The Retail Consolidation Concept and Application at London s Heathrow Airport. BESTUFS II Workshop. 13 th January 2005
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1 The Retail Consolidation Concept and Application at London s Heathrow Airport BESTUFS II Workshop 13 th January 2005
2 Contents Multi-Retailing: Challenges and Issues Consolidation: Concept & Applications BAA: Heathrow: Consolidation: Performance: Questions: The Challenges facing Heathrow The Solution Delivering the Benefits at Heathrow Sustainability Measures - Heathrow Questions from the Floor
3 Multi-Retailing: Challenges and Issues Consolidation: Concept & Applications BAA: Heathrow: Consolidation: Performance: Questions: The Challenges facing Heathrow The Solution Delivering the Benefits at Heathrow Sustainability Measures - Heathrow Questions from the Floor
4 Multi-Retailing: Challenges & Issues Airports, Shopping Centres and City Centres represent the main types of multi-retailing environments Airports Shopping centres City centres Sustained growth of retail activity within airports has provided Airport landlords and retailers with additional challenges. Supporting this growth presents new challenges for centre management and sustainability Out of Town shopping centres have developed in response to ever demanding customer requirements for the 'onestop-shop' experience. More retail selling space is required within restricted physical space City Centres need to find the right balance between end customer demand, environmental improvement initiatives, planning restrictions and retailer needs.
5 Multi-retailing: Challenges & Issues Multi-retailing at airports, shopping malls and city centres have created new supply chain challenges for Retail Centre operators and Retailers Airports Shopping Centres City Centres Supply chain challenges Maintaining availability in high footfall retailing environments Restricted access for deliveries Congested delivery areas Small stock rooms supporting large stores Often inadequate in-store stock management systems Waste disposal/management Collections and returns Security control Increasing supply-chain costs
6 Multi-Retailing: Challenges and Issues Consolidation: Concept & Applications BAA: Heathrow: Consolidation: Performance: Questions: The Challenges facing Heathrow The Solution Delivering the Benefits at Heathrow Sustainability Measures - Heathrow Questions from the Floor
7 A typical multi-retailer environment supplychain Key logistics processes are performed by retailers and landlords who are distracted from their core business activities Direct deliveries Challenges Supplier warehouses Landlords Service area congestion results in higher emissions and risk of accident Irregular and ad-hoc supplier management difficult to control Mismanagement of delivery media causing potential H&S and fire risks RDC Parcel Carriers Retailers Inefficient staff planning Severe restrictions on stockholding ability Lower productivity due to the performance of non core activities Suppliers Increased congestion around multi-retailer centres Worsened turnaround times leading to additional costs into the supply-chain Requirement to provide more reliable services to retailers Multi-retail environment
8 A typical multi-retailer consolidation solution Exel addresses these challenges with solutions that outsource key logistics processes enabling stakeholders to focus on core business activities Direct deliveries Supplier warehouses RDC Parcel Carriers Consolidation platform Multi-retail environment Supplier Management Approved suppliers Performance reporting Supplier collections Stock consolidation Checking of goods Offsite stockroom management/provision Caging of stock for delivery Delivery to store To door/stockroom service Agreed delivery windows End to end carton tracking Delivery of manageable quantities Returns Collection of interbranch transfers and supplier returns Disposal of cardboard Collection of delivery equipment (cages, tote boxes) Enabling Tools Consolidation centre media tracking system Stock visibility and replenishment solution
9 Multi-Retailing: Challenges and Issues Consolidation: Concept & Applications BAA: Heathrow: Consolidation: Performance: Questions: The Challenges facing Heathrow The Solution Delivering the Benefits at Heathrow Sustainability Measures - Heathrow Questions from the Floor
10 BAA plc Aberdeen Edinburgh Glasgow Pittsburgh (Retail) Indianapolis Boston (Retail) Naples Muscat Salalah Heathrow Southampton Stansted Gatwick NT Airports Mauritius Perth Melbourne Launceston The world s leading airport company
11 Heathrow Airport 4 Passenger Terminals Terminal 5 opening 2008 Currently 240 Retail and Catering Units 500,000 square feet of Retail Space 63 Million Travellers per year
12 BAA: The Challenges facing Heathrow Terminal 5 planning application required BAA to - reduce traffic congestion and environmental impact - reduce waste per passenger Terminals 1-4 not designed for retail logistics - access restricted and insufficient loading bays - landside access shared with passengers and staff - limited back room storage for retail outlets
13 Multi-Retailing: Challenges and Issues Consolidation: Concept & Applications BAA: Heathrow: Consolidation: Performance: Questions: The Challenges facing Heathrow The Solution Delivering the Benefits at Heathrow Sustainability Measures - Heathrow Questions from the Floor
14 Heathrow Airport: The Solution 1995 Consultancy work to identify solutions The preferred option was a Consolidation Centre - to streamline the supply of retail and catering outlets - to provide a central point of receipt for all suppliers - to provide timed delivery by outlet into the terminals - to provide door to door deliveries in secure roll cages To prove the business case BAA chose Exel to operate a trial during spring 2000 Exel was awarded a 5 year contract in March 2001 following a tender process
