Optimal slotting solution delivers big efficiency wins for Peapods online grocery delivery chain
Project facts
- ClientPeapod
- LocationUSA
- ChallengeOptimise product placement within the warehouse to increase efficiency and reduce the number of products which needed to be picked from the store.
- SolutionSlotting time for new warehouses from 500 hours to just four. For day-to-day order fulfilment, out-of-stock occurrences have dropped by 20% and picking speed has increased.
The challenge
Peapod is a grocery delivery service in the United States which has been expanding fast. It fulfils customer orders from warehouses attached to its stores. This means items can be picked from the warehouse or from the store itself. Picking from the warehouse is quicker and less disruptive for customers in store. They wanted to optimise product placement within the warehouse to increase efficiency and reduce the number of products which needed to be picked from the store. It contracted Royal HaskoningDHV’s Supply Chain and Logistics team to provide a solution.
The solution
Custom solution offers the best of both worlds
Grocery retailing is subject to many regulations - from food safety and quality assurance to occupational health and safety requirements. For example, heavy items have to be placed on lower shelves and, to avoid contamination, fresh meat cannot be placed above other items. These business rules, together with Peapod’s own specifications, needed to be incorporated into the model. In addition, Peapod wanted the model to present the ideal product placement as well as the best arrangement of slots, specifying the height and number of shelves in a bay.
None of the standard solutions dealt with having a warehouse that shares inventory with a store. What we wanted was the best of both worlds. Besides item placement, the custom solution really helps with ensuring that the various business rules are adhered to in a uniform way. Now over 40 different business rules are automatically factored into Podslotter, which saves us a lot of time and ensures much more consistent execution.
The result
Slotting plans for new warehouses take just four hours
The platform developed by Royal HaskoningDHV provides a dynamic solution enabling the client to produce an optimal slotting plan on a weekly basis, aligned with changes in products and demand. It also provides solutions during twice-yearly reviews of shelving arrangements and produces layouts for new warehouses. Customised to meet precise needs, it has a user-friendly interface enabling updates to products and business rules can all be made in house.
The system we developed has delivered tremendous value for the client, increasing the ease and efficiency of picking while boosting customer satisfaction. The speed of calibration of new warehouses is a huge benefit for the fast-growing organisation, generating the shelving layout, choice, number and location of products in a matter of hours.
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