Case Study:
External Benchmarking and Gap Analysis

Client Overview

This grocery retail client operates over 400 stores in the U.S. under six banners, including conventional supermarkets, food and drug stores, and discount food stores.

The Challenge

• Client was in the process of acquiring a store chain, and both organizations were already operating 14 DCs that handled dry, fresh and frozen foods, as well as health and beauty/general merchandise.
• Primary sourcing for both was a single wholesaler, and DCs were a mix of company-owned and outsourced operations (in most cases with the wholesaler). Client needed to identify the competitiveness of the outsourced operations.

Tompkins' Role

• Performed external benchmarking with six competitors in the areas of corporate administration, warehousing, transportation, cross-docking, backhauling, slotting and administration for warehouse and transportation.
• Developed key industry standard metrics to compare client to competitors in:
  • Cost per case for warehousing and transportation.
  • Corporate, warehouse and transportation administration costs as a percentage of sales.
  • Percentage loads backhauled; backhaul budget; backhaul, slotting and cross-docking as a percentage of sales.
• Conducted gap analysis, identifying causes for gaps and ranking opportunities for implementing operational improvements based on client’s current structure.

The Results

• Competitors had up to 80% of incoming loads with backhaul by using third-party and internal sources.
• Warehousing costs were up to 35% higher.
• Rational for competitors’ strategic approach provided operational improvement.
• Annual savings were estimated to be in excess of $17 million if benchmarks were met.
  

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