Whatever the commitment to ‘total supply chain’, there is no doubt that logistics and fulfilment remain the core supply chain competences, and the area where the metrics will make or break an Awards entry.
Unsurprisingly, a full third of the shortlist were nominated in this category, including Argos, Borealis, Coca Cola Enterprises, Dell, Dentsply, GlaxoSmithKline, Matáv, Rexam, and Swisscom Mobile – despite considerable differences in the average sectoral scores, there was at least one nomination from each business group.
As a first cut, the judges went back to the scores on the NVC Index, and identified a group of four that were clearly separated from the rest: Argos, Rexam, Coca Cola, and Dell.
At Argos, ‘the fulfilment engine is very much the lifeblood of the organisation’, as the judges noted. Features that appealed included the way the distribution network is optimised around several distinct fulfilment channels, the detailed monitoring of transaction times from order to receipt and the way this is used to identify and resolve issues, the successful introduction of direct home delivery, and the active collaboration with suppliers on standardising packaging to increase vehicle fill rates. The metrics also cannot fail to impress – 150 million items picked a year, all picked and replenished as singles, 20 per cent reductions in inventory in the system, yet a 10 per cent increase in in-store product storage capacity, achieved by close attention to detail.
The Rexam entry was also well supported by the metrics. Based on a properly comprehensive set of supply chain KPIs, Rexam can show, amongst other things, a reduction in finished goods inventory from 54 to 18 days, with high point stock down 29 per cent and the low point down by 16 per cent. The summer peak stockholding has been reduced by over 700 million cans (try imagining that). Warehouse rationalisation, from 51 down to 30, has been mirrored by increased utilisation. On the fulfilment side, OTIF has improved from 96 per cent to over 99 per cent, and Rexam now boasts a full track and trace capability in case of product recalls, that can locate a product’s position to within the last two hours.
It is probably no co-incidence that Coca Cola Enterprises, one of Rexam’s major customers, was also highly rated in this category. They also boast some impressive figures – 95 per cent OTIF to within 15 minutes of the agreed time; a vehicle fill rate improvement of 7.5 per cent; a significant increase in direct-to-store deliveries over the last four years (and each one per cent increase is worth €150k); and finished goods inventory down from 9.5 to 8.5 days without impacting at all on OTIF or availability.
The judges also liked the Merchandising Unit concept, the long term strategic nature of relationships with a rationalised group of key hauliers, and the way in which CCE with its partners has turned backhaul capability into a significant revenue stream (worth €1.35m at the last count), with the benefits shared with customers.
Finally in this category, the judges looked at Dell. Again, there were some truly awesome statistics, even allowing for the fact that a purely make-to-order business, is in a rather different game from firms that have to buffer against, for example, seasonal or weather-related variations in demand. But you can’t argue much with 99 stock turns per annum, OTIF of 97 per cent, and an unmeasurably small inventory at materials receiving, work in progress, and finished goods (essentially, the only items that aren’t moving are the rare ones that have failed during the assembly process). Downstream, the immediate loading of finished goods for dispatch, and the way the merge-in-transit capability is fully integrated into the outbound fulfilment model, are also impressive, as are the resulting outbound lead-times of 48 hours to the UK and Benelux, 72 to the rest of Europe (and you can’t get much further from ‘the rest of Europe’ than Limerick). Control of inbound logistics is equally impressive.
Selecting Dell for this Award, the judges described ‘truly compelling examples of excellence in Logistics and Fulfilment execution, all the way from supplier call-off to the customer. The philosophy – that the entire supply chain is fulfilment – is evident’.
