Ahold Delhaize USA transitions to self-distribution supply chain network
What will certainly impact Ahold Delhaize USA’s rich portfolio of private brands over time, the retailer announced that it will be enhancing its supply chain network on the east coast by transitioning into a self-distribution supply chain network and by acquiring three warehouses from C&S Wholesale Grocers, a long time partner of the retailer.
Ahold will invest $480 million over the next three years toward this investment.
With the increased number of distribution centers, Ahold Delhaize expects to see an expanded capacity for its private brands and products, and added efficiency. This means products, including private brands, will have to travel less miles to stores and there will be less time spent moving products from distribution centers to stores enabling even fresher products to reach store shelves and consumers.
To date, Ahold Delhaize USA companies have collaborated with Keene, N.H.-based C&S to service select U.S. banners. Retail Business Services, the services company of Ahold Delhaize USA, will continue to work with C&S, a partner of three decades' standing, to provide supply chain services as Ahold Delhaize USA undergoes the transition to a fully integrated self-distribution network.
“Moving to a self-managed supply chain will enable Retail Business Services to reduce costs for the local brands it serves, improve speed to shelf, deepen relationships with vendors and better position our companies’ distribution centers in the communities they serve,” noted Chris Lewis, EVP, supply chain for Retail Business Services. The Ahold company develops private brands for Ahold’s retail brands such as Food Lion, Stop & Shop, Giant Food, Giant/Martin’s, Hannaford and the online grocer Peapod.
“These changes will enable us to take advantage of financial and strategic value within procurement, logistics and warehousing to provide the freshest product through the most advanced, efficient delivery network in the grocery industry,” Lewis noted. “We will continue to partner with key providers for distribution center management services, including third-party labor services, such as our longstanding partner C&S.”
As part of the expansion, Ahold Delhaize USA will buy three warehouses from C&S, two locations in York, Pa., and one in Chester, N.Y. C&S Wholesalers announced its support of the transition. "C&S is uniquely positioned for the long-term, we have a strong leadership team with some of the best industry veterans; an expanding footprint in key geographic areas; innovative technology solutions that enhance the consumer experience; and the most cost-efficient products and services in the market," said Rick Cohen, C&S Wholesale Grocers.
Also part of this new plan, Ahold will team up with various companies to build two fully automated frozen facilities, one will service the Mid-Atlantic market, while the other will service the Northeast. The company will also pursue two new leases: one on a newly renovated warehouse in Manchester, Conn., and another on a C&S facility in Bethlehem, Pa.
Overall, the initiative will furnish the necessary infrastructure to support aggressive omnichannel growth plans. During the three-year time frame, Ahold Delhaize USA and its companies will accomplish the following:
Boost distribution presence with seven new and acquired warehouses, among them two fully automated frozen facilities in the Northeast and Mid-Atlantic;
Seek optimal facility locations near Ahold Delhaize USA banners and their customers, enabling local product expansion, enhanced product freshness and speed of delivery;
Innovate in warehouse design, including the transformation of facilities to improve automation and leverage technology advancements such as an integrated transportation management system and end-to-end forecasting and replenishment technology, designed to facilitate the omnichannel experience and multichannel growth;
Continue to strengthen relationships with vendors and suppliers, and through the integration, further deepen partnerships to improve service, quality, innovation and efficiencies; and
Grow Ahold Delhaize USA companies’ presence in local markets and bolster local community connections through the anticipated creation of hundreds of jobs in local communities, including positions in support offices.
The strategy “is another example of how Ahold Delhaize USA is transforming our infrastructure to support the next generation of grocery retail,” said Kevin Holt, the company’s CEO. “Through this initiative, we will modernize our supply chain distribution, transportation and procurement through a fully integrated self-distribution model that will be managed by our companies directly and locally. This will result in efficiencies and, most importantly, product availability and freshness for customers of our local brands – now and in the future – whenever, wherever, however they choose to shop.”
Ahold Delhaize USA companies’ distribution networks currently encompass 15 traditional and e-commerce distribution centers, which service the company’s banners, and the network will grow to 22 facilities by 2023.
“Part of our strategy is leveraging the best of automation and technology,” said Lewis, Retail Business Services. “Each facility will also maintain a significant workforce. We recognize the future of work is changing, and we’re taking active steps to help our workforce adapt by enabling them to work more efficiently.”
The enhanced distribution network will provide coverage for Ahold Delhaize USA’s banners spanning from Maine to Georgia.
Ahold Delhaize USA , a division of Zaandam-based Ahold Delhaize, is the parent company for Ahold Delhaize's U.S. companies. Considered together, the companies of Ahold Delhaize USA comprise the largest grocery retail group on the East Coast and the fourth-largest group in the country, with nearly 2,000 retail stores and distribution centers across 23 states, and more than 6 million annualized online grocery orders. Additionally, the companies of Ahold Delhaize USA operate some of the most extensive supply chain operations on the East Coast, including more than 1,000 trucks that travel more than 120 million miles annually and deliver 1.1 billion cases to banners’ stores.