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Implementation of a Central Distribution Center for Slow-Moving Items in a Grocery Retail Chain

Project Overview

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➤ Category

Operational Excellence & Customer Experience

➤ Location

Cajamar-SP

➤ KPIs (Acceptance Criteria)

[ • ] Centralized CDC fully operational within 3 months.
[ • ] Reduction in inventory days for slow-moving SKUs
[ • ] Improved OTIF due to single-point supplier delivery.
[ • ] Increased DC productivity, freeing capacity for high-rotation items.
[ • ] Support for store assortment expansion in premium clusters

• [SITUATION]:
A large grocery retail chain faced growing inefficiencies in inventory management caused by the decentralized storage of slow-moving SKUs. These products, often purchased in large quantities due to commercial negotiations, occupied valuable space in multiple regional DCs, driving up storage days, increasing obsolescence risk, and lowering operational productivity.

• [TASK]:
As the project lead, I was assigned to design and implement a centralized distribution center (CDC) dedicated to low-turnover dry goods, aiming to optimize working capital, reduce stock days, and increase productivity across the existing warehouse network.

• [ACTION]:
➢ I developed the business case and secured executive approval by demonstrating potential savings in inventory days and logistics costs.
➢ The project involved:
◦ Defining the location and contractual negotiation for the new site;
◦ Coordinating the setup, licensing, and operational readiness of the new CDC;
◦ Aligning with Procurement and Commercial teams to manage vendor logistics incentives;
◦ Establishing operational policies for 'breaking down bulk' boxes into smaller quantities and unit picking for store replenishment;
◦ Integrating the new CDC into the network’s logistics flow to serve all regional DCs as an upstream supplier.

➢ I led cross-functional weekly steering meetings with representatives from each area (Logistics, Supply Planning, IT, Procurement, and Operations), while maintaining executive updates through the leadership forums.

• [RESULT]:
➢ The new CDC was successfully implemented in Cajamar within 3 months, meeting all operational and timeline milestones.
➢ The centralized operation reduced the average inventory days, increased other DCs productivity, and improved supplier service level (OTIF) by consolidating deliveries into a single inbound point.
➢ Additionally, it supported the company’s store clustering strategy, enabling a broader assortment for premium-format stores.

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