Monday, November 1, 2010
Irish Logistics at your convenience
3:16 PM | 
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| Eugene Maher |
“A lot has happened in the Irish food and drink logistics marketplace over the last three years, driven by actions taken by the main supermarket chains to enhance their competitiveness. Consequently this has created significant supply chain challenges for food and drink manufacturers when delivering to the grocery convenience sector, which represents circa 35 per cent of the total food retail trade in Ireland.
Two key developments have taken place. Firstly, the main supermarket chains have centralised their distribution requirements. The knock-on effect of this is that food and drink producers no longer deliver direct to these supermarkets. Whereas previously goods destined for the main supermarkets and convenience stores would be delivered on the same vehicle, this is no longer the case. This, in turn, has made it more costly for suppliers to deliver their products to convenience stores, which are geographically dispersed and often located in remote areas of Ireland.
Secondly, the main supermarkets are using their purchasing power with their existing suppliers and wholesalers in the UK and bypassing the Irish market to get the best deals. This, coupled with the fact that they can consolidate supplier goods in the UK for onward delivery to their recently established distribution centres, where product is picked for individual stores, means they are gaining further cost advantage over the grocery convenience sector in Ireland.
So how can food and drink suppliers enhance their supply chain efficiencies for the benefit of the grocery convenience sector in Ireland?
Ideally what is required is a logistics solution, which enables food and drink suppliers in the UK or Ireland to bulk distribute goods into a major stockholding facility, ready to be picked to order for individual convenience stores across Ireland, and then delivered via a shared user network to the outlets to ensure maximum vehicle utilisation and minimum food miles travelled across the whole supply chain. By having such a seamless supply chain solution with a central stockholding facility, UK suppliers would also be able to guarantee on-shelf availability due to being able to take orders for next day delivery, and reduce waste by better matching supply to demand.
The issue with such a solution is that it demands major investment, and no Irish logistics operators have realistically been in a position to raise the necessary finance for such a development.
That was until a joint venture (JV) was created earlier this year between the Culina Group, which provides total supply chain services to 90 premium brand UK and Irish suppliers, and the SHS Group. Over the last 12 months I have been involved with what is arguably one of the most exciting logistics developments in the Irish food and drink industry. The JV company, Culina SHS Ireland, today provides an unrivalled operational platform driven by leading edge technologies. This consists of a central warehousing facility in South Dublin and a shared user distribution network, comprising a 22-strong vehicle fleet, which is wholly owned by the company. This means that Culina SHS has complete control over the supply chain for the benefit of its customers.
In addition to providing a storage facility for all food producers and processors in Ireland for their finished goods, ingredients and raw materials, Culina SHS offers both UK and Irish-based food and drink manufacturers the opportunity to help the grocery convenience chains remain competitive in the food retail sector in Ireland by providing a highly cost-effective logistics solution. This is not only important in terms of responding to the developments in the food and drink supply chain outlined above, but is also particularly critical at a time of prolonged economic uncertainty, which is putting downward pressure on the premium prices charged by the convenience stores.”
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