RP Turner Corporation makes pipeline valves for the oil industry in Western Canada. It buys materials from Japan, the USA and Eastern Canada, manufactures valves in Edmonton, Alberta, and ships the finished products to oil fields in the North. In 2000 it started a major project to reduce the cost of logistics.Managers soon found that the separate activities worked more or less independently. This was sometimes all too obvious when the three main Departments – Marketing, Production and Finance – were in different locations. Production was in Edmonton, as the nearest major city to the oil fields; Marketing was in Calgary near to oil company headquarters; Finance (including procurement) was in Vancouver near the port and financial centre. Canada is a big country, so Production was a thousand kilometres away from Finance, 500 kilometres away from Marketing and over two thousand kilometres from delivery points. How would you set about improving logistics?

Farmer John grows wheat and corn on his 45-acre farm. He can sell at most 140 bushels of wheat and 120 bushels of corn. Each acre planted with wheat yields 5 bushels, and each acre planted with corn yields 4 bushels. Wheat sells for $30 per bushel, and corn sells for $50 per bushel. To harvest an acre of wheat requires 6 hours of labor; 10 hours are needed to harvest an acre of corn. Up to 350 hours of labor can be purchased at $10 per hour. Formulate LP to maximize profits, Answer the following question what will happen. (a) If only 40 acres of land were available, what would John profit be? (b) If the price of wheat dropped to $26, what would be the new optimal solution to John problem? (c) Use the SLACK portion of the output to determine the allowable increase and allowable decrease for the amount of wheat that can be sold. If only 130 bushels of wheat could be sold, then would the answer to the problem change? (d) What is the most that John should pay for an additional hour of labor? (e) What is the most that John should pay for an additional acre of land?

Grocery buying is changing due to the emergence of omnichannel retailing. Consumers want options, and grocers need to be ready to provide them. Thus, experts say retailers will have to deal with selling price, venue, payment, and customer experience in all transactional channels. Doing so effectively is easier said than done, however.

One who understands that well is Jim Wisner, formerly a VP at Jewel Food Stores and Shaw’s Supermarkets? He states that omnichannel retailing is being able to operate, in any fashion, when and where the customer wants to interact. That can involve customer service via social media, online chat, E-mail, or phone; browsing or shopping in-store or online; receiving products via home delivery or in-store pickup, or old-fashioned aisle browsing; or making coupons or discounts similar across channels. “As much as the ultimate goal needs to be a complete integration of ‘all things at all times,”’ says Wisner, now president of Wisner Marketing, “it is important to make sure that each individual piece can operate functionally and effectively on its own. Pasting an online shopping portal to a Web site that hasn’t been redesigned in years or mobile-optimized won’t attract shoppers.”

DyShaun Muhammad, VP of consultancy Catapult, offers these three key steps for retailers:

Educate Yourself Get to know shoppers, especially those who are most valuable. What really drives a shopper to actually buy a particular category from you? What are the barriers to his or her doing more transactions with you? Where do tools like mobile apps, flexible fulfillment, digital couponing, and more traditional merchandising tools fit in his or her path to purchase for your priority categories? How could you best deploy these tactics to better deliver your retail proposition to drive stronger affinity and share with the shopper? How could your vendors help?

Evaluate Your Ecosystem Once you have a good understanding of shoppers’ needs and key drivers, you must assess your own ecosystem. Do you have the technology, logistics, data, and organizational resources to operate against a unified view of shoppers and their activity across channels? What are the gaps in your systems that impede delivering the quality of experiences that will drive the desired level of shopper loyalty and conversion? What frustrations are shoppers communicating to your customer service teams or via social channels?

Experiment to Find What Works At this point, you can then engage in the hard work of determining which things to experiment against, where to invest, and how to restructure your organization to deliver. It can’t be done all at once, but each step needs to be able to deliver meaningful value for shoppers and make it easier for them to accomplish their shopping goals with you.

As with any major new initiative, obstacles stand in the way of smooth implementation. Wisner, Muhammad, and others point to organizational silos in different departments as one challenge to overcome. “There are operational, organizational, and experiential issues to resolve,” affirms Channie Mize, general manager for the retail sector for Periscope, a McKinsey solution. “It’s easier to do multichannel, but that creates silos and doesn’t extend to customer service. Also, branding may not be consistent across the channels with a multichannel versus omnichannel approach.

“In more traditional multichannel environments,” Mize continues, “the chief merchant officer controls the merchandising in the physical stores, while the CIO, or ‘head of online,’ controls the offering in the online stores. They each have different agendas tied to different or misaligned incentive structures. This can cause the same retailer to cannibalize itself across channels, which inherently provides for less than optimal results for the customer.”

1. Why is omnichannel retailing a bigger challenge for food retailers than general merchandise retailers? 2. Apply DyShaun Muhammad’s three key steps to your favorite supermarket.

3. Comment on this statement: “It’s easier to do multichannel, but that creates silos and doesn’t extend to customer service. Also, branding may not be consistent across the channels with a multichannel versus omnichannel approach.”

4. What are your top five recommendations as to how to best perform as an omnichannel retailer?

Floyd’s Bumpers pays a transportation company to ship its product to its customers. Floyd’s Bumpers ships full truckloads to its customers. Therefore, the cost for shipping is a function of the distance traveled and a fuel surcharge (also on a per mile basis). The cost per mile is $2.48 and the fuel surcharge is $.56 per mile. The worksheet May in the provided datafile contains data for shipments for the month of May (each record is simply the customer zip code for a given truckload shipment), as well as the distance table from the distribution centers to each customer. Use the VLOOKUP function to retrieve the distance traveled for each shipment from the exercise completed above, and calculate the charge for each shipment. What is the total amount that Floyd’s Bumpers spends on these May shipments?

Oasis Water Company sells and distributes 5-gallon water bottles in Seeb, Muscat region. Home delivery customers place orders at Oasis (X = 7.2, Y = 8.4) for delivery during the week. Customer locations, delivery days and number of bottles requested for two days of the week are given in the following table. The delivers are made using an 18-bottle truck and another 27-bottle truck. The trucks leave Oasis to make the deliveries and return the same day.

Use savings Method to develop a route plan for the company.