Nestle

Nestle is switzerlands biggest company, founded by Henri Nestle in 1867. Today it is capitalized at over $59 billion and is also the worlds largest consumer food company, employing 253,000 people worldwide in the production of more than 15,000 different products. It manufactures and markets some of the best-known international FMCG food and beverage brands in the world Nescafe , KitKat , Quality Street, Buitoni , Cheerios and Shredded Wheat to name just a few. Total logistics has been helping Nestle UK manage its supply chain for over eight years.

Making sure that the right goods get to the right UK multiples, wholesalers and retail outlets at the right time every time is a huge logistical undertaking and is underpinned by Nestles two biggest UK distribution hubs at York and Bardon in Leicestershire. When Nestle UK decided to sell off a significant part of its food business to premier foods in2002 covering such brands as Branston Pickle , Sunpat , Sarsons Vinegar and Rowntree Jellies it was faced by the simultaneous problems of under and overutilization at the two main distribution hubs. Total Logistics was appointed to asses the

options and specify the strategic solution dubbed Project Shirt for the rebalancing of Nestles UK supply chain. Whereas Nestles York centre is operated in-house , the 456,000 sq.ft Bardon centre is managed on behalf of Nestle by TDG, one of the UKs largest supply chain solutions providers with 8,000 employees and a 1,600-strong vehicle fleet. York handles Nestles confectionery business and Bardon concentrates on the rest of the Nestle product portfolio. This was principally the Food and Beverages range where TDG was assembling deliveries for Nestle from the Scottish Highlands to the Channel Island plus all sites in between utilizing a network of eight trans-shipment centres around the country.

Absorbing Business Change While the York facility was already being over-utilised on the confectionary side of the business, Nestles food products represented a major proportion of the volumes passing Bardon. This inevitably meant that the sale of the companys food business to Premier Foods would create the opposite problem for the Bardon facility: that of under-utilisation. Bardon largely mirrors the York operation in terms of the basic warehousing process of goods-in; product storage strategy and zoning; high bay management; low bay management ; order processing; RDT based case picking; and loading / marshalling process. However, Bardon is a bigger operation, with 14 unmanned cranes, 57,000 High Bay pallet location on 14- level aisles, 6,000 pallet locations in the Manual Bay, 20 picking trucks and a range of other trucks. Having spare capacity provided an opportunity to assess how customers were served and this was the principal driver for bringing in total logistics to help with the re-engineering of Nestles supply chain. But it wasnt the only one; there was a risk management issue. Nestle no longer felt it appropriate to hold entire product stocks under one roof and a solution had to be found for the strategic storage and distribution of major lines like coffee or the hugely popular KitKat that protected them but without compromising access and delivery efficiency. In addition, a future objective of the project for Nestle was the establishment of a single customer service centre in York. There was also a clear need to respond to the impact of the EU Working Time Directive: the travel time for lorries delivering from York into the south of England is long. Without an alternative solution that reduced delivery lead times, adhering to the Directive would have almost certainly meant cost additions Re-engineering the Supply Chain Lan Hill is Nestles director of supply chain services and eBusiness: The sale of our Foods Division was the ideal opportunity to build in a far greater level of flexibility and responsiveness into our national logistics network. We spent a lot of time listening to our customers and they wanted to see a higher frequency of deliveries but with less

volume in effect giving them a much more effective JIT-based method of operation We had already been working successfully with total Logistics for many years and their appreciation of the strategic issues affecting our business made them the ideal choice for mapping out the options for us, he added. The initial study involved establishing the flows of product of the remaining business streams and modeling the cost of alternative warehousing and transport options. One of the possible options considered was to mitigate the under-utilisation impact of the sale of the food division by reconfiguring the existing network from two product-specific national distribution centres to two regional distribution centres each carrying the full range of products. Effectively, this would merge the confectionery deliveries with those of the remaining food and beverage products. Having established the right strategy for change, Total Logistics then undertook a more detailed analysis of this option and the operational implications of providing an improved service to Nestles customers. Switching to Composite Palletisation As Hill says: The secondary analysis gave us clear options from which to operate combined deliveries, including the right methods for stock deployment at York and Bardon . they quickly identified the changes that needed to be made to the warehouse and transport system in order to secure improvements in customer service, optimized warehouse utilization, faster response times, combined ordering and an on-tap capability for more frequent deliveries. Once the right model had been developed by Total Logistics and Hills in-house team, work on its implemented began. The York and Bardon hubs would need to be united closely the across systems, people, processes and transportation. This involved accurate co-ordination between Nestle, TDG at Bardon and also covered the AUTOSTORE warehouse management system(WMS) running all product movements at both sites. All of which would need to fit hand in glove with Nestles SAP enterprise resource planning (ERP) system located at the companys Croydon headquarters plus

the new supply chain had to work within the parameters of Nestles UK manufacturing operations. With major manufacturing centres at York, Halifax, Castleford, Fawdon, Tutbury , Hayes and Dalston, Nestle generates about 70 per cent of UK centres with the balancing 30 per cent coming from overseas or being re=imported following export for finishing

About Total Logistics It has offices in Workingham (UK) Roermond (NL). It is establishad in 1989