New Culina Group Company aims to meet demand for integrated perishable supply chain

Culina Fresh Limited is an innovative new door-to-door freight management service which offers high quality multi-modal supply chain capability incorporating road, rail, sea and air transportation for fresh produce, horticulture and other perishable goods. The company has been established to meet demand from producers, importers and retailers for an integrated solution to manage the complete supply chain from source, whatever the country, to final delivery throughout the UK and Europe.

Launched in September as a separate operating business within the Culina Group, Culina Fresh Limited is headed by two highly experienced leaders from the fresh food logistics sector: Managing Director, Thomas van Mourik (current CEO of market-leading Culina Logistics) and Operations Director, Paul Steele, who has 25 years’ freight forwarding experience, the last 15 in the perishable sector.

Many retailers are moving to direct sourcing as part of a strategy to simplify their supply chains and introduce shorter lead times and other efficiencies. Producers and importers are also adapting their supply chains to improve efficiencies in order to meet future challenges.

The business will initially operate from two strategic locations. Facilities at Heathrow Airport in the UK will provide offices and warehousing to co-ordinate air freighting operations. Valencia in Spain has been chosen for its proximity to the region where the company expects to manage significant volumes of fresh produce. The company will also work with carefully selected partners in North America, South America, Eastern and Southern Africa, and the Far East who will provide local support services.

“Producers and importers have been telling me that their existing supply chains are too disjointed and inefficient, and to date no-one has been prepared to take ownership and responsibility for door-to-door freight management,” says Paul Steele. “We’ve identified an exciting gap in the market which we’ll be filling with a high quality service that will address those issues and offer a new benchmark solution for freight management of temperature sensitive goods.”

Culina Group’s very own careers website (www.culinacareers.co.uk) went live in October to provide potential recruits with all the information they need when looking for a role with one of the logistics industry’s most progressive employers.

The site includes information about vacancies and career opportunities at each of the company’s ten sites in the UK and Ireland. Visitors can browse current vacancies at each location and filter opportunities by site and job category. There are also quick links to special events such as recruitment days.


The site is designed for easy navigation and includes a wide range of information about Culina Group and its operations. This includes profiles and comments from employees across a range of roles and locations who explain in their own words how working with Culina Logistics has provided them with excellent career opportunities. Information about the leadership team and other senior managers helps prospective employees gain further understanding about the company and its approach to doing business. Culina Group has an excellent staff retention rate, currently at 96 per cent, and actively encourages its employees to progress their careers through personal development and training.


“We are passionate about adding value down the line and this starts by recruiting and developing the best logistics professionals in the industry,” says Richard Berry. “With the site we aim to provide all the information high calibre people need to make a decision about joining the food & drink industry’s leading logistics provider.”

Steve Winwood, Group Commercial Director of Culina Logistics, explains one of the current supply chain trends

Retailers are encouraging their supply chain partners and suppliers to revise their delivery patterns so that fresh/chilled products and ambient products can be moved with common processes and schedules. This goes against perhaps 40 years of tried and tested practices but in making these changes the retailers expect to adopt, and be seen to adopt, leaner and more sustainable supply chains. The service providers face the challenge of delivering these changes but can also view them as new business opportunities.

Research published recently by the Institute of Grocery Distribution appears to endorse this belief. This suggested that around 60 per cent of retailers expect lead times will reduce by up to one day over the next five years. More than half of manufacturers agree. The majority of retailers (54%) and manufacturers (67%) also expect that order frequency will increase over the same period.

Most retailers have in the past employed different ordering and delivery processes for their fresh/chilled and ambient products. A typical chilled product ordering process works on what is known as day-one-for-day-two. Orders placed by a specified time on the first day will be picked and despatched for shipping and delivery overnight or on the following day. Each category of product (such as meat, produce, dairy and fresh juice) typically has its own delivery window so that each order arrives at a specific time. A number of retailers require a drop-and-drive process which minimises the amount of in-bound checking and paperwork. Instead the order is checked for completeness at the point of picking so that stock spends as little time as possible in transit before going on sale.

Ambient products, on the other hand, are often delivered over a day-one-for-day-three cycle. Here, orders received on the first day are picked on the second and delivered on the third. Deliveries are made at pre-booked times but will vary from day-to-day which means there is less certainty of vehicle availability on the day. In this scenario most retailers prefer to complete all checks on arrival and provide a signed proof of delivery, known as POD, at the end of this process. The advantages here include maximising order success rates and minimising the number of returns.