15 Heathrow Airport: The Solution Solution for Heathrow is based on off-site consolidation, which includes all processes from product receipt to despatch and returns Goods Receiving Supplier consolidation Security scanning Delivery shuttle In-terminal operations Collections & Waste management Central point of receipt for all supplier deliveries Order Assembly by terminal, by outlet To meet legislative requirements Continuous delivery operation Timed delivery to outlet Receive stock from stores Track and trace palm pilot based systems
16 Heathrow Airport: The Solution Opened April square feet warehouse on south east perimeter of airport Multi-temperature operation Operational 24 hours per day, 7 days per week, 365 days of the year 8 delivery areas (Landside and Airside in 4 terminals) Shuttle based delivery schedule with fixed timetable, visiting each delivery area 4 times per day Returns service offered as part of overall service Cardboard collection and recycling service Delivery is made direct to store and unloaded into stockroom
17 Heathrow Airport: The Solution Store liaison - Dedicated Delivery Service Manager - Agreement of delivery schedule - Monthly performance reviews Supplier management - Communicating goods-in delivery windows based on store requirements - Measuring on-time performance - Feedback to retailers / caterers
18 Heathrow Airport: The Solution Delivery management -Central delivery planning function at HCC - In-terminal team leaders co-ordinate the off-loading of the vehicles and the delivery to the outlets by the terminal operatives - All vehicles fitted with ISOTRAK tracking and driver communication system to ensure quick response and enhance security
19 Heathrow Airport: The Solution Warehouse Management & Tracking System - Handheld palm pilot system developed by Exel Retail Services - Tracks at carton level all movements of goods within the warehouse - Tracks cage movements from warehouse to point of delivery in store
20 Heathrow Airport: The Solution Current annualised volumes: - 100,000 roll cages - 5,000 trips to airport - 45,000 store deliveries Retailers Served - 83 brands serviced, representing 81% of total stores serviced
21 Multi-retailing: Challenges and issues Consolidation: Concept & Applications BAA: Heathrow: Consolidation: Performance: Questions: The Challenges facing Heathrow The Solution Delivering the Benefits at Heathrow Sustainability Measures - Heathrow Questions from the Floor
22 Consolidation: Delivering the Benefits at Heathrow FOR BAA Enables BAA to meet its commitments regarding T5 - Expected reduction in delivery vehicles of 70% - Suppliers will be encouraged to introduce re-usable packaging which will be controlled by Exel It will provide improved security in the supply chain - Pre-booked receipt from known suppliers - X-Ray Scanned deliveries to controlled areas In-terminal operations will also benefit - Greater control of airside vehicle movements - Minimal delivery equipment left at stores or bays - Reduction in airside/landside security screening for deliveries
23 Consolidation: Delivering the Benefits at Heathrow FOR RETAILERS Reliable supply chain - improved sales - Improved staff planning and productivity - Improved product availability - Increased delivery frequency - Drip feed manageable amounts rather than single bulk delivery Added Value Services - Remote Stock Rooms (either self managed or Exel managed) - Pre-retailing of goods before delivery - Collection of waste cardboard and plastic (processed for recycling by Exel at the HCC)
24 Consolidation: Delivering the Benefits at Heathrow FOR SUPPLIERS Enables a new approach to serving Heathrow... Moving from: -multi drop - manual handling - vehicle size restrictions - airside security - delays at loading bays - delays waiting for store staff To: - single point of delivery - mechanised receipt - no vehicle restrictions - off airport delivery -delivery window at HCC - immediate off loading and checking
25 Consolidation: Delivering the Benefits at Heathrow FOR THE ENVIRONMENT Reduction of Vehicle Movements in and around the airport Improved Air Quality - Reduction of CO2 and effects on wider environment - Reduction in NOX and PM10s affecting local environment Reduction in Noise Pollution Use of Alternatively fuelled vehicles (LPG, CNG or Electric) - Allows further reduction in emissions - Further reduction in noise pollution
26 Consolidation: Delivering the Benefits at Heathrow FOR THE ENVIRONMENT Congestion levels reduced - Easier access and manoeuvrability around airport for other users Safer environment for other airport users
27 Multi-retailing: Challenges and issues Consolidation: Concept & Applications BAA: Heathrow: Consolidation: Performance: Questions: The Challenges facing Heathrow The Solution Delivering the Benefits at Heathrow Sustainability Measures - Heathrow Questions from the Floor
28 Sustainability Measures Heathrow Airport Period: January December 2004 Collections and Receipts Exel Consolidated Loads to Airport 4298 Vehicle Movement Reduction 78% Vehicle Movement Reduction (Adjusted) * 70% * Adjustment made to allow for some couriers that continue to the airport to make other retail/non retail deliveries
29 Sustainability Measures Heathrow Airport Key Sustainability Figures TOTAL KM SAVED EMISSIONS SAVED CO2 (tonnes) NOX (tonnes) 1 1 PM10s (kg) TOTAL CARDBOARD RECYCLED (tonnes) EQUIVALENT TO 3.5 x the circumference of the earth 1,976 trees 5 18 hot air balloons
30 Sustainability Awards London Transport Award Business Contribution to Sustainable Distribution 2004 Nominated for the National Transport Awards Institute of Logistics and Transport Environmental Award 2001 Diamond Award BAA Clean Vehicle Programme Additional Key Achievements One of the companies with the highest level of participation in BAA Car Share Scheme Introduced a cycle to work scheme Participation in local community schemes: TACS, local school support 5
31 Multi-retailing: Challenges and issues Consolidation: Concept & Applications BAA: Heathrow: Consolidation: Performance: Questions: The Challenges facing Heathrow The Solution Delivering the Benefits at Heathrow Sustainability Measures - Heathrow Questions from the Floor
32 Questions and Answers For more information, please contact: Ian Foster Commercial Manager Tel. +44 (0) Mobile. +44 (0)
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