Tuesday 22nd Aug 2017 - Logistics & Supply Chain

LSC 2015: cutting edge strategies

Cutting edge supply chain strategies from leading retailers and manufacturers came under scrutiny at the Logistics & Supply Chain Conference in London in March.

Logistics & Supply Chain Conference

Jaguar harnesses supply chain to drive growth

Jaguar Land Rover has transformed its business and both brands over the past five years, investing over £10 billion and doubling sales. Mike Mychajluk, supply chain & external engagement, Jaguar Land Rover, explained how it was harnessing its supply chain to support this growth at the Logistics & Supply Chain conference.

First published in Supply Chain Standard, May 2015.

First published in Supply Chain Standard, May 2015.

“This calendar year-to-date to the end of December 2014 our sales are 462,678 vehicles, nine per cent up on last year. Jaguar retail sales, at 81,570, are six per cent up and Land Rover, at 381,108, are nine per cent up.”

JLR has been part of the TATA group since 2008, but is independently managed from the UK. It currently has UK vehicle assembly plants, with two UK product development facilities – and it opened its New UK Engine Manufacturing Centre in 2014.

Its first overseas manufacturing facility opened in China in 2014 and there is a new plant under construction in Brazil. In total it employs more than 32,000 people globally – a figure that has doubled over the past few years.

It has developed a technically advanced aluminium vehicle architecture. “This all new technology not only represents a significant milestone for Jaguar Land Rover (£1.5bn/$2.4bn) but, more importantly, for our customers. Aluminium has already been used in Jaguar’s XJ, XK and F-Type models, while also helping to reduce weight on the Range Rover family of vehicles.

‘This uniquely developed architecture will be modular and scalable. It will enable us not only to enter but also to compete aggressively in exciting new segments, creating new markets for both brands with far more scope than ever before as we start delivering a wider range of compelling products tailored specifically for our demanding customers,” he said.

The first product built upon the new architecture will be the Jaguar XE.

“In supply chain we are the people that make it all happen,” said Mychajluk. “Over and over again we are having to work out how we can increase our capacity.”

Mychajluk highlighted the importance of the UK supply chain to JLR. In the UK, its purchasing will be over 50 per cent of UK passenger vehicle OEM expenditure by 2017.

It is working in collaboration with government on automotive strategy. “We are going to grow the supply chain – we want new technologies to flow through. For example, he said: “We have a proving factory to take a prototype and work out the manufacturing steps to get it produced.”

The growth in the automotive industry is not just about the OEMs it is also about growth in the supply chain, he said, highlighting the move to reshoring.

JLR is pushing its suppliers to increase production for its UK plants, but increasingly it wants them to increase production for its overseas plants. The Hams Hall Export Centre became fully operational in September 2014 and at peak will send out up to 140 ship containers a day, he said.

JLR plans 50 new product actions over the next five years, which creates huge opportunities for the UK, he said. “But the UK manufacturing environment is challenging, and a partnership approach with our stakeholders is vital to realise employment and financial benefits for the UK.”

 

 

Supply chain drives growth for Mizuno

Mizuno’s ambitions of becoming a major global player in the sports retail market are reliant on a strong supply chain. The company reported $1.8bn sales in 2013. Japan made up the bulk of this, with 66 per cent of overall sales, while the Americas provided 17 per cent. Although only accounting for eight per cent of said sales, the European market is seen as a growing prospect for the Japanese brand.

For a brand looking to expand, it is aware of the challenges it must overcome, and does not hold back from admitting its weaknesses.

Azad Brepotra, the sports brand’s project manager, told delegates that the company is looking to improve upon its existing supply chain. As a firm, Mizuno is looking to not only achieve double digit growth in Europe, it is also looking to bring agility into its supply chain.

“We are touching every area of the business with these supply chain improvements,” said Brepotra. “Even the HR departments – and inevitably, we are expecting some areas to be resistant to change.”

Presently the firm operates out of four warehouses, with three of these operated by separate 3PLs – Brepotra notes that he believes such a set up is hampered by limited outside insight.

 

Asia Pacific leads growth of third party logistics

Asia Pacific will overtake Europe as the largest market for third party contract logistics by 2017, Simon Hobbs, vice president – supply chain development at Ceva Logistics, told delegates in the opening session of the conference.

The global contract logistics market grew by 2.8 per cent in 2013 to some €168 billion – and the prediction is for six per cent compound growth between 2013 to 2017. Today, 37 per cent of global market is in Europe, but by 2017 Asia Pacific will be the largest market with 34 per cent.

Hobbs highlighted the importance of collaboration in logistics in a changing market.

