SPAR Netherlands: Retail route optimisation with OptiFlow
SPAR is an internationally recognized brand that was founded in the Netherlands 91 years ago. Today, the retailer operates 450 stores in its home country, spread across five different concepts, and also supplies 150 neutral stores.
With such an extensive retail network, SPAR’s transportation operations demand a well-equipped logistics infrastructure. According to Rob Salomé, the manager of supply chain and logistics at SPAR, “The more restrictions, the more challenging it becomes for an individual to come up with alternative combinations. This is where an automatic planning system can offer the biggest advantage.”
Increasing complexity calls for automatic route planning
In 2016, the implementation of an automatic planning system marked a significant milestone for the retailer. Despite efforts with existing tools, the retailer had been unable to achieve this goal until then. “We actually purchased our previous package with the intention of planning automatically, but unfortunately, that didn’t work out,” they noted. Furthermore, at the time, there were several challenges to overcome in order to devise a feasible plan. According to Salomé, “The system suggested strange routes and the planning process was time-consuming. Our planners had to constantly adjust and shift orders to ensure customers were on routes that made sense. Therefore, it was still a highly manual exercise.”
As SPAR was preparing to open 200 Express stores, they realized that the complexity was growing. “It was becoming increasingly intricate, and we realized that we needed to find a way to manage this complexity. At a certain point, an individual reaches their maximum capacity in terms of being able to maintain an overview.” Additionally, cost savings were a top priority. “We were looking to reduce costs, and we didn’t see that happening with manual planning. It was expected that an automatic planning system would provide much better results.”
King Of Convenience
First introduction to OptiFlow
When OptiFlow, the route optimization platform developed by the Belgian scale up Conundra (now operating as PTV Logistics), entered the market, it was still a relatively new product. As such, it was not very well-known at the time. It was only thanks to their transporter, Simon Loos (formerly Peter Appel), that Salomé discovered the product and began exploring its capabilities. “Conundra initially paid us a visit, and we decided to conduct a pilot to assess potential savings. We ended up identifying a savings potential of 5-10%, which led us to ultimately choose OptiFlow.”
The rise of hybrid convenience stores
SPAR Netherlands aims to become the “King of Convenience” by focusing on providing convenience stores. “We don’t want to compete with supermarkets, but rather distinguish ourselves as a hybrid form between a convenience store and a traditional supermarket,” says Salomé. Customers can purchase not only food but also a wide range of catering products that can be consumed immediately or within one hour, such as “hot pizzas, meals, sandwiches, and smoothies”.
More selling points in urban areas
SPAR’s expansion is primarily focused on urban areas, aligning with their strategy of providing convenient shopping options. “Eighty percent of new store openings are located in urban areas,” according to Salomé. The company’s ambitious target is to increase from 450 stores to 1001 selling points by the end of 2024, with a clear distinction between “stores” and “selling points”. Apart from traditional brick-and-mortar locations, SPAR is exploring innovative possibilities such as “smart refrigerators” and “unmanned shops in hotel lobbies” to extend its reach.
Excellent support during implementation
According to the logistics manager, the implementation of OptiFlow went very smoothly and was completed within six months. Karim van Doorn, head of planning at SPAR and a key user of the product, was closely involved in the implementation process and emphasizes the excellent support they received. “The consultants worked with us on site for a few weeks to understand how we plan and what we encounter. Even when we went live, we received good guidance in that first week.” What was noteworthy for the logistics manager is that OptiFlow is built around input files in Excel format. “Honestly, I thought it was a bit unprofessional at first. But at the end of the day, it makes their solution incredibly flexible.”
Challenges urban distribution
Expanding selling points brings added complexity, especially in urban areas where rules and regulations are constantly changing. Salomé points out, “In addition to restricted periods for loading and unloading, we have to consider using rigid vehicles instead of trailers, as well as height and weight limitations, all of which add complexity to our planning process.”
Making clever combinations with OptiFlow
“OptiFlow helps us simplify the complexity. Its computing power is far superior to that of humans, who tend to fall back on the same patterns repeatedly,” explains Salomé. To illustrate this, he offers an example: “A human might load the same customers onto a box truck bound for Amsterdam every day, but OptiFlow recognizes that customer A doesn’t necessarily need to be in that box truck today. It replaces customer A with another one. With OptiFlow, we can calculate many more combinations, which not only improves our planning, but also reduces costs.” Van Doorn also highlights the computing power of OptiFlow, saying, “By including afternoon trips in the morning planning, the system can determine the type of vehicle needed to return to our DC in Waalwijk at a specific time to start the afternoon route. If you were to manually calculate this, it would never work out.”
Impact carbon neutral transport
As SPAR continues to pursue its growth ambitions in urban areas, the company is also looking ahead to the future in light of increasingly strict environmental legislation. “While it may not be an immediate concern for rural areas, emission zones will be designated in at least 40 cities by 2025,” notes Van Doorn. “Between 2025 and 2030, our vehicles will no longer be permitted in these zones, necessitating a switch to emission-free alternatives.” SPAR is already brainstorming ways to make a smooth transition, with plans to establish smaller hubs on the outskirts of cities for supply via regular trucks, followed by entry into cities via emission-free alternatives. However, the challenges continue. “We’ll need to factor in the range of electric vehicles and charging times, which further complicates our planning,” Salomé explains.
Closing the gap between planned and executed
SPAR’s transportation is heavily impacted by traffic around cities, prompting the retailer to integrate traffic patterns into its planning. To further bridge the gap between planning and execution, SPAR aims to incorporate even more data into its planning in the future. “The future requires for our forecast to become as close as possible to reality. The only way to achieve this, is by incorporating as much actual data as possible in your planning tool,” says Salomé. Delays during certain timeframes are becoming increasingly relevant which is why SPAR hopes to eventually include near-real-time delays in its planning.
Expanding competitive market
As SPAR continues to grow, the complexity of its operations also increases. To navigate this ever-changing environment, SPAR now has a powerful tool at its disposal to remain flexible. “Sometimes we wonder if it would have been possible to manage today’s operations without switching to OptiFlow,” says Salomé. By implementing OptiFlow, SPAR can continue expanding in a complex and competitive market while providing ist customers with the best service and products at their fingertips.