Newly acquired by a major UK food group, a historically underinvested food service distributor struggled to support continued customer growth and firefighting was a badge of honour in the business. Established ways of working resulted in unnecessary complexity in the supply chain, excess inventories, and extensive use of external warehouse storage.
Sustaining growth within capital expenditure requirements called for a radical review of supply chain strategy and operation. Key objectives:
- Maintain, preferably exceed, customer service requirements.
- Reduce working capital and stock write offs.
- Grow sales faster than logistics costs.
Our tailored programme drew on specific elements of our diagnostic methodology:
- Demand – the pattern of customer orders were assessed in terms of volume and variability to establish the distinct segments that the supply chain needed to fulfil.
- Supply Chain Synchronisation - using the demand analysis, we tracked back through the supply chain to capture how suppliers planned and executed supply orders for the main product flows. Significant opportunities to improve visibility across the supply network and smooth supply flows were captured.
- Logistics Management– current operations were reviewed to determine service and cost performance.
Our analytical insights allowed us to design a new operating model for the business that featured:
- Setting of baseline supply volumes for the main product flows, allowing suppliers to plan on a minimum volume each day/week.
- Planning of vehicle movements to drive high utilisation, including extensive use of backhaul opportunities.
- Managing inventory levels so that stock cycled through the business on a daily basis for all fast moving products.
Implementation of lean, flow supply chain model across all main supply categories delivered:
- Order fulfilment consistently at over 99%.
- Average inventory holding reduction £8m.
- Operating cost reduction as % of sales reduced by 12%.
- A fundamental reset of supply chain ways of working was needed for a step-change in performance.
- Collaboration with key suppliers was pivotal to success.