InsightsDoes diversity in store layouts lead to additional logistics costs in both the distribution centre and the store itself?

When was the last time you watched shelves being stacked at your local store? You would probably imagine that this is a streamlined operation, with staff poised for trucks to arrive so they can bring pallets of goods straight into the store. In addition, you may expect pallets to be loaded logically so that shelf stackers can avoid crisscrossing the entire store, getting in the way of customers.
That might be the ideal picture, but the reality is often quite different. Employees have to search and pull out the goods they need, and some products are occasionally left elsewhere, and cannot be found easily. The irony is that the store is left with empty shelves, even though the required goods are actually on site.

Value networks

These days, it appears that this ‘ideal’ system is becoming even harder to implement. This is a direct consequence of the shift from traditional, linear value chains to value networks, as described by the Consumer Goods Forum and Capgemini in their joint report from December 2015.

The value chain no longer represents a linear journey made by products, which arrive with the consumer following the chain of supplier, manufacturer and retailer. Instead, the trend is for value networks, offering consumers multiple channels and interfaces that transcend all the processes and business sectors.

These can be observed if we look at the logistics of food retailers. Their distribution centres supply not only supermarkets, but hypermarkets, train station shops, petrol station shops, drive-throughs, pickup points and consumers in their homes.

In addition, supermarkets no longer have identical layouts and product ranges. Food retailers increasingly have to adapt their stores to local consumer preferences, which is a considerable challenge given the growing number of product lines and the sometimes limited space in stores.

Watch this video of Marc, the DC manager:


The alternative is the automation of the distribution centre. This involves equipping each warehouse with an automated storage and order picking system, which can transport packages to packing stations without human intervention. They are subsequently stacked manually or automatically on trolleys.

In such a distribution centre, a trolley is not filled by one single order picker, but by a combination of cranes, shuttles and conveyors that work together to simultaneously collect the correct packages. By smart management of this equipment, these can be collected for each store in the ideal sequence, and stacked on pallets.

Automation of the order picking process obviously increases operational efficiencies, improves ergonomics and reduces picking errors. It also shortens lead times in distribution centres. Perhaps the single greatest benefit of an automated storage and order picking system is that it allows the optimisation of the logistics process in a specific retail area. That gives you the freedom to opt for diversity in your store strategy, safe in the knowledge that this will not necessarily increase the costs of your logistics.

Remko van Gils
Remko van Gils
Food Retail Market Director

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