“We are seeing much greater collaboration with our customers’ competitors. If supply chain is not a competitive issue for them – why not,” he said highlighting the motor industry as an example. Every component in a car is unique to that vehicle – and that is where the competition comes – not in the logistics.

And he pointed out that there are times when a big 3PL will use a small local operator or even a competitor 3PL – areas of the world where it does not have a high level of coverage, for example.

There is also a growth in joint ventures – it’s common typically in China. Hobbs looked at developments in the outsourcing process. “Some mature companies see outsourcing as “insourcing” 3PL skills into their organisation,” he said pointing out that this was when it worked best.

 

Gaining a competitive advantage

Risk managing a supply chain is often mistakenly perceived as just another form of insurance by companies, according to Cranfield University’s professor of supply chain strategy Richard Wilding. However, Wilding believes that it can be so much more.

But, if carried out effectively, risk management could provide significant competitive advantage. For this to take place, companies need not only greater visibility of their entire supply chain but also the factors that could negatively impact it.

“In the UK there is one event that can instantly shut down the supply chain,” said Wilding. “Snow. But there are numerous events that can affect it: foot and mouth, tsunamis in Japan.”

Academia plays a vital role in developing strategies to counter risks faced by supply chains. However, this requires collaboration between both academics and industry.

 

Collaboration boost for Homebase

Collaboration was at the core of the presentation by Chris Warn, head of supply chain at Homebase. He said: “Close collaboration with suppliers is crucial to ensuring complete visibility across the supply chain.”

Warn argued that working strategically with suppliers could result in bigger savings than could be achieved in a purely transactional relationship.

At Homebase, he said the starting point had been developing a broad understanding of supplier.

It started with purchase order management – and went to speak to suppliers to get feedback on how we could operate more efficiently. What came out of that was the importance of sharing information more proactively with the supplier base.

Another example is factory to store operation where Homebase is looking to do as much work as possible at origin before bringing into UK and, if possible, direct to store. At Christmas, Homebase brings in some 700 containers for Christmas – and failure is not an option. Warn said Homebase had worked closely with Kuehne + Nagel to take the pressure off its distribution network.

One of the results of this change of approach is that it is asking product suppliers to do things differently – particularly in terms of labelling and product handover.

The growth of e-retailing means that there are now a significant number of products that are available online only, and often the supplier will manage that delivery. In that situation, it can’t be a master servant relationship, he said.

 

Meter change largest industry upheaval in a generation

Switching to smart metering presents the largest industry upheaval since the move to natural gas in the 1960s, according to Glyn Williams, British Gas head of supply chain, speaking at the Logistics and Supply Chain Conference.

The organisation’s response to the supply chain challenge made it overall winner in the European Supply Chain Excellence Awards 2015.

Under a UK government requirement for smart meters to be made available to the British consumer, the utilities company is to install over 50 million meters across 16 million properties by 2020. In total, the government initiative will lead to the installation of 60 million meters across 34 million premises nationwide.

To date, the firm has installed 1.3 million of the 1.6 million meters installed across the country.

Collaborating with suppliers – DHL, Royal Mail and Tata Consultancy Services – British Gas has re-engineered its supply chain to support a dramatic up-scaling of its capabilities, from 1,200 engineers to 3,500 by 2016.

The project has driven significant cost avoidance by automating manual processes, which reduces the need to recruit significant warehouse resource to support the scale up plans, and providing them with a simple ordering catalogue has reduced manual processing for engineers.

“The engineer effort has, however, become enormously complicated,” said Williams. A lot of time is spent dealing with old meters – assets not owned by British Gas.

These assets are owned by one of 70 suppliers used by British Gas, and following collection by engineers, they are sent back to the manufacturer who subsequently scraps them. Williams believes the firm needs to improve trust with the suppliers to remove a hurdle in the rollout.

“Rather than shipping assets back and forth, if we can gain that level of supplier trust, we could scrap it at source,” he says. “This increases efficiencies for all parties involved.”

One of the problems of success for British Gas is the risk of losing staff that it has trained to its competitors.

“It was important British Gas take the lead on this,” said Williams. “As the company with the largest share, there would be too many risks in holding back. So we opted to be proactive and try to gain competitive advantage.”

This, of course, required the firm to not only bring on board new staff, but to train them as well.

“Being first to market, we have had to commit to training, now some of our engineers are being lured away,” said Williams. “We need to be inventive about how we keep our staff, offering them opportunities and lifetime career prospects is just one way of doing this.”

With other firms lagging behind, Williams now believes that the government may push back the deadline to 2022 rather than impose the severe penalties laid out for failing to get the switch completed on time.

“Our competitors may want an extension to 2022,” he said. “We’ve been first in the market and ideally we’d like the deadline to be held at 2020 because of competitive advantage.”

