Case study: Lulu logistics

Case study: Lulu logistics
Manoj L R, Operations Manager of Lulu's Logistics, Dubai
Published: 12 February 2017 - 7 a.m.

Catering to a wide variety of expact commnities in the UAE, stocks at Lulu stores in the UAE comprise over 44,000 SKUs. “It is certainly one of the largest in the region," says Manoj L R, Operations Manager of Lulu's Logistics, Dubai. "The sheer volume of the goods we handle makes ours one of the largest supply chains in the region.

One of the fastest growing brands in recent times, Lulu has come quite far from its modest beginnings, under the leadership of Yusuff Ali M A, its chairman.

What began as a small supermarket in Abu Dhabi in 1995 is now one of the largest retail chains in the Middle East.

With the parent company EMKE Group headquartered in Abu Dhabi, Lulu Group has over 132 outlets worldwide, of which 49 are in the UAE.

In spite of the volume of goods to be handled and the number of outlets in the distribution chain, the group has been able to run its supply chain management in the country like a well-oiled machine, and most of it comes down to a well-thought out distribution channel and warehouse management system.

For ease of operations, Lulu group has divided the UAE region into three parts: Dubai and Northern Emirates; Abu Dhabi; and Al Ain.

Manoj takes us through the group’s supply chain process: Lulu has four warehouses in the UAE, the one in Abu Dhabi being the largest with 1mn sq ft, followed by the warehouse in Dubai Investments Park with 400,000 sq ft.

At the warehouses, goods are managed with the help of a warehouse management system.

“Ordering from store to warehouse is completely automated. We practice computerised reordering of products for the store everyday depending on sales data from point of sale, seasonal changes, actual inventory levels, product receipts and acceptable safety stock levels. Inventory data integrity is maintained by cycle-counting,” Manoj said.

“The benefits of auto ordering include lower out-of-stocks and higher sales, lower inventory costs and higher margins, and lower labour costs by cycle-counting.

“Besides giving us an exact idea of our stock, the WMS also alerts us about goods that are going to expire two months in advance, so that we can take the necessary steps to sell off our stocks,” Manoj said.

In the beginning of 2016, the company’s first transit warehouse in Jebel Ali Free Zone (Jafza) began operations, enhancing the group’s import and export operations. The warehouse covers an area of 200,000sq ft and currently handles around 700 shipping containers a month.

“Thanks to the new warehouse at Jafza, we have been able to increase our frequency of shipments,” Manoj said.

The warehouse at Jebel Ali, which mainly houses items such as textiles, home furnishing and electronics, employs around a 100 staff, while those at Abu Dhabi and Dubai employ 700 and 500, respectively.

Perhaps the group’s biggest supply chain challenge lies in its distribution system. “With such a large number of SKUs and a wide network of stores, distribution has to be our biggest challenge,” he said.

Lulu runs a well-planned distribution system in the UAE, operating a fleet of 168 vehicles.

“We aim for ‘minimum vehicle, maximum output’. Route maps and timing are all scheduled in advance, and the movement of all vehicles are monitored by GPS. We have arranged our schedule in such a manner that during prohibited hours (when trucks are not allowed on UAE roads), the vehicles are either loading or unloading, both of which take around three hours to complete,” Manoj said.

“The trucks at the retail warehouse in Dubai itself carry out a hundred trips daily.”

Unlike most retail chains in the region, Lulu has its own logistics management system. “No part of our supply chain process is outsourced and that is one of our biggest advantages in the market.

“There have been instances of suppliers brining in goods just hours before a promotion, and we have managed to get those goods to all the Lulu stores across Dubai and Northern Emirates on time, in spite of the huge delay, just because we have strong supply chain system,” said Manoj.

“Around 12,000SKUs are issued to our stores daily from the Dubai warehouse.”

All Lulu outlets have back stores, albeit with limited space as the majority of the stock is held at the warehouse. “Because we have a big warehouse with ample space we don’t need large back stores. Our warehouses always hold stock for 15 to 20 days. Even if the supplier runs out of an item, it is still available at our warehouse. And suppose an item does go out of stock at a store, it is replenished within three hours.” Lulu currently sources items from about 400 local suppliers.

Lulu sources 75% of its fruits and vegetables through direct imports from more than 25 countries. “We import around 275 containers of fruits and vegetables a month,” Manoj said.

The group has also signed contacts with local farms as part of a CSR initiative to support local organic farmers.

Products with a short shell life, such as fresh juice, chicken, fish milk, yoghurt and other beverages are directly sent to the stores by the suppliers. “They are sent twice a day, in the mornings and evenings.”

The group’s retail warehouse in Dubai has another speciality of sorts, says Manoj. “It has kitchen with over 100 chefs from different countries. We produce around three tonne of items every day.”

Keeping up with the times, Lulu forayed into online shopping in the first quarter of 2016.

Lulu's e-commerce division (www.luluwebstore.com) currently sells groceries and department products.

Stuart Davidge, head of e-commerce, Lulu Group, said, “While e-commerce offers a world of opportunity, success is defined by how well customers are satisfied. Our logistics team places umpteen importance on the quality of the delivery process to ensure that Lulu meets the expectations of our valued customers. All our delivery vehicles have special compartments for chilled and frozen food as well as groceries to ensure that their quality is maintained during delivery process.”

“Our customers are at the heart of everything we do,” he added.

The group has ambitious plans for the future, focusing on expansion in Asia and the GCC.

The company opened hypermarkets in Malaysia and Indonesia last year, and it has plans to open around 35 new stores in the region in the next three years.

 

 

 

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