Topic: Supply Networking CASE 1: A new distribution centre site for Pick n Pay in Johannesburg In 2010, Pick n Pay launched its major R628 million distribution centre in Longmeadow, Gauteng, and planned for another four around the country within the next three years. Longmeadow, the company's blueprint centralised distribution centre (CDC), currently services 284 stores. Building on this success, a second inland grocery distribution centre was planned, as well as facilities in the Western Cape, KZN and Eastern Cape regions. In addition, a perishables inland distribution centre was scheduled. This total investment comes at a cost of over R2 billion. According to CEO Nick Badminton: 'Pick n Pay's move to centralised distribution pivotal to the group-wide transformation programme, which was launched three years ago as part of a fundamental review of the way we do business. The purpose of this project was to improve the efficiency of our core retail business, reduce the cost of doing business, simplify our organisational structures and enhance the way we use information technology. Our decision to move to centralised distribution was motivated by changes in South Africa's retail landscape, which had seen us fall behind our competitors who were investing significantly in their supply chains and in improved service to their stores through centralised distribution systems. Throughout the world, the most successful retail groups have unlocked massive value from their supply chains and most of them have moved away from direct-to-store delivery distribution We were also driven by the realisation that our current distribution operations are running over capacity and have become inefficient, resulting in stores being overstocked with a deterioration in customer service levels as a result. Badminton said that Pick n Pay was the last of the major supermarket groups to commit to a streamlined supply chain. While this inevitably compromised our efficiency in the short term, it has enabled us to leam from the experience of others and to build a world class distribution centre, deploying the most up-to-date and state- of-the-art warehouse management software solutions. It was no light decision, as required considerable capital investment and represents a significant change in the way we've done business for more than four decades, with the investment in Longmeadow to date totalling R628 million Badminton said that beyond technological advances and logistical achievements, it is the benefit to its customers that remains top of our minds. 'For the hundreds of thousands of shoppers who pass through our doors every day, the most significant benefits of centralised distribution have included the improved availability of stock, lower prices and a streamlined ordering process. This has freed up our store staff to spend more of their time concentrating on shopper engagement. All the latest independent surveys confirm that over a basket of goods, Pick n Pay is quite clearly cheapest of all the major retail chains. The above was eight years ago. Today, Pick n Pay in Gauteng alone has seen the number of stores serviced by the Longmeadow CDC increase from 284 to 540. This has created serious stress to the distribution centre. As a result, Pick n Pay decided to open a new CDC to service the 262 stores found in Johannesburg only. Page 5 of 11 The company's chief operations officer, Miss Naomi Morero has identified a couple of potential areas in Johannesburg that she believes to be suitable for the new CDC, however, she would like a more accurate site selection based on scientific data. She has contracted your services and has requested you to assist her in determining the location of the CDC. The CDC will service the following stores: Pick n Pay Bryanston, Pick n Pay Rivonia Square, Pick n Pay Benmore, Pick n Pay Bright Water Commons, Pick n Pay Ferndale, Pick n Pay Cresta, Pick n Pay Northcliff, Pick n Pay Campus Square, Pick n Pay Braamfontein, Pick n Pay Darras, Pick n Pay Louis Botha, Pick n Pay Bramley, Pick n Pay Greenstone, Pick n Pay Meadowdale, and Pick n Pay Primrose. The current CDC will service the remaining stores. The following map shows the stores to be serviced by the new CDC. y COM 20 Pek n Pay Lonehil Pick n Pay , . Clothing Store w 19 O Pick 'N MAY Pick n Pay 18 17 Od 16 15 14 13 12 w 11 Pick n Pay Bryanston WO Pick n Pay Sandi Ovo Bryanston Pickuper Prvunia Square (6.1, 15.6) (10.4. 15:3) Pick n Pay find OL SI Studio Fick n Pay Benmore Lettahara | diel (10.1, 12.6) Randburg > will Pek n Pay Bright Water Carnions CH Tal Aw (3.5, 10.5) Pick n Pay Sandton Pick iPay Pharmacy Greenstone Salowe CH Pick n Pay (17.9, 8.4) , . Pick a Payltyd Pick n Pay Greension Pick n Pay Cratita Canti Bramley 12.7.3). Thu (13.5, 7.91 ka Pick n Pay Kleadowdalo Notic Pick n Pay Pick n Pay. Northclif Vouga 10 9 (4.5, 9.9) Ferndale Wies He 8 7 VM 6