Magnit and X5 innovate in their supply chains

Date : 28 January 2019

Magnit and X5 have been investing in a range of supply chain initiatives to boost cost efficiencies. This is crucial to both retailers as they look to protect their profit margins, so they can sustain their 1,000-plus annual store opening strategies. From consolidated delivery to various transport modes, we look at how Russia’s top two retailers are looking to benefit.

Magnit and X5 opt for consolidated delivery service

The retailers partnered with Artlogic, a digital solutions company, in 2018 to connect them with suppliers and transport companies through an online platform for delivery ‘pooling’ The service allows transport companies to consolidate goods from different suppliers and deliver the orders to regional distribution centres (RDC). Orders addressed to one RDC are consolidated using a special online portal. Currently the service is available in the Moscow region and Rostov-on-Don, in southwest Russia.


Delivery consolidation or ‘pooling’ benefits retailers and suppliers

There is no minimum order and the service is flexible enough to allow for varying sizes of deliveries. The aim of this system is to cut costs in fuel usage, reduce delivery times, increase frequency of deliveries, reduce incoming flows in warehouses, lower unloading downtime, and reduce the need for warehouse storage. Suppliers place a delivery order on the portal, where they see the costs of the delivery. If the delivery exceeds 24 pallets, then the pricing changes in accordance to the price tariffs in place. The service works with suppliers such as Johnson & Johnson, L’Oréal, and local food suppliers to transport a range of products.


Magnit tests new multi-mode delivery service

Magnit has been looking for several ways to reduce supply chain costs, one of which is a ‘piggyback’ (combined) delivery service. As part of this it has partnered with a Russia rail subsidiary. It combines transport methods of trucks and rail to improve the supply it provides to distant stores. It does this by loading the truck onto freight trains for part of the journey. It tested the service along the Novosibirsk-Moscow-Novosibirsk route and announced it reduced costs by 5%, and saved two days transport time, down from the typical five days when using trucks only. The retailer intends to pass on some of these savings to its suppliers and shoppers.


X5 will develop last mile delivery service

X5 is looking for innovative ways to boost supply chain cost efficiency via its innovation lab. In 2018 the lab introduced three supply chain pilot projects. As part of its five year plan in NextGen Retail, it is looking at partnerships with service providers and suppliers to develop a last mile delivery service.


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