Inside Logistics

SAQ profits rise on the back of supply chain improvements

New WMS and switch to private fleet helped save costs and improve efficiency

July 6, 2018

MONTREAL – The SAQ, Quebec’s liquor distributor, ended its 2017-2018 fiscal year on March 31, 2018, with net earnings of $1.114 billion, up 2.6 per cent from the preceding year. Sales totalled $3.252 billion, a 4.1 per cent increase from fiscal 2016-2017.

The 2017-2018 fiscal year included an additional week of operation and two Easter holidays. In addition, the price reductions first introduced in the third quarter of the preceding fiscal year on some 1,600 wines contributed to the increase in volume sales and had an impact on the rise in dollar sales and margins.

Expressed as a percentage of sales, net expenses showed improvement, ending the year at 16.6 per cent versus 18.2 per cent in fiscal 2016-2017. Net expenses totalled $539.2 million, a $29.2 million (5.1 per cent) decrease from the preceding fiscal year.

This was achieved despite the expenses stemming from the extra week of operation in the 2017-2018 fiscal year, thanks to the company’s ongoing efforts to improve efficiency and effectiveness.

Operational excellence

When negotiating with suppliers, the company insists on obtaining the best purchase price in Canada. The actions taken by the SAQ in the last two years have made it a price leader among Canadian liquor control boards, and the results show that its price reduction strategy has been profitable for its customers, suppliers and shareholder.

To make its supply chain more flexible and better performing, the SAQ replaced the warehouse management system (WMS) in its distribution centres. The new technology offers improved product tracking and increased operational flexibility and helped the SAQ to support the 4.1 per cent increase in shipments.

To improve efficiency and reduce costs, the SAQ began using its own truck fleet to deliver customer orders for pick-up in stores instead of relying on an external partner. By combining these additional deliveries with the regular deliveries made to stores, the company not only achieved savings of $110,000 but also improved its environmental performance by decreasing vehicle usage.