Saturday 25th Nov 2017 - Logistics & Supply Chain

Winner: British American Tobacco

There was strong competition this year in the Award for Fast Moving Consumer Goods/Consumer Packaged Goods between Seiko Optical, Electrolux, Kimberley Clark, and British American Tobacco. Seiko Optical UK, a previous finalist in the Awards, is of note as being probably the smallest operation among this year’s finalists (although it is
of course part of a much larger group). The UK operation imports, markets and distributes spectacle lenses manufactured in Europe and the Pacific Rim to wholesalers, spectacle manufacturers and retailers in the UK, Scandinavia, Africa, the Middle East and parts of Europe (most of the continent being supplied from Seiko Optical Europe in Dusseldorf). There is a complex mix of ‘off the shelf’ orders, where main stocks are held in Dusseldorf and forward stocks in the UK, and bespoke items manufactured to firm orders. Excellence depends on sophisticated sales forecasting and tight management of incoming freight. Since September 2005 EDI orders have increased from 52 to 82 per cent which has greatly improved accuracy and efficiency.

In Seiko Optical Europe as a whole, in that period, stock fill for shelf items has improved from 95 to 99 per cent, average supply time is down from 9.2 days to 7.6 days, and the time in which 99 per cent of orders are despatched is down from 13 days to 10. UK general manager John Conway says that, with only 19 full time employees, and having existed as a business unit less than three years: ‘We are proud of the improvements we have made and the degree to which supply chain management is now an integral part of our business culture’.

Electrolux Major Appliances supplies 29 European countries from 21 factories with 18 million products a year, with the UK operation turning over $448 million. Key supply chain activities are focusing on cross-functional Sales and Operations Planning, and slow/non-mover reduction teams that can take and implement quick decisions, and especially an increase in collaboration with major customers. Customised supply chain solutions such as Make to Order/ Staging warehousing and ‘opportunist direct delivery’ with upstream delivery have been introduced and supply chain director Paul Dunne says that over 50 per cent of volume is now direct delivery to 35 key UK customers, most of whom are working in partnership and adopting more advanced make-to-order processes through Electrolux’ ‘Collaboration Beyond Boundaries’ strategy. The judges felt unable to recommend the Kimberley-Clark entry for this sector award, as it was quite narrowly focused on their work in setting up a European central supply chain services team (but for more on this excellent piece of work, see under the ‘Team of the Year’ category).

So the winner in this category was judged to be British American Tobacco. BAT provide an outstanding example of how to configure an end to end supply chain, as it happens based on the SCOR model, which really does extend from the leaf grower to the High Street tobacconist, and was described by the assessor as ‘one of the best I have seen’. There is a very strong correlation between business and supply chain strategies – plural, because the supply chain is being structured to reflect the different requirements of the business across the world (mature or even declining markets in the developed world, but considerable growth potential in the developing countries) as well as supporting the corporate aim of overtaking Phillip Morris as the world’s number one. The ability of the supply chain to deliver innovative new products fast enough is also a major consideration.

The judges here were particularly impressed by the enthusiastic senior level commitment to using the supply chain to deliver revised business strategies. They were also impressed by the way roles and responsibilities are clearly defined, yet capable of changing to meet new challenges, and the commitment to personalised education and development for supply chain personnel. Although this company is still on what it recognises as a journey, the figures (benchmarked internally and externally) show that the supply chain is indeed delivering against very challenging and constantly shifting targets.

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