 

Sainsbury’s revolutionises GM flow into the UK

Sainsbury’s has revolutionised the way its flows general merchandise product into the UK from overseas sourcing locations. Iain Bartholomew, head of the non-food supply chain at Sainsbury’s, explained the benefits of the innovation at the Logistics and Supply Chain conference.

The retailer faced a number of business challenges, he said. Non-food is growing at three times the rate of food. Sourcing has been shifting and imports volume have been increasing at 20 per cent year on year. It is now handling some £1bn worth of general merchandise per year.

All this had resulted in significant challenges to its UK infrastructure. The solution involved picking at origin so that goods can be delivered direct to store. Added value origin operations now provide 100 per cent availability of sale stock in every domestic store.

Not surprisingly, this initiative won Sainsbury’s and its logistics partner Allport Cargo Services the 2014 Logistics and Distribution Award in the European Supply Chain Excellence Awards.

Working with Allport, Sainsbury’s ran a pilot programme for Halloween 2009 handling some 60,000 cases – picking for store at origin in Asia and shipping direct. Over the five years since then the volume handled this way has grown to some 1.5 million cases.

Bartholomew highlighted the importance of the use of a control towers to manage the process. Sainsbury’s now has five sourcing offices around the world – notably in China and India.

One of the advantages of picking at origin is that infrastructure cost is avoided in the UK and more efficient store receipt for store colleagues.

Not only that, said Bartholomew, “We can pick in Asia at least as accurately as we can in UK.”

 

Sourcing ethically

A positive workforce is a must if a company wants to operate effectively and compete with its rivals, according to Amanda Lockley, head of CSR at Matrix Systems, which won the Sourcing and Procurement Award at the European Supply Chain Excellence Awards 2014.

Key to Matrix’s win was the adoption of a new auditing process and its implementation of a new social and ethical sourcing programme. Auditing workers has become something of a box ticking exercise, said Lockley, who has worked in China.

“Chinese factories often hold multiple sets of books to meet different requirements,” said Lockley. These systems lead to duplication and fake information, which equates to ineffectual use of funds. Auditing without continually improving results in a cycle of stagnation, she said. Matrix opted to take the bull by the horns and has sought to improve both best practice at its factories and workers’ environment.

“How do we do this? We break down the fear, what with cultural differences etc,” said Lockley. “It’s very difficult, takes time and is all about building relationships. Once we have heard their problems, it’s important to put back the benefits – and it is important to remain sensitive and not to put down their existing structures.”

At senior level, Lockley has received board level support for the programme, with the firm’s CEO investing in it. Since implementing the scheme, factory wages have risen alongside a reduction in working time with a measurable impact.

“Worker retention has risen from 50 per cent to 80-90 per cent,” said Lockley.

 

 

Conference Partners

 

Lead Partner

 

Ceva Logistics

Ceva Logistics is one of the world’s leading logistics companies, providing end-to-end design, implementation and operational capabilities.

 

Thought Leadership Partners

 

DynaSys

Founded in 1985, DynaSys is one of the leading European providers of collaborative demand and supply chain planning solutions.

 

Unipart Logistics

Unipart has developed The Unipart Way – a philosophy of working that is underpinned by a set of tools and techniques that form the basis of its knowledge management system.

 

DSI

DSI helps give you control of your mobile future. With DSI, you can conquer the complexities of becoming a mobile enterprise.

 

Workshop Partner

 

Honeywell

Honeywell is a leading provider of innovative voice technology solutions, helping companies with mobile workers run a better business.

 

Exhibitor and Meeting Partners

 

Palletways

Palletways is Europe’s largest provider of express palletised distribution services.

 

Tools Group

ToolsGroup helps companies accelerate their business performance through market-driven demand analytics and supply chain optimisation.

 

Exhibition Partner

Flanders Investment and Trade

Flanders Investment and Trade is a Belgian government economic development agency, and services are free of charge.

 

Networking Partners

 

Pooling Partners

Netherlands-based Pooling Partners operates three pallet pooling networks.

 

IDI Gazeley

IDI Gazeley is one of the world’s leading investors and developers of logistics real estate, with a focus on customer service to developments in North America, Europe and China.

 

Supporting Partners

 

CILT UK

The Chartered Institute of Logistics and Transport (CILT) is the professional body for transport, logistics and the supply chain.

 

ELUPEG

ELUPEG – formed in 2002 – is a European organisation focused on the fostering of logistics collaboration.

 

Cranfield University School of Management

 

Leaders in Supply Chain UK

Leaders in Supply Chain UK is an independent network of leading practitioners helping to shape the future of our profession.

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