STORES Magazine - February 2009 - (Page 49)

NUTS AND BOLTS / SUPPLY CHAIN Better Data, Better Decisions Delivering greater supply chain visibility at Papa John’s BY KAREN M. KROLL n just over 20 years, Papa John’s International has grown from a one-man pizza delivery business operating out of the founder’s father’s restaurant and bar to more than 3,000 units in 28 countries. I The rapid pace of growth has been exciting, but also left the company’s infrastructure struggling to keep up. In this country, Papa John’s uses a network of 10 distribution centers to transfer products from vendors to its stores. Until recently, however, the managers at each DC would order the supplies they thought necessary for their own locations; they lacked the ability to see what was available or needed in nearby DCs, limiting their capacity to economize on transportation costs by combining routes. Moreover, to ensure that they didn’t run out, managers sometimes kept several months worth of ingredients on hand. That boosted carrying costs, and required some DCs to lease outside storage units. In addition, store managers often would call – rather than use the formal supply chain system – to place orders, and most vendors negotiated directly with the freight carriers, and then incorporated the costs into the amounts they charged Papa John’s. Further complicating the process is the fact that almost all the products moving from the DCs to the stores are perishable (in fact, to ensure freshness, each DC and store must get a delivery every four days). To overcome these challenges, the team at Papa John’s began implementWWW.STORES.ORG EXTRA ing the transportation apprior to invoice creation,” TOPPINGS plication and demand Hartman says. “They forecasting/inventory opmust have all costs aptimization modules from proved prior to submitCut $500,000 Atlanta-based Manhattan ting an invoice. That has from inventory Associates in early 2007. reduced auditing and costs in the Those systems went live error correction.” first year mid-year, and implemenReduced freight tation of the warehouse Slicing inventory management system costs spending by should be completed by Equally important, cen10-15% within the end of 2009. tralizing inventory records six months The cost of these systems gave Papa John’s “greater Eliminated 90% typically runs into six figvisibility to ensure that of its outside ures, but the benefits are products were used before compelling. With their their expiration date,” restorage units new demand planning and ducing waste and writeinventory applications, Papa John’s offs, Hartman says. And, in the event of warehouse managers have a better hana food recall, being able to quickly track dle on current inventory levels and upthe path a particular ingredient has coming needs, so they can more precisetaken becomes increasingly important. ly determine ordering levels, rather than Overall, Papa John’s was able to chop hold extra stock as a precaution. $500,000 from inventory costs in the That’s allowed Papa John’s to slash 90 first year the system was live, Hartman percent of its outside storage units, says says. Freight costs also have dropped, Eric Hartman, the pizza chain’s senior even though the centers are getting more director of logistics. And, because the frequent deliveries, because greater supsoftware allows visibility into the potenply chain visibility across the organizatial trade-offs between service levels and tion allows Papa John’s to develop more efficiency, Papa John’s has been able to efficient delivery schedules. reduce inventory levels without risking And when several vendors are located service failures. near each other, Papa John’s will direct Billing procedures and freight acthe carrier to combine pick-ups from counting also have been simplified. those vendors before heading to a DC. “Our carriers see all applicable costs Papa John’s also can track an order STORES / FEBRUARY 2009 49 http://WWW.STORES.ORG

Table of Contents Feed for the Digital Edition of STORES Magazine - February 2009

STORES Magazine - February 2009 Contents Executive Editor's Page President's Page Are You a Pusher or a Puller? What Shoppers Think Online Retail Satisfaction 10 Things You May Have Missed Numbers Worth Counting Full Price/Markdown Retail People Cover Story - Something’s Got to Give First Look Concept2Watch Online Partners Merchandising Sustainability Inventory Systems Drug Store Systems Business Intelligence Inventory Managment Online Marketing Supply Chain - Better Data, Better Decisions Returns Management - Identifying Fraud Data Security - Securing Intimate Data Anti-Shoplifting - Mall of Shame? Risk Management - Securing Consumer Confidence Loeb Retail letter ARTS Update Point of View NRF News Retail Crossword Retail Industry Calendar End Cap

STORES Magazine - February 2009

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