These models have developed to create supply chains geared towards ensuring fresh/chilled products have maximum shelf life. This is good for retailers because it presents the maximum opportunity to sell before a product reaches its sell by date. Similarly, although they may not always appreciate it, this is also good for consumers because they have longer to eat or drink the product after they have bought it.

To a certain extent, the argument goes, deliveries of ambient products do not need to be as quick. But times are changing and retailers are beginning to realise that employing two different delivery processes is not always efficient. Aligning both fresh and ambient products into a single day-one-for-day-two process should lead to efficiencies in a number of areas.

The benefits are clear. The retailer has a simpler ordering process geared towards replenishing stock on the following day and aligned with sales patterns. The retailer will also see significant reductions in working capital by operating the ambient supply chain in the same way as the current fresh/chilled supply chain. This will lead, however, to improved stock availability on the shelf, where it counts most, for improved customer service. For smaller retailers there will be a reduced requirement for holding stock in store rooms at the back of the shop. This means more floor space can be dedicated to selling or, alternatively, the pressure to add costly storage facilities to support bigger volumes or faster throughput is avoided.

This change in the ambient supply chain does however have significant effects for the retailer’s supplier who inevitably will need to hold additional stocks within its supply chain. Suppliers will also need to react far more quickly to requests from the retailer at a time when accurate forecasting is getting ever more difficult to achieve.

In the middle of all this is the logistics provider which may need to revise its own processes. The shorter lead times implied by day-one-for-day-two will mean an increased and more flexible requirement for warehouse storage, but also greater reliance on cross docking for consolidation. This could have implications for the design and layout of the warehouse but also the equipment, technology and processes employed. Beyond this the information systems in use - from order processing, warehouse management, order picking, vehicle loading, and delivery routing and scheduling - will probably have to work more closely than ever before to ensure seamless, real-time support for the real-world business. Interfaces with upstream (ie retailers) and downstream (ie producers and suppliers) information systems will also become more crucial and, ultimately, embedded within the supply chain.

New appointment supports growth strategy for Culina

Culina Group has added to its leadership team with the appointment of Glyn Davies as a non-executive director. The company has grown significantly in the past few years through the success of its shared user distribution model and complementary services for clients in food production and retailing. It plans to double the business within the next five years through organic growth and strategic acquisition and this new appointment is designed to add more insight from the road haulage and transport sectors at the non-executive level.

“I am delighted that Glyn has joined us at Culina in such exciting times,” says Thomas van Mourik, CEO, Culina Group. “The next five years are pivotal for us and Glyn’s expertise and support could not come at a better time. He will be instrumental in supporting our strategic plans to double the business by 2016.”

Glyn Davies has experience of the road transport and haulage sectors built up over nearly 50 years. During his career he has founded, owned and led a number of successful businesses. Each has been built on his understanding of the market and appreciation that cost plays a key role in transport operations.

After starting his career with P&O Road Services in the 1960s, Glyn founded Russell Davies in 1974 and led the company for 21 years to build a £100 million turnover business before selling to a major industrial group. He then co-founded Hanbury Davies and created another strong business before it was bought by a large distribution company ten years later. Since 2008 he has focused on business interests including Hanbury Riverside, a commercial vehicle contract hire and sales company, and a property development organisation which he manages with his son. He has also previously held non-executive director roles at a number of businesses.

“Culina is a big business with ambitious plans,” says Glyn Davies. “I’ve known Thomas van Mourik for many years and I am looking forward to helping the business grow by sharing my experience and insight.”

In his spare time Glyn supports Ipswich Town Football Club and is a keen follower of music and motor cars.

How will the London Olympics affect transport and distribution across the country?

With less than a year to go, excitement about the Olympics is gradually mounting. But what does the largest sporting event ever held mean for businesses and the supply chain?

First, there is going to be a huge increase in visitors to London and the surrounding area. Some, including Lord Coe, have suggested up to a million extra but more realistically - based on recent games - it is likely to be in the order of two to three hundred thousand who will be coming to stay in London specifically for the event. On top of this are people from the UK living close enough to make day trips and the several thousand athletes, supporters and officials who are more directly involved.

This is going to increase demands on food and general retailers, food service businesses, hotels and other businesses. All of these, to some degree or another, rely on the supply chain to maintain business continuity. This is predictable and many of these businesses will already be preparing for the upsurge they expect to see during the build-up to the games and the likely peak during July and early August.

