Sustainable Transport & Distribution Pavel Isaev Supply Chain Director Danone Russia Moscow – 03/06/2010
Sustainable Transport & DistributionPavel Isaev
Supply Chain Director Danone RussiaMoscow – 03/06/2010
Era of Retail Expansion
High costs due to parallel operated line hauls Less flexibility in departure schedules Complex supply chain processes occupy management capacity on both sides (Manufacturer and Retailer)
ChallengesRetailer DC
Warehouse of Supplier
Production PlantManufacturer
Production PlantManufacturer
Retail Outlet
Retail Outlet
Retail Outlet
Retail Outlet
Inefficient Supply Chain
Existing Network CoverageExisting Network Coverage20 DCs and 8 cross docks in 26 cities
500 Trucks delivering over 30,000 destinations (1,5 times a week on average)
Current annual volumes handled : more than 350,000 tons
80% of the Russian population and 85% of the buying power is delivered within 24 / 48 hours
Network coverage reflects the population spread in Russia
Service frequency ranges from daily in major cities to once a week in furthest locations
Designed to meet manufacturers and retailers’ needs
Danone Pan-Russia Chilled Network
TOTAL COST TO SERVE MODEL TOTAL COST TO SERVE MODEL
INBOUND
PRIMARYDISTRIBUTION
SECONDARYDISTRIBUTION
POS
Factory expedition
Primary warehousing
Freight to secondary & Cross-dock
Freight to distributors
Freight to platforms
Distributors
POS
Customer platforms
POS
Vanselling
Preselling)
Internal freight outInternal freight out import
Factory export Factory 1 Factory 2
DnK
A solution for the food and beverage chilled sector with multiple delivery points in Russia
Project Idea
Network
Volumes
Temperature range : 2oC to 6oC
Pan-Russia Chilled Network
Goods delivered through the network includeGoods delivered through the network includeDairy products
Milk, traditional and modern dairy, butter, cheese, etc..
Semi-cooked or ready meals and saucesPacked processed meatChilled and temperature sensitive beverages
Combined delivery with goods are accepted forCombined delivery with goods are accepted for POS materials to the same delivery point (marketing leaflets and
publicity)Non-contaminating dry foodstuff tolerating the temperature range
Specialized in temperature controlled goods delivery
Advantages at a glance
The DnK optimized network
Main DnK warehouse
Production PlantManufacturer
Production PlantManufacturer
Retail Outlet
Retail Outlet
Retail Outlet
Retail Outlet
DnK Regional warehouse
Warehouse of Supplier
– On time delivery via optimized DC locations– Cost reduction through shared facilities and trucks– Improved delivery time reliability and flexibility in departure schedule (no minimum
quantity)
Around 5,000 delivery points in Moscow
3,500 delivery points in St Petersburg
600 points of delivery in Yaroslav (500 000 people)
From Retail Chains and Hypermarkets
To traditional stores
DnK currently visits over than 30,000 delivery points
Network Coverage
Dnk solutionOperational perspective
After salesAfter salesDocuments returned after delivery in
1 week time for 80% of destinations
2 weeks for far destinations (20%)
Delivery notes scanned within 24 hours after deliveryOrders tracing and visibility on web portal with delivery status
Returns managementReturns managementProposed solutions
Delivery to the same or to another delivery pointDestructionReturn to customer’s DC
WarehousingWarehousingStorage and picking solution close to the consolidation centers
Dnk solutionTariffs
Tariffs can be based on weight or on number Tariffs can be based on weight or on number of palletsof palletsSmallest quantity invoiced : 10 kg1 pallet is considered from 200 kg, but the invoice can
be based upon weight only, if requested
Weekly invoice
One single contract for all RussiaOne single contract for all RussiaCentral invoicing
Central claims management
Central customer service
DnK tariffs
Large potential of products to achieve critical mass Large potential of products to achieve critical mass
Broad geographical coverageBroad geographical coverage
High frequency of shipmentsHigh frequency of shipments
Variety of destinations – from Hypermarkets to small storesVariety of destinations – from Hypermarkets to small stores
Flexible distributionFlexible distribution
Cost efficient solutionCost efficient solution
Quality, efficiency & reliability as major network characteristicsQuality, efficiency & reliability as major network characteristics
Safety and security Safety and security
Full traceability and visibility of the flows through IT systemFull traceability and visibility of the flows through IT system
DnK - Unique distribution offer on the market
Thank you!Thank you!
Any Questions?Any Questions?
BACK UPBACK UP
Main warehouse
St-PetersburgSt-Petersburg
Moscow NorthMoscow North
Moscow Moscow SouthSouth
TchekhovTchekhov
Rybinsk (XD)Rybinsk (XD)
KostromaKostroma (XD)(XD)
YaroslavlYaroslavl
Nijni-Nijni-NovgorodNovgorod
VoronezhVoronezh
KalugaKaluga
RostovRostov
KrasnodarKrasnodar
Novorossiysk Novorossiysk (XD)(XD)
VolgogradVolgograd
Saratov (XD)Saratov (XD)
Samara (XD)Samara (XD)
TogliattiTogliatti
KazanKazan
UfaUfa
MagnitogorskMagnitogorsk ((XDXD))
Orenburg Orenburg ((XDXD))
EkaterinburgEkaterinburg
Chelyabinsk Chelyabinsk (XD)(XD)
PermPerm
TyumenTyumen
OmskOmsk
NovosibirskNovosibirsk
KrasnoyarskKrasnoyarsk
7
5 6
3
2.5
2
1.5
1.5
1.3
1
1
1
1
1.2
2.3
2
4
Regional warehouses Cross docking
DnK Chilled Network: lead times of delivery (days)
2.3
3
4
41.4
1.4
2.7
Other towns covered
1.6
LT details
p. 16
Main warehouse
St-PetersburgSt-Petersburg
Moscow NorthMoscow North
Moscow Moscow SouthSouth
TchekhovTchekhov
Rybinsk (XD)Rybinsk (XD)
KostromaKostroma (XD)(XD)
YaroslavlYaroslavl
Nijni-Nijni-NovgorodNovgorod
VoronezhVoronezh
KalugaKaluga
RostovRostov
KrasnodarKrasnodar
Novorossiysk Novorossiysk (XD)(XD)
VolgogradVolgograd
Saratov (XD)Saratov (XD)
Samara (XD)Samara (XD)
TogliattiTogliatti
KazanKazan
UfaUfa
MagnitogorskMagnitogorsk ((XDXD))
Orenburg Orenburg ((XDXD))
EkaterinburgEkaterinburg
Chelyabinsk Chelyabinsk (XD)(XD)
PermPerm
TyumenTyumen
OmskOmsk
NovosibirskNovosibirsk
KrasnoyarskKrasnoyarsk
5
5 8
27
6
16
20
11
9
1
11
13
8
54
13
6
7
Regional warehouses Cross docking
DnK Chilled Network: nb of connections per week
3
3
6
61
1
1
20