Couche-Tard needed to get its arms around its store distribution. Based in Laval, Quebec, the company is Canada's largest chain of convenience stores, stocking more than 2,500 products at each of its 2,575 sites across Canada and the U.S. Midwest.

Until a few years ago, the company relied on wholesalers and direct store delivery (DSD) to get those products on the shelves. But that was inefficient. For one thing, more than 50 DSD vendors serviced its stores. Oftentimes their trucks took up parking spaces intended for customers. Vendor representatives naturally would chat with employees, taking their attention away from customer service. On top of that, the vendors often delivered more than individual stores really needed. "Traditional wholesalers send full cases or half cases of product to the stores," explains Director of Distribution Guy Champagne. "Convenience store shelf space is not big enough to hold a full case of product."

To provide better control over the delivery process and make it possible to replenish individual stores more efficiently, the retailer decided to establish a single distribution center. Opening its own warehouse also would allow Couche-Tard to take advantage of special offers from wholesalers, such as lower prices on vanload shipments or purchasing large quantities to hedge against price increases. "We wanted to have better control over our supply chain and our product costs, and to give better quality of delivery to our stores," Champagne says.

Working with Kom International, a consulting firm in Montreal, Couche-Tard conducted a feasibility study to determine if the company had enough volume to justify the cost of a new facility (it did) and to analyze distribution patterns and costs.

The next step was to determine the optimal location for the new DC. Because 60 percent of Couche-Tard's corporate-owned stores are in the Montreal area, the new distribution center had to be located there, close to major highways. That fairly well described the city of Laval. And the city government was happy to have the new facility, Champagne says. "They had some industrial land they offered to us, along with a tax reduction as well as an incentive, so that was a big factor in our decision for the location."

The DC, holding 990 stock-keeping units (SKUs), opened in February 2002. Today it holds 1,600 SKUs. Individual stores now order stock through the DC using software that tracks eight weeks' worth of sales and store-level inventory. The program presents store managers with suggested orders, which they can modify before sending them electronically to the distribution center.

The company has moved from delivering only dry goods to its stores once a week to making twice-weekly drops of both dry goods and fresh products, such as milk and sandwiches. Couche-Tard also has the ability to break cases and control the amount of product sent to each store, which has improved stocking efficiency.

Suppliers now ship goods to the DC rather than directly to the stores. It took some convincing to get them to go along with that change. "In the beginning, some of them were worried that their product wouldn't be presented in a good way at store level, because usually they have someone going to the store and doing their own display," Champagne says. He quelled those fears by visiting suppliers and talking to them. "That was the only way," he says. "I told them, you trust Couche-Tard, and you've been trusting us as our supplier for so many years. Now Couche-Tard is taking another direction. Trust us, we can make it happen."

As indeed they have.