Top Notch, Top Speed
Topco Achieves Rapid Improvements in Inventory Performance by Leveraging JDA Services
For Topco, customer service is a competitive differentiator. This privately held company provides procurement, quality assurance, packaging and other services exclusively for its member-owners, which include supermarket retailers, food wholesalers and foodservice companies. Topco leverages the collective volume, knowledge and commitment of these customers to create winning private-label products that are sold under brand names such as Food Club, Shurfine, Top Care, Valu Time, World Classics and PAWS Premium.
Topco's more than 50 members collectively represent $120 billion in retail sales volume, with thousands of stores across the United States. Providing exceptional service to these members — while ensuring profitability — is a central supply chain challenge for Topco.
“It's a tough economy, and nobody can afford to have a lot of money tied up in places they don't need,” said Julie Michalak, senior manager of demand planning and replenishment for Topco. “We always need to balance providing the best service to our customers with keeping our own costs down.”
For the past few years, Topco has relied on JDA Advanced Warehouse Replenishment to optimize the replenishment performance of its distribution centers. As its business evolved, the company wanted to expand this replenishment functionality to incorporate more robust demand forecasting and statistical modeling capabilities. “We wanted to be able to manage forecasts at the customer level. We could see demand history in JDA Advanced Warehouse Replenishment, but we needed forward-looking statistical capabilities from a demand planning perspective,” Michalak recalled.
Headquartered in Elk Grove Village, Illinois, Topco Associates LLC is an $11.9 billion privately held company that provides aggregation, innovation and knowledge management solutions for leading food industry member-owners and customers. Topco leverages the collective volume, knowledge and commitment of these companies to create a competitive advantage in the marketplace by reducing costs and offering winning business-building capabilities.
Rapidly improve higher levels of forecasting and inventory accuracy.
The ability to distribute inventory more strategically was another factor in Topco's decision to expand its capabilities. “With the way we had JDA Advanced Warehouse Replenishment set up, our distribution was based on a hub-and-spoke system. Our Joliet, Ill., facility was the hub, and our West Coast facility was the spoke. This meant that the West Coast warehouse could take anything that was needed from the Joliet warehouse, even if it brought that warehouse to zero,” said Michalak. “Keep in mind that Joliet was the hub for a reason; it served most of our customer base. So having inventory there at zero — without any visibility into that — created some challenges.”
The company also wanted to improve its inventory turns, while reducing the liability associated with its perishable inventory, by reducing the amount of product that must be dumped or donated due to the product's expiration date.
Selecting the Right Partner
“We had a few different software vendors come in, some very high end and some at the lower end. We looked at all different levels of solutions,” said Michalak. “Being the incumbent, JDA already had a lot of the foundational work done from an IT perspective.”
The foundational work that was built around the warehouse management solution proved to be a significant factor in Topco's decision-making process. “When we implemented JDA Advanced Warehouse Replenishment, our IT team did a great job of creating the interfaces in a way that we could take on an upgrade, meaning the interfaces were done at a detailed level,” Michalak said. “The data wasn't overly manipulated in a way that it couldn't flow into another type of system. So from an IT perspective, there were a lot of fundamentals already in place in order to be able to do a quick implementation.”
Implementation timing also played a critical role in the selection process. “We didn't want to wait two years for our IT resources to be freed up. We wanted the capabilities right away. We wanted to start gleaning the business benefits. Since that pre-work was already completed, that was a big advantage for the JDA system,” Michalak said. “Also, when we compared the high-end providers with JDA, a lot of the capabilities we were looking for were similar. JDA offered all the capabilities we needed, for the best price.”
A Fast, Strategic Implementation via JDA Services
For Topco, another benefit of partnering with JDA was the potential for a very rapid implementation via JDA Cloud Services. Implementation speed was not the only advantage; JDA Cloud Services also offered a lower overall cost model than hosting the hardware and software in-house.
“We didn't have the capabilities in-house to accomplish a software implementation on our own,” Michalak explained. “We would have had to buy another server, and we would have needed to add salaried headcount with specialized skills. We weighed the capital investment carefully against the JDA Cloud Services cost.”
Ultimately, Topco chose to implement JDA's Supply Chain Now — a preconfigured, cloud-based solution that leverages the best-of-breed templates for JDA Demand, JDA Demand Classification, JDA Fulfillment and JDA Order Optimization. Supply Chain Now was deployed in just six months, with JDA Consulting Services managing the implementation, and JDA Cloud Services continuing to operate the software and hardware as well as the data integration, security and change management.
JDA Consulting Services also helped Topco define many of the implementation details. “JDA consultants are subject-matter experts,” she said. “They not only worked with our IT folks on some of the nitty-gritty technical details, but they also worked with my team to help us understand how the solution was going to be designed.”
The consulting team adhered to the JDA Enterprise Methodology, JDA's proven global implementation approach, during the implementation process. “With some of the projects at Topco, IT leads the project. JDA came on-site and really took the time to understand our business needs,” said Michalak. “Their expertise and suggestions were very helpful. JDA Consulting Services acted as a ‘translator' for us internally between Topco's strategic planning team and our own IT folks.”
In addition to helping facilitate the implementation, the on-site team from JDA walked users through the training and testing process. “JDA Services was really an end-to-end solution in order for us to get the implementation done, from start to finish,” she said.
Early Results Are Promising
Six months after the implementation of Supply Chain Now, Topco is already seeing important changes in its customer service capabilities. “The new number-level forecast for individual customers is allowing us to have some different conversations with members. We are doing some seasonal pre-builds to ensure that we have inventory available exactly when they need it,” said Michalak. “This is a capability we didn't have before. In fact, across our supply chain we are seeing new levels of information that we could never see before.”
In the area of inventory management, new statistical safety stock rules are helping Topco to balance inventory more strategically — reducing both safety stock investments and lost sales due to stock-outs. “Our inventory levels have definitely come down,” Michalak said. “With the statistical safety stock algorithms, our inventory has leaned out quite a bit. It's still early, but I think the new JDA solutions will turn our inventory in the way we need to, which is what the business case is designed around.”
A Top-of-the-Line Partnership
The Topco team has been pleased with the rapid results enabled by both JDA Cloud Services and JDA Consulting Services. “If we could not have partnered with JDA Cloud Services, we could not have implemented the software this year because we did not have the expertise or resources of the JDA Services team. It would have taken us at least a year to secure the in-house knowledge and resources,” said Michalak.
According to Michalak, Topco has been pleased with the results of working with JDA for the second time. “Overall, it has been a good experience. I definitely think that it was one of the smoother supply chain projects that I've been on,” she said. “We're still learning the capabilities of the software, and there is some functionality that we haven't even explored yet. We continue to push ourselves to be better because the system has more capability still. It has definitely helped us move to the next level.”