The availability of information, the Internet and Social Media, has significantly reduced the size of the supply chain network. The supply chain, however, cannot function competitively without effective collaboration, information sharing and visibility. It is equally imperative that all parties involved in the partnership, maintain a financially sustainable business.
We shall explore the evolution of the partnership between Brandhouse (Pty) Ltd (hereafter brand house) and IMPERIAL Managed Logistics (hereafter IML), from an initial disconnected and transactional relationship to a real collaborative partnership within the outsourced primary freight environment responsible for DRP and direct customer deliveries. It was important for both parties to regain trust, improve service levels and reduce wastage caused by poor inventory management and delivery execution.
We shall furthermore provide evidence of the benefits of the collaborative partnership and the steps involved to the successful implementation.
History and scope
Brand House is South Africa’s leading total beverage Alcohol Company with an unrivalled portfolio of premium brands across the spirit, beer and RTD (Ready-to-Drink) categories. Established in 2004, Brandhouse combines the best of three alcohol beverage companies in terms of brands, people and ways of working. It is a South African joint venture of Diageo, the world’s largest premium alcohol beverage company, Heineken International, the third largest brewer in the world and Namibia Breweries Limited, one of the leading beverage manufacturing companies in Southern Africa.
The Brandhouse national network plans and executes approximately 35 000 full truck loads per annum, including 43 unique delivery lanes and over 1000 direct customers delivery points in South Africa. This high risk product requires full time risk management and expediting through 24 hour, seven days a week dedicated network. IML is the contracting service provider for all primary freight movement for Brandhouse
Visibility
Previous information sharing was limited to a published load execution plan. Replenishment planning was conducted in isolation, which put immense pressure on the national network’s capability (warehousing and transport), to service customers. Planned loads exceeded inbound and outbound capacities, insufficient lead times were allocated to deliveries and data integrity on load schedules resulted in failed delivery execution and plummeting customer service levels.
IML has been developing innovative ways of providing customers visibility through an internet based platform, a gateway to providing live access to operational information, load status and completed deliveries. IML’s in-house IT department developed a fully customised portal, capable of providing full visibility to Brandhouse management and staff, IRL warehouse and IML operations. All parties are now able to view the progress of picking, loading and despatch, with real-time visibility of vehicle positions. The improvements now allowed for 48 hours’ forward planning, visibility and information sharing by both parties, improved decision making and load execution. This also allowed us to increase operational control by reviewing and establishing planning parameters, not only reducing lead times, but also increasing warehouse throughput capacity. Shared load information allowed us to identify risk periods/areas, mitigating possible loss of sales due to out of stocks or vehicle availability. Load smoothing, based on warehouse and transport capacities assisted in alleviating some pressure off the year-end peak.
Performance
The essence of a good supply chain network is ensuring the correct stock, to the right location, at the required time and anticipated price, by upholding an industry leading service level. Both partners realised that step change was required to rectify the current situation. Changes implemented include the relocation of the Brandhouse operations to IML’s centrally located command centre in Stellenbosch, where trained operators have been serving large FMCG contracts successfully for the past 15 years. The transition, together with the introduction of Brandhouse’s high performance DRP team and a dedicated IML Key Account Manager and operations team, was an instant success. A dedicated fleet on local loads and certain mid and long distance routes were implemented to ensure minimal service disruption due to seasonal demand.
The team managed to achieve a 44% improvement in brandhouse’s OTIF (On Time, In Full) on Depot Replenishment Planning and a consistent delivery performance above 90% on customer direct orders, coming off a base of below 60%. Forward planning, information sharing and visibility, which previously were non-existent, resulted in one of the best executed December peaks in recent years.
The utilisation of co-packers and strategic business partners, like Namibia Breweries, further relieved the throughput pressure on local warehouses resulting in better stock availability, more direct shipments from alternative sources and financial opportunities. Brandhouse and IML managed to execute more direct loads to customer from Namibia in the last six months, compared to the preceding 12 months.
Change management was one of the largest contributors to the success of the new ways of working. Driving network performance through identified key performance indicators (KPI), allowed management of both teams to drive processes and procedures. It changed the way we operate, communicate and collaborate. It created the base for trust within the partnership.
Sustainability
Building a mutually beneficial relationship is imperative in ensuring a long term commitment by all parties. Commitment to the employees, environment and stakeholders. Brandhouse and IML have achieved this by working together to reach their budgeted targets for peak 2014, providing employment and training opportunities for individuals involved in the Brandhouse partnership. Brandhouse furthermore shows their commitment towards Corporate Social Responsibility through their Drive Dry initiative, communicating the importance of responsible drinking to their employees and the public. We incorporated rail transport as a means to reduce our carbon footprint and reducing congestion on our already congested road transportation network. The first phase included returns from Cape Town to Johannesburg, with the finished good project currently in its final testing phase.
Conclusion
With the new base created through the stabilisation of operations and achieving the required service levels, the partnership are now able to focus on continuous improvement and cost saving initiatives that will benefit all stakeholders.
We have moved away from the silo mentality and looking at innovative ways of improving our supply chain. We are no longer forcing our functional achievement of goals to the various channel partners, but rather collaborating to achieve our companies’ goals.