Grocery Gateway: Customer Delivery Opeartions Case Study

Problem Statement

Dominique Van Voorhis, vice-president of industrial engineering and operations systems for Grocery Gateway has to prepare a plan consistent with the overall strategy for the company aimed at improving delivery operations and recommend how to increase the number of stops per hour for its drivers from 2.7 to targeted 4 stops per hour.

Objectives & Goals

The Grocery Gateway focus was on aggressive growth with target of 5000 orders per day within three years, and become cash flow positive on variable costs basis in one year. The company placed specific attention on low cost, high service logistics execution in one market.

Background

- Grocery Gateway, an online grocer, started its business in 1997 and provided services to residents of the GTA and serviced an area of 3,200 KM Sq with a population of seven million people.

- By May 2000 the company raised $70mil in private sector financing

- In May 2001 Grocery gateway relocated from 6225 square meter facility to new 26,000square meters facility in Downsview, north of Toronto. The new facility had been built with three temperature zones using the best designs and technology to make it more efficient to fill the orders.

-The company employed 275 people in customer fulfillment center and 100 drivers and had a fleet of 55 trucks

- the company has 5 main systems: RIMMS - dynamic road organizer provides route delivery schedules; OPS - order processing system; WMS - warehouse management system tied to OPS and to WCS - warehouse control system- customized software that controlled the movement of totes assisted with fixed-position scanners tat read the identity of the tote; Easy pick - for fast moving skus.

Market Situation

SWOT Analysis

Strengths

- largest direct online grocer with 125000 registered customers

- Wide selection of products with 6500 items

- competitive prices

- during the peak period 1500 orders a day with average value of $135

- the company optimized its...