Coop has been operating in the Dutch food and beverage market since 1891. In areas where local tradesmen opened up small retail businesses, various regional cooperatives were created throughout the twentieth century. In 2001, following its merger with business cooperative Codis, Coop increased its share in the Dutch market, and it currently operates more than 300 stores across the Netherlands. Around half of these stores are managed by independent business owners, ensuring that the local connection is maintained.
In 2020, both group revenue and revenue from consumer sales increased by 12% and 16%, respectively. This exponential growth has had an impact on Coop’s stores, distribution channels, and operating processes, and keeping everything running smoothly requires acuity and creativity. How can Coop ensure reliable and efficient distribution to and from its stores, and with what kind of solution does the company intend to compete with other major retailers? We asked Coop’s Transport Manager, Daniël Krant, and Tactical Transport Planner Jacob Kleiker.
Two-Fold Challenge: Curbing Costs and Meeting a Growing Demand for Service
Coop has experienced massive growth in recent years, which inevitably has an impact on its employees, stores, and internal processes. Jacob: “In order to efficiently coordinate our transportation management, we started out with one tactical planner, and we currently employ six people in that department (Tactical and Operational). We had also outsourced our transportation management to our only logistics services provider, but we wanted to keep our transportation costs in check while at the same time meeting the growing demand for service from our stores. These were the two main reasons for us to insource this part of our business. When we started out it was only a tactical plan, where our logistics services provider was still responsible for operational planning and implementation.
“While looking for a suitable partner, we met representatives from ORTEC at the ICT & Logistiek (IT & Logistics) fair. ORTEC is well established in the retail industry, and they provide support to several major retail chains. Since they offered a smart solution, and we also connected with them on a personal level, we decided to take on this project together with ORTEC, and we’re still very happy with our partnership.”
How Coop Ensures a Predictable and Efficient Distribution Channel
Coop, of course, couldn’t be happier with its spectacular growth – which is only set to continue. But there’s also a downside to all this success: as the amount of work increases, so does the complexity of the company’s operations. Daniël: “The program we were using at the time was seriously obsolete, and it cost us a lot of time to create a schedule. That’s when we knew we needed to take the next step, and ORTEC Tactical Routing has allowed us to do just that. The solution seamlessly meets the needs and requirements of our transportation planners. For one, it has enabled us to save significant costs because our planning operations have become more realistic, and we can respond with greater accuracy to peak and off-peak times. There’s also the fact that Coop is known as a grocery store with strong ties to the local community, so we see it as our responsibility to actively help create a more sustainable society. One of the key elements of that is reducing both mileage and carbon emissions. By using historical data, we can optimize current routes while at the same time helping to save the environment. A third advantage is that we need less time to create a schedule. Through automation and the use of algorithms, our planners can focus on strategic issues and avoid human errors. Finally, all this helps us to calculate scenarios easier and more efficiently. We’re better able to substantiate and verify the decisions we make, which both increases support for these decisions and leads to new insights.”
Next Step in the Optimization Process
Coop has made great progress in tactical terms, which is crucial to ensuring an efficient distribution process. We’ve been able to optimize this process thanks to our many years of experience with ORTEC Tactical Routing. However, this is where Coop lacks a connection with its operations. Daniël: “Until recently, we were literally using pen and paper for our operational planning. The transportation industry is changing rapidly, and the demand for service from the organization continues to grow. Our old systems no longer allow us to meet this growing demand, so we decided on ORTEC’s solution for routing optimization, ORTEC Routing and Dispatch (ORD). In using ORTEC Routing and Dispatch, we intend to achieve short-term cost savings by reducing movements at the front and optimizing routing for our trucks.” A total of 125 trucks are currently driving across the Netherlands every day, which amounts to more than 1,000 operational routes a week.
Flexibility and Knowledge Are Ingredients for Partnership
Coop Benefits from ORTEC’s Flexibility. Daniël: “ORTEC has always been very pleasant and flexible throughout our partnership, which means communication between us has always been very open and direct. We also work with a dedicated team, which means ORTEC employees can monitor our people and intervene where necessary. This ensures operational support, time savings, and a strong relationship. This flexibility is also reflected in ORTEC’s solution, which ensures that internal processes are optimized, and we can make changes as and when needed.
Coop is impressed with ORTEC’s level of expertise. Jacob: “We often have questions about changing specific features, and that’s when we can tell that ORTEC has excellent knowledge of the market, processes, and products. They are a well-established company in the retail industry and understand the intricacies of our processes. They also have specialist knowledge of algorithms and mathematical models, which often leads to new insights and solutions.”
Tactical Planning in Retail: Efficient Routes and Optimal Utilization
On a daily basis, Coop analyzes all tactical and operational plans for the immediate future. So, what have been the tangible outcomes to date? While exact numbers and contributions are hard to estimate, the company’s planners/schedulers and other employees have been able to make clear progress. For example, ORTEC Tactical Routing has ensured, for starters, that truck loading capacity has increased significantly. This allows the company’s trucks to transport more goods, deliver to more stores, and they have been able to reduce “empty” miles. Its planning and scheduling operations have become more reliable from both a tactical and an operational perspective, which they achieved through reliable prediction based on historical data. The scheduled service more closely matches reality, whereas before it depended on human intervention and experiences. This has had an impact on drivers, retail staff, and employees at the company’s distribution center.
Coop has used ORTEC Consultancy to conduct in-depth analyses, which has led to a number of quick wins. For example, they reassessed and optimized their timetable, which shows all routes and deliveries. Stores now know that they will receive regular deliveries, which results in a more efficient transportation process. Another analysis dates back to 2019: at the time of the acquisition process, Coop had to decide what type of trailers were suited to the new setup. They conducted a data analysis, which ensured that they acquired the right type of trailer. This allowed them to take on a number of logistics challenges at the same time.
Standardization is a crucial parameter for Coop. In recent years, ORTEC and Coop have worked hard on developing a standardized approach in using the solution. Although there’s still some progress to be made, the current situation has made things clearer and more manageable.
Today’s Challenges Are Tomorrow’s Opportunities
The COVID-19 pandemic has boosted the online and offline retail market, with both store revenues and online sales having risen sharply. Coop is currently optimizing its organization from within; in the new setup, departments need to use standardized methods and deal flexibly with changes. This has also increased ORTEC’s added value.
Coop currently aims to use ORTEC’s existing solutions as effectively as possible and to meet all internal needs. Through an increase in the amount of relevant data and the growth of Coop, these challenges provide enough opportunities to strengthen the partnership over the next several years. ORTEC is proud of its partnership with Coop and is looking forward to continuing to work successfully with them in the future.
