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Builds Large New Logistics Centre in Kolding
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Pushing the Boundaries for Customer Service and Operational Efficiency
June 2019
The ever-increasing trade via the internet is affecting everyone in retail, including border stores. For Fleggaard, changes in customer purchasing patterns were crucial in the decision to build a new Click & Collect warehouse to serve the seven Fleggaard and Calle stores in the central border area around Padborg. The project was carried out in close cooperation with Langebæk and has more than lived up to expectations.
Nikolai Fink is the Marketing Director at Fleggaard and has an office in Harrislee, where the new Click & Collect warehouse was put into operation about a year ago. Already during the initial tour of the warehouse, he makes it very clear how pleased he is with the solution, emphasising that he certainly isn’t the only one:
‘Since the warehouse was taken into use, the number of customers has increased by more than 30%, and customer satisfaction is very high. Additionally, we have reduced the costs per order by at least 30%.’
These significant numbers are inextricably linked to the fundamental improvement of the customer experience that the new warehouse enabled. But that is still only one side of the story. The construction of the warehouse and the centralisation of the Click & Collect business also led to significant improvements in operations.
From Store Operations to Warehouse Operations
The new warehouse, with its approximately 1,500 m², may not be among the largest in retail. And since it is, so far, almost 100% manual, it is not among the most advanced either. But it still has a major impact on the business.
‘The challenge for Fleggaard was to conceive and implement an entirely new operating model for Click & Collect that would cater to a larger product range, higher product flows and volumes, as well as improve our customer service,’ explains Nikolai Fink.
‘When we decided to centralise Click & Collect, we essentially went from focusing on store operations to focusing on warehouse operations. This was completely new for us, and it quickly became clear that we needed help to execute the decision.’
‘The reason for the decision was changes in customer purchasing patterns. A growing number of customers made use of our collection offer, which meant that employees in the store where the customer placed their order online would pick the items from the shelves in the store and ensure that they were handed over at the agreed time.’
‘The stores handled everything themselves. But as more and more customers chose to use the collection service, the stores increasingly hit their capacity limits – that is, the ceiling for how many customers they could serve in the desired time slots per day. In other words, we found ourselves too often in a situation where we had to disappoint the customer. Obviously, that is not ideal for the business in the long run.’
‘At the same time, the process of fulfilling the orders was affecting the shopping experience in the stores, where customers had to fight their way through, because the employees with picking carts took up a lot of space in the aisles. It also meant that both customers and employees, especially during very busy periods, felt more stressed than was ideal. So, we understood that we needed to do something.’
Click & Collect Central Warehouse
‘Expanding our existing stores, however, was not an option. The regulations here in Germany limit our possibilities in that direction. We are not allowed to build more or larger stores than we already have. We had to find another way to increase our capacity and improve the customer experience.’
‘In a way, centralising the collection offer in the individual stores made sense, as it on paper met both success criteria. But at the same time, we were a little concerned about what this would mean for the individual store. A large portion of what customers order online are large, heavy items, which they collect first, park their car, and then go into the store to continue shopping. Would customers accept that they had to drive somewhere else to pick up their goods? Would they buy less or visit us less frequently because of this? Would they completely avoid us? These were some of the questions we wrestled with.’
‘Despite the uncertainty, we chose to proceed with the centralisation. It has proven to be a good decision. We have gained more customers, and turnover has increased because we can meet the rising demand while simultaneously raising the service level in the store. Only one of the stores has experienced a slight decline. The customer analyses we have conducted in the wake of the project point exclusively in a positive direction.’
Professional and Pragmatic
‘We chose Langebæk as a consultant for the project primarily for two reasons. First, we were familiar with their work for other retailers, including Matas and Nemlig.com, and second, they came highly recommended by people in our network whom we consulted.’
‘It has been a true pleasure working with the team from Langebæk. Not only are they extremely competent, but they also listened carefully to us, took the time to understand our business and operating conditions, took our existing investments into account, such as our WMS, and provided relevant and achievable recommendations. We have largely implemented the solution they recommended.’
‘It was particularly in the analysis phase, where we needed to examine our capacity requirements, capacity limitations, product flow, and volumes, as well as in the planning phase, where the new processes had to be devised, that Langebæk proved their worth. Without them, we would not have had the faintest idea of how large the new warehouse needed to be or how it should be laid out in order for us to get the optimal outcome from it.’
‘Before we had the Click & Collect warehouse, all the items were inside the store. When the goods arrived, we filled the shelves in the store. Then, the collection orders were fulfilled from the shelves. This created a lot of duplication of work, slow processes, and contributed to a less-than-optimal customer experience, as we have already discussed.’
‘Today, it’s completely different. All high-frequency and high-volume items are picked directly from the warehouse, while low-frequency and low-volume items are picked in the store here in Harrislee. With the new processes that Langebæk defined, we can now pick all the items we need from the store before it opens, so employees with picking carts no longer get in the way of customers. We’ve also optimised other processes, including the introduction of location management and handheld scanners. Finally, the goods delivery has been improved with the possibility for further optimisation.’
‘The new warehouse has been in operation for about 12 months. We’re not yet at the maximum order volume the warehouse can handle, but we are somewhere between 80 and 90% of the way there. It has already given us a huge benefit. Going forward, we will work on optimisation – perhaps with the help of warehouse automation – and explore whether we can apply our newfound experience to other border areas (editor’s note: Femern and Tønder).’
