This case involves a casual theme chain operator with over 400 locations, ranking in the Technomic® Top 100 Restaurant Chains. The company is publicly-held and owns most of its locations. They also franchise in a few markets. They operate as a single concept with locations across most of the United States and Canada.
Supply Chain Situation
Faced with declining guest counts after the economic downturn on 2008, the supply chain management team was challenged with additional ways to reduce cost. While distribution fees from its national foodservice distributor were very competitive, the chain had high in-bound ("landed") costs due to the fact that over forty distribution centers were deployed by the distributor across the supply chain. With no real in-bound density to work with, each distribution center was buying in LTL (less than truck load) quantities. In addition, too many warehouses in the supply chain contributed to poor responsiveness to limited time offers (LTOs) and difficulty with overall compliance to the concept's product specifications. Contributing to the problem was poor supply chain visibility. The concept wanted to implement a back-office system but the number of warehouses and IT touch points made this a daunting task. The supply chain team lacked timely information with which to analyze product movement, verify pricing or measure distributor performance. To solve this problem, a contract to use a thirdparty technology was about to be signed... but with a six figure annual price tag.
The foundation of our solution was to reduce the number of warehouses in the system from over forty to about a dozen. To validate the in-bound cost savings from reducing the warehouse network, we conducted a study in collaboration with the supply chain team. We also put in place a distribution fee that was simple to understand, easy to administer and, of course, competitive. To solve the supply chain visibility problem, we implemented our e-Advantage® technology platform which provides near-real time access to the concept's transactional detail. This allows the supply chain team to run standard reports or easily build customized reports to suit their needs. The system is web-based, available 24/7, and contains a rolling 25 months of invoice history, order guides, and distributor warehouse stock status data. Our implementation of the concept's specified back office system was done centrally through our technology platform without any integration issues or "touches" at the warehouses. Finally, our solution provided a detailed transition plan for converting the previous national distributor to the DMA network and system in less than 90 days.
Implementation of the DMA solution saved this chain operator $3 million on an annual basis. In addition, the optimized warehouse structure has positioned the concept to leverage product contracting, product compliance and LTO management. The restaurants have a back office system that allows them to be more productive. The supply chain management team has visibility to their supply chain and a business and analytics tool, helping them to isolate and act upon supply chain opportunities. The transition occurred in seventy days without any disruption at the restaurants