for deliveries
back to their respective companies
17
After Implementation
Palletised goods arrived at GLSs warehouse and
were being transferred to storage immediately
18
After Implementation
19
Key Learnings from this Project

• Top level managements approval and support for
  such project from the very beginning is most
  important.
• It is possible to streamline business practices
  through using ECR Standard Pallets to improve
  productivity.

20
Key Learnings from this Project

• Communication on the needs to change and the
  training of staff are important to ensure quick
  adoptions and smooth transitions to the ECR
  Standard Pallet.
• It is important to gather staff feedback and
  review the use of the ECR Standard Pallet.

21
Conclusion

• In order to enjoy more cost savings, GLS would
  convince more of its suppliers to use the ECR
  Standard Pallet when delivering goods to GLS as
  soon as possible.
• This would reduce manpower costs to switch goods
  from other non-standard pallet onto ECR Standard
  Pallet before storage in GLSs warehouse.

22
Conclusion

• GLS would also encourage leasing of ECR Standard
  Pallet so that efforts need not be made to sort
  out non-standard pallets from standard pallets.
• Space in GLSs warehouse will also not be taken
  up for the purpose of sorting non-standard
  pallets, awaiting to be delivered back to their
  respective companies.

23
Thank You