WHAT CAN WE DO AT THE DC TO
improve delivery at the store? By asking that
question, Tim Thornton and his team at
Pepsi Beverages Co. (PBC) turned what
started out as a DC automation project into
something much more valuable.
At the time, the company was embarking
on an ambitious distribution network overhaul that would include the construction of
several highly automated DCs. When they
went to design the automated system,
Thornton and his team chose equipment that would not
only boost warehouse throughput but also allow them to
build loads for efficient loading and delivery. As a result,
trailer loading productivity is up 58 percent and delivery
productivity has increased by 15 percent.
Thornton recently left PBC after 10 years at the company.
During that time, he held a variety of logistics and supply
chain positions, most recently serving as vice president of
supply chain–warehouse and logistics.
QWhy should DC operations be concerned about the fficiency of store deliveries?
AFor Pepsi, as a direct store delivery company, service in the store is everything, and it is the role of the distribu-tion/fulfillment centers to deliver on the promises made by
the sales organization to have the right product at the right
place at the right time for the right price. It cannot be service
at any price; it has to be a balance of cost and performance
across the supply chain, including the distribution centers.
The DCs have to focus on improving efficiency and effectiveness within their four walls because it has a direct bearing on
the effectiveness and efficiency of the store delivery, check-in,
and merchandising operations for Pepsi and its customers.
QWhat was the most challenging part of Pepsi’s trans- formation effort for you? How did you overcome that
challenge?
AAs with any change—but particularly with process changes to age-old business practices—addressing organizational
resistance was the biggest challenge.
Surprisingly, most of the resistance came
from the supervisors and managers, not the
hourly and salaried employees. The selling,
delivery, and distribution center employees
very quickly saw the benefits of our many
transformation initiatives since most focused
on removing non-value–added processes
and wasted time from their daily activities. The challenge
we faced most often was related to management capability
and commitment to lead the transformation.
We found that we were best able to overcome this challenge by focusing our efforts on communication and training. To mobilize the organization, you first have to transform the thinking of the leadership team. We found that we
needed to speak the language of the organization, to tailor
our training and communication message to each unique
audience, and to paint the vision they personally needed to
see to better understand the initiative.
QWhat recommendations would you make to compa- nies embarking on a similar effort to revamp their
distribution operations?
ALook beyond the traditional challenges impacting your distribution operations, move past the visible symptoms inside your operations, and look across the entire supply chain to uncover the true problems and bottlenecks that
are preventing you from becoming great. Challenge all existing people, processes, and technology solutions. Look
upstream in your supply chain for ways to challenge the
existing inputs into your distribution system; likewise, look
downstream to challenge the outputs required by your delivery network. By doing so, you will be able to develop initiatives that transcend warehouse-centric solutions and provide
truly transformational wins across the entire supply chain.
Benoit Montreuil
FOR ALL THE RECENT ADVANCES IN
supply chain management, our system of
moving goods remains a paradigm of inefficiency, says Benoit Montreuil. For evidence
you need look no further than the empty
miles traveled by vehicles and containers,
DCs that are underused much of the year, or
the redundancies created by direct point-to-point transport. Montreuil thinks there’s a
better, more sustainable way to conduct
global logistics operations—a model he calls
the “physical Internet.”
A professor and Canada Research Chair in
enterprise engineering in the department of
operations systems at the Université Laval in
Québec, Montreuil is a highly regarded
researcher and thinker. He graduated from
the Université du Québec à Trois-Rivières
and earned his master’s and doctoral degrees
from the Georgia Institute of Technology.
He is a founding member of the CIRRELT
Interuniversity Research Centre on Enterprise