Hotels can plan with some confidence that occupancy rates will be near to 100 per cent during the games and schedule their deliveries accordingly. But what about food retailers and food service? The volume of customers will increase for sure but by how much and what will they want to buy, and when? Will they prefer to sit down for a meal in a restaurant or will they buy snacks from a nearby take-away, supermarket or convenience store? Those outlets that maintain stock availability will do good business but those that plan badly will miss the opportunities that come their way. Suppliers may need to schedule deliveries more frequently or at different times of the day to fulfil the increased demand.

The Olympic site will also present some interesting logistics challenges. This is a new venue that will probably be at its busiest at the time when it has only just fully opened. This is not normal for most developments which gradually build up to peak capacity over many weeks or months. Some of the country’s largest and best known retailers will be opening stores in and around the site over the coming months and planning their logistics operations will be a key part of their launch phase. Getting it right first time will be the only chance to maximise the business potential.

The second key issue for the supply chain is how this unprecedented event will impact ongoing operations. Traffic levels in and around the main venues are likely to be much higher than usual which will affect scheduling and planning or normal deliveries. Everyone involved with the supply chain will need to take this into account. Open access events such as the marathons, triathlons and cycling road races and time trials will inevitably lead to road closures, large crowds and increased traffic. This has already been shown by the success of recent “trial” events such as the cycle road race in August. Most of these events are scheduled for the weekend but anyone making or taking deliveries on the days affected will need to plan well in advance.

The authorities are not complacent and have been planning for most of this since 2005. Infrastructure has been upgraded and the various bodies involved, including LOCOG, Transport for London and so on, are putting plans in place to cope with increases in train passengers and road traffic. TfL said it had spent more than £6bn upgrading the network for the Olympics. LOCOG is aiming for 100 per cent of spectators to travel to venues by public transport, cycling or walking. It has also published lots of information on road closures and other changes during the games.

Some commentators are suggesting that traditional tourist numbers in London will be lower than normal. Indeed, studies of the recent games in Sydney, Athens and Beijing have suggested that tourism numbers over the whole year might be down slightly. London may be different because of its location and size but even so everyone expects the number of visitors during July and August to be much higher than normal. So, with less than a year to go the venues are open, the trial events are taking place and the athletes are gearing up for their final push towards their dream of gold. The only question that remains is “are you ready too”?

Food kilometres — it’s a big subject and not an easy one to cover in a short article like this. Some industry estimates reckon that food in the UK is transported for a total of nearly 30 billion kilometres each year between producer and retailer. Around 80% of this is inside the UK. Leaving aside arguments about where food is produced for a moment, it is clear that once that food is in the UK supply chain there are good business reasons to reduce the number of kilometres travelled to reduce the carbon footprint, minimise fuel costs and save time.

Defra estimates that HGVs and LGVs together account for over one third of all UK food kilometres. Indeed, food transport accounts for 25% of all HGV vehicle kilometres in the UK. But while the annual amount of food moved in the UK by HGV has increased by almost a quarter since 1978 the average distance for each trip has increased by half. This is due in no small part to the changes in retail that have taken place during the same period with the growth of the major supermarkets. This has a major impact on the amount of fuel being used and the number of vehicles on the roads. And it all costs money.

The industry has responded well to these changes. The IGD recently announced that the food and grocery sector has saved 163 million HGV miles through a series of initiatives which have ensured excellent progress towards its voluntary target — supported by Culina Group - of removing 200 million food miles from the country’s roads by the end of this year. This is the equivalent of 2600 fewer vehicles on the roads.

There is more to do and any business involved in the food supply chain can contribute. Logistics operations should be planned carefully to minimise the number of food kilometres without adding undue burden onto the business or compromising its ability to service its customers. Careful load planning and route scheduling help to minimise the distance travelled and optimise loads for maximum vehicle efficiency and productivity. This is more than using the satnav on “minimum distance” setting - many operators now use sophisticated software applications that optimise orders, loading and delivery routes. In fact, HGV tonne kms have increased by 36% since 1991 and by over 100% since 1974, according to DEFRA, which means vehicles and journeys are more efficient than ever before.

Load planning is important. This can cover everything from assembling and loading orders in the correct sequence for efficiency and economy so that the first to be delivered are loaded last. Additional economies can be achieved in third party operations by sharing loads between different customers. This will help to ensure that each pallet or roll cage is loaded near to its full capacity so that the maximum available space is utilised inside the vehicle. The vehicle operates at or near to its maximum carrying capacity which is good for efficiency and minimised food kilometres.

