In his role as director of total supply chain for Molson Coors, Lee Finney champions innovation. He talks politics, profits and new products with Johanna Parsons.
Every week about 50 pubs close down – bad news for drinkers, and even worse news for the brewers that are constantly having to change the focus of their supply chains to accommodate the shifting balance between the on-trade of the pubs and the off-trade of the supermarkets.
But that is just one of the challenges facing Lee Finney, director of total supply chain at Molson Coors. His remit encompasses procurement, S&OP, brewing, primary and secondary distribution for on and off-trade, as well as technical innovation.
A broad background helps. He has covered manufacturing, distribution, procurement and technical; everything he says, “from the shop floor up”.
But the brewing industry itself is something new for Finney. Having risen through the ranks at Campbell Soup, and worked extensively in the daily fresh bakery market, he finds the challenges distinctive. “The difference is that it’s such a politicised part of industry. The alcohol sector is highly regulated, and subject to a lot of government taxation and policy…Certainly the business requires a different type of management.”
What Finney calls “highly punitive taxes” have pushed profits to as low as pennies per pint, even for Molson Coors’ brands such as Coors Light, Grolsch, Carling and Caffreys.
Alcohol taxes have also contributed to the move to off-trade. With some 50 pubs closing down each week, it is no surprise that the supermarkets have become increasingly important to the major brewers.
With his background in FMCG, Finney is used to dealing with the big retailers, but the off-trade requires a completely different supply chain model to the established channel to pubs.
Pubs take beer in barrels and kegs, whereas retailers need small packs of bottles and cans.
The brewer’s distribution partner Tradeteam is struggling to “right size” its operations to supply the on-trade with decreasing volumes. But it must also deliver to the off-trade, feeding into the supermarkets’ forward distribution systems.
The shift from one channel to the other is a real challenge, he says. “We are having to organise ourselves differently to win in that off-trade.”
This kind of off-trade is also very volatile. “It is highly price driven, highly commoditised, highly deal driven.” Although they try to build long range plans with retailers to smooth the supply chain, plans with the big supermarkets are of course subject to change. They are often informed of new promotions with just weeks to go, or that a promotion, or the planned packaging, must change.
Finney reckons there is huge inefficiency in the whole supply chain, from retailer back, in the management of forecasting collaborative planning. “Because we are all not synced up efficiently and effectively we’re putting costs into our business, they’re putting costs into their business.”
To cope with this, Finney’s priority is to set up demand management functions that are tightly focused on driving forecast accuracy with the retailers. He says: “We have to keep pushing for supply chain synergies and cost optimisation, it’s a massive agenda.”
One of the ways that the supply chain is addressing that agenda is with its secondary network. This sees the brewer acting as a branded wholesaler for independent pubs. It procures products such as wines, spirits and Guinness for example, and consolidates about 2,000 SKUs into its distribution system based at Burton. Unsurprisingly, Finney says: “From a supply chain and logistics point of view, that’s highly complex.”
Another way Molson Coors has addressed its financial agenda, is to turn to contract brewing. In a market with declining volumes, it has taken over closing breweries, and filled its network “by becoming the brewer’s brewer.” For example in February it bought the Sharp’s brewery in Cornwall.
The cost optimisation agenda is not the sole focus of Finney’s role. “Naturally part of the supply chain is driving cost out of the system, but if you become so cost focussed that you forget about the consumer, you forget about growth, you forget about innovation, then your business in the long term will not prosper.”
Innovation is so important that he spends about 20 per cent of his time on reviews and risk management for innovation projects. Broadly, he oversees a technical department that develops the concepts identified by the marketing department.
Some upcoming products will include a wheat beer to be served with a slice of orange, and a cask ale brewed in a microbrewery at the Burton site. “Molson Coors’ intent is to grow the category again through innovation and brand building,” says Finney.
Innovation also encompasses new applications for existing brands. For example Carling has become popular in Spain, and they now plan to launch it in the Ukraine and beyond. Over the past few years Molson Coors has also purchased a range of brands, such as Cobra, Corona and now the bitter Doom Bar, from its acquisition of Sharp’s.
All these new products might be more costly and complex to organise, but along with the channel shift to off-trade, Finney sees diversifying the portfolio of beers as essential for the business.
“It’s really important for supply chain leaders to think about innovation… it adds complexity and makes manufacturing and distribution much more complex, but if we don’t embrace it we will not thrive.”
curriculum vitae
1992 – 1996
University of Hull BSc Engineering Europe, Mechanical and Production Engineering with Languages.
2002 – 2006
University of Warwick – Warwick Business School MBA.
2000
Manufacturing development manager – CMB Europe Crown Cork & Seal.
2002
Manufacturing and TPM manager – Campbell Soup Company.
May 2004
UK purchasing manager – Campbell Soup Company.
April 2005
Operations director – Erin Foods Ireland Campbell – Campbell Soup Company.
September 2006
Director of USA supply chain – Pepperidge Farm.
March 2008
Operations director – baking – Goodman Fielder, Australia.
2010 – Present
Director of total supply chain – Molson Coors Brewing (UK).
