The Retail Consolidation Concept and Application at London’s Heathrow Airport
BESTUFS II Workshop
13th January 2005
Contents
Consolidation: Concept & Applications
Heathrow: The Solution
BAA: The Challenges facing Heathrow
Consolidation: Delivering the Benefits at Heathrow
Performance: Sustainability Measures - Heathrow
Multi-Retailing: Challenges and Issues
Questions: Questions from the Floor
Multi-Retailing: Challenges and Issues
Consolidation: Concept & Applications
BAA: The Challenges facing Heathrow
Heathrow: The Solution
Consolidation: Delivering the Benefits at Heathrow
Performance: Sustainability Measures - Heathrow
Questions: Questions from the Floor
Multi-Retailing: Challenges & Issues
Airports, Shopping Centres and City Centres represent the main types of multi-retailing environments
Shopping centresAirports
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 'one-stop-shop' experience.
More retail selling space is required within restricted
physical space
City centres
City Centres need to find the right balance
between end customer demand, environmental improvement initiatives,
planning restrictions and retailer needs.
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
Shopping Centres City CentresAirports
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
Multi-Retailing: Challenges and Issues
Consolidation: Concept & Applications
BAA: The Challenges facing Heathrow
Heathrow: The Solution
Consolidation: Delivering the Benefits at Heathrow
Performance: Sustainability Measures - Heathrow
Questions: Questions from the Floor
A typical multi-retailer environment supply-chainKey logistics processes are performed by retailers and landlords who are distracted from their core business activities
Direct deliveries
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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
Retailers•Inefficient staff planning•Severe restrictions on stockholding ability•Lower productivity due to the performance of non core activities
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
Chal
lenges
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RDC
Parcel Carriers
A typical multi-retailer consolidation solutionExel addresses these challenges with solutions that outsource key logistics processes enabling stakeholders to focus on core business activities
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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 inter-branch transfers and supplier returns •Disposal of cardboard•Collection of delivery equipment (cages, tote boxes)
Stock visibility and replenishment solution
Consolidation centre media tracking system
Enab
ling T
ools
Consolidation platform
Direct deliveries
RDC
Parcel Carriers
Multi-Retailing: Challenges and Issues
Consolidation: Concept & Applications
BAA: The Challenges facing Heathrow
Heathrow: The Solution
Consolidation: Delivering the Benefits at Heathrow
Performance: Sustainability Measures - Heathrow
Questions: Questions from the Floor
BAA plc
Naples
Melbourne
Pittsburgh (Retail)
Muscat
Launceston
IndianapolisBoston (Retail)
MauritiusPerth
NT Airports
Aberdeen
Glasgow Edinburgh
Stansted Heathrow
Southampton Gatwick
Salalah
The world’s leading airport company
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
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
Multi-Retailing: Challenges and Issues
Consolidation: Concept & Applications
BAA: The Challenges facing Heathrow
Heathrow: The Solution
Consolidation: Delivering the Benefits at Heathrow
Performance: Sustainability Measures - Heathrow
Questions: Questions from the Floor
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
Heathrow Airport: The SolutionSolution for Heathrow is based on off-site consolidation, which includes all processes from product receipt to despatch and returns
Central point of receipt for all supplierdeliveries
Continuousdelivery
operation
Timed delivery to
outlet
Receive stock from
stores
GoodsReceiving
Supplier consolidation
Securityscanning
Delivery shuttle
In-terminal operations
Collections&
Waste management
Order Assembly
by terminal, by outlet
To meet legislative
requirements
‘Track and trace’ palm pilot based systems
Heathrow Airport: The Solution
Opened April 2001
25000 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
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
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
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
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- 190 stores serviced
Multi-retailing: Challenges and issues
Consolidation: Concept & Applications
BAA: The Challenges facing Heathrow
Heathrow: The Solution
Consolidation: Delivering the Benefits at Heathrow
Performance: Sustainability Measures - Heathrow
Questions: Questions from the Floor
Consolidation: Delivering the Benefits at Heathrow
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
FOR BAA
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)
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
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
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
Multi-retailing: Challenges and issues
Consolidation: Concept & Applications
BAA: The Challenges facing Heathrow
Heathrow: The Solution
Consolidation: Delivering the Benefits at Heathrow
Performance: Sustainability Measures - Heathrow
Questions: Questions from the Floor
Sustainability Measures – Heathrow Airport
Collections and Receipts 19380
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
Period: January 2004 - December 2004
Sustainability Measures – Heathrow Airport
Key Sustainability Figures
5
2003 2004
TOTAL KM SAVED 86709 144017
EMISSIONS SAVED
CO2 (tonnes) 63 106
NOX (tonnes) 1 1
PM10s (kg) 17 29
TOTAL CARDBOARD RECYCLED (tonnes) 106 152
2004 EQUIVALENT TO
3.5 x the circumference of the earth
1,976 trees
18 hot air
balloons
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
Multi-retailing: Challenges and issues
Consolidation: Concept & Applications
BAA: The Challenges facing Heathrow
Heathrow: The Solution
Consolidation: Delivering the Benefits at Heathrow
Performance: Sustainability Measures - Heathrow
Questions: Questions from the Floor
Questions and Answers
For more information, please contact:
Ian Foster
Commercial Manager
Tel. +44 (0)208 990 6770
Mobile. +44 (0)7831 540867
supply chain solutionsfor a changing world
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