Good load planning and scheduling also help to reduce or even eliminate the need for empty vehicle movements. Third party logistics companies with network operations often transfer products from one warehouse to the other on the “return” journey to maximise the efficiency of their operations. The location and number of distribution centres is also a factor. Too many may add complexity and inefficiency into the operation but too few may lead to overly long delivery distances.

Another way to reduce food kilometres, and costs, is to consolidate processes into fewer sites or even a single operation. On-site copacking or similar rework, for example, reduces vehicle movements associated with collecting items and delivering them to third parties - which could avoid four journeys in total - saving time, money, and management overheads.

Of course, each operator and contract will have an optimum balance between these and other factors. And while these may change depending on the day-by-day circumstances the operational efficiencies created by good planning, scheduling and application of supporting tools all remain very important.

At the same time there are other efficiencies that reduce the impact of road haulage. This can include selecting energy-efficient vehicles and scheduling deliveries for times of the day or week when there is likely to be less congestion on the roads, reducing the time spent idling rather than travelling. Both will contribute to the reduction in the fuel used even when the actual distance driven stays the same.

More generally discussions about food miles often include where the food is produced and whether switching to more local suppliers is more sustainable. Whichever way the argument falls, the distribution industry has a role to play by making sure that its operations are as efficient and well-organised as possible.

Tom Middlemiss, Head of Projects at Culina Logistics, who has been instrumental in the set up of the supply chain packaging joint venture, Culina IPS, believes that suppliers could be missing a trick when it comes to meeting the trend towards retail ready packaging.

I was interested to read recently about a new report published by the Institute of Grocery Distribution (IGD) entitled: Global Retail Ready Packaging and how suppliers are responding to this new challenge to increase their competitiveness. In drawing upon those who have already responded to the challenge, the report seeks to provide insights on approaches to retail ready packaging (RRP).

This included:

Deciding whether it was for them from the outset — in his analysis of the report Stewart Samuel, Senior Business Analyst — Market Intelligence at the IGD, commented that suppliers needed to consider the merits of RRP from a “more ideological or strategic standpoint”, including:

• What is the scale of the change being proposed?

• Can we work to the timelines that have been outlined?

• What degree of internal change will this process drive?

• How does this initiative fit in with other plans that my company is working on?

• What is the business risk of not being part of this programme?

• How are my competitors likely to respond?

 
Level of engagement — the research revealed that suppliers typically adopt one of six different engagement levels when faced with a request to convert their products to RRP. Even for those which are fairly resistant, many continue to maintain some form of engagement in order to understand how roll-out plans are progressing and to better understand the implications for their businesses. Samuel in his analysis concluded that over time, it is likely that many suppliers will develop a different response to the initiative, partly due to their experiences (e.g. gaining benefits and overcoming challenges), and partly due to the response of their competitors.

Offsetting costs: to address increased costs, according to the research suppliers have shown that a range of tactics can be adopted to minimise the overall impact, including

• RRP maximisation — designing solutions to enhance brand appearance in the category, functionality and customer communication 

• Efficiency measures — including converting all customers to the RRP solution and driving procurement savings  

• Negotiation strategies — increase product listing or distribution, increase share of space within the category.

Reviewing supply chain management

Whilst the above are all key insights into ensuring a successful RRP strategy, the report does not cover the importance of food manufacturers reviewing their supply chain management strategies.
Currently there is very little consideration amongst suppliers of integrating supply chain and co-packing activities. This can lead to two highly inefficient and costly scenarios. Firstly, an international supplier of food and drink products could co-pack at source before exporting them to the UK. This means that due to packaging type, efficiency may be lost in the supply chain in pallet and vehicle fill; also where multiple SKUs and clients are involved, the final decision regarding product destination or specialisation needs to be made earlier which can result in higher wastage.

Secondly, suppliers tend to outsource to an independent co-packer which means that product has to be transported between a stockholding facility and a co-packing operation, thereby increasing food miles and inefficiencies. Both of these scenarios and associated inefficiencies can be avoided by selecting a logistics provider that can provide a co-packing solution at their stockholding facility.

This was one of the key reasons behind the formation of Culina IPS. Culina IPS provides true collaboration and integration in the supply chain in order to deliver an RRP solution. This development means that we now offer specialist contract packaging services within our warehouses, negating the need for goods to be transported to and from another location for packing.