U.S. Quick Serve Chain Partners With Open Sky Group to Take Distribution In-House

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transforming quick serve distribution center

The Challenge

A large, U.S.-based, quick-serve food chain elected to bring its distribution services in-house in 2018. The goal was to reduce reliance on 3PLs, lower cost and ensure the quality of their product through improved traceability across the supply chain. The initial plan was to internalize 51% of their distribution capacity, making their restaurants the sole focus of their transformed distribution centers (DCs).

The company interviewed several consultants, including Open Sky Group, to implement Blue Yonder warehouse management (WMS), labor management (LMS), and transportation management (TMS) as well as slotting software in a soon-to-be-constructed, company-owned DC.

An existing facility across the street from the proposed site was already testing the internal distribution concept with modest success. This DC was equipped with a homegrown, Oracle-based WMS, which would ultimately be replaced by the Blue Yonder suite when the new DC was completed. Open Sky Group won the bid based on our deep Blue Yonder experience, proven strategic and technical capabilities, successful product demonstration, and overall cultural fit with the client team.

In September 2019, work began. However, no sooner did the project launch than COVID hit, causing supply chain troubles across the company network, as 3PL after 3PL fell into a pandemic-induced pattern of delayed shipments and work shortages. The transformation project suddenly took on a sense of urgency.

The Solution

Open Sky Group recommended an implementation timeline around an agile methodology designed to complete the work in sprints as the new DC was being built. Following pandemic protocol, most meetings were conducted virtually. Business processes were mapped to functional teams and areas assigned to the new DC in conjunction with Blue Yonder solutions.

Open Sky Group consulted on best practices, leading the client through decisions on how and where to utilize automation and where economies could be realized using process changes vs. technology investments. Examples included capitalizing on cubic capacities of carts and trucks, inventory placement for efficient picking, and methodologies for onboarding new vendors and employees.

The cornerstone of the software would be Blue Yonder WMS, which was integrated to communicate with the client’s ERP, WLM, various middleware, TMS, and new hardware devices located throughout the new facility. By April 2020, the TMS was connected, representing the last piece of software to go in. These components were tested and refined in sprints, ensuring maximum operability as the project evolved.

Open Sky Group helped the client identify efficiencies along the way, such as mapping warehouse coordinates to engineered standards to improve labor management. Reports were set in the LMS to track case per hour metrics based on locations, such as freezer areas vs. ambient temperature zones, case weights, shift durations, rack details and other attributes for measuring speeds and volumes.

As most of the client’s stores were identical, Open Sky Group helped identify primary SKUs based on turn rate to satisfy point of sale demand. These were given strategic placement in the warehouse to relieve congestion producing an efficient turn of inventory while ensuring the freshest product to the end customer

The Results

The client’s new Georgia facility was completed in January 2021. The last packages shipped out of the temporary facility on a Saturday and by Monday, the new DC, governed by the Blue Yonder WMS, was in full swing.

To date, the client is directly servicing approximately 12.5% of its total U.S. restaurants, with plans to adopt the successful blueprint in other strategic locations nationwide. Constructed under the most trying of circumstances, the new facility has proven to deliver the enhanced quality and assurance the client desired for its stores.

Since then, Open Sky Group has remained engaged, helping the client uncover new processes to relieve the logistics burden and focus more on providing a superior, in-store, customer experience.

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