The Challenge
Office Depot is the leading consumer and business-to-business retailer and distributor of office products serving small, medium and enterprise companies through more than 1,300 brick-and-mortar stores and a robust eCommerce site. Both store and online orders are fulfilled through a system of distribution centers that receive scheduled shipments. Navigating these shipments from port of entry to the end user is essential to the company’s success.
For years, Office Depot’s products arrived through a single port of entry in thousands of containers, which were then railed to 15 distribution centers. It was crucial that the containers move through the supply chain within 48 to 72 hours, or they would begin to incur demurrage (holding) fees. Unfortunately, workers had no way to determine the contents of each container, which consistently slowed down the process and which resulted in the accrual of millions of dollars in demurrage fees each year. To make matters worse, Office Depot shipped the same quantity of product to each distribution center, regardless of market needs. Some distribution centers were overstocked, while others faced out-of-stocks, contributing to unrealized sales.
Our Insights
The mission was clear. We needed to “restage” Office Depot’s container operation by finding a way to get Office Depot containers out of the main receiving port, break down each shipment, pallet the product, and return the containers ASAP.
Our Approach
The Harte Hanks Logistics team initiated a deep dive into the workings of Office Depot’s distribution system, examining supply chain management, logistics technology and retail-specific guidelines. We uncovered a multitude of inefficiencies and opportunities for cost savings. Most notably, we were able to construct a plan that would enable shipments to move from port to distribution centers in one day.
Together with Office Depot teams, we met with port management and recommended that Office Depot expand shipment deliveries from one to four ports across the country, providing a more versatile footprint. At each port we identified and negotiated with third-party warehouses to receive and pallet products and return containers to the port, eliminating costly demurrage fees.
We implemented our proprietary Allink360 Transportation Management System. This cutting-edge software platform provides a comprehensive solution which operates in tandem with third-party carriers. It provides shipment visibility and advanced notifications during transit so that distribution centers can prepare for product arrival.
Allink360 has the capabilities to receive and replenish products at the individual SKU level, and build trailer plans accordingly. It automatically sends daily accrual and other system reports enabling Office Depot to meticulously track costs and make immediate comparisons for better-informed decisions. It proactively flags anomalies such as order mismatches.
Harte Hanks Logistics transformed Office Depot’s replenishment files into a comprehensive “Smart Supply Chain” management system that provides total transparency from start to finish.
The Results
- Millions of dollars in cost savings from reduction in demurrage fees
- Ability to better predict costs with certainty for more reliable accounting
- A reduction and consolidation of distribution centers from 15 to 9 through greater efficiency
- Elimination of “cold” inventory (goods that are not selling) to liquidators, preventing merchandise from languishing in distribution centers
- Real-time shipment tracking and validation to provide improved data quality and payment accruals
- Implementation of flexible carrier network to guarantee deliveries regardless of unforeseen circumstances