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.

The recent Food & Drink Supply Chain Health Index survey conducted by Culina Logistics revealed that for one fifth of the food and drink manufacturers, waste management was one of the best performing areas in terms of generating efficiency gains. However it also showed that for more than one in four (27%) waste management had failed to achieve efficiency targets.


James Tupper, Efficient Consumer Response (ECR)  learning and change manager at IGD, has 30 years' experience of developing people and business performance in the food and grocery industry across Europe, North America, Asia and Africa. Here he talks exclusively to Food & Drink Logistics Review about why supply chain waste prevention needs to be put more firmly on the agenda of all those managing material flows.

“Whether you are on the commercial or supply chain side, your work can have a massive impact on waste levels in the food and drink supply chain. For example, those in commercial functions can have a pivotal influence on the prioritisation of improvement opportunities through tracking of waste performance across products and trade partners. The range, product and packaging decisions of category, brand and marketing managers have major ramifications for waste levels. The forecasting of, and responsiveness to, demand by supply chain professionals, as well as their management of product flow and stock life can similarly have a crucial effect on waste.

According to the Waste & Resources Action Programme (WRAP), 18.4 million tonnes of waste* (costing £17 billion) is produced in the UK food and drink supply chain, and households, each year. Of this, five million tonnes (or 27%) is generated at manufacturing sites, 1.4 million tonnes (or 8%) on retailers’ sites and 0.1 million tonnes (1%) in distribution.

Ideally trading partners need to work together to improve performance, as decisions made and actions taken to prevent waste in one part can have unintended consequences elsewhere (such as increasing overall waste levels). All waste reduction initiatives must ensure waste is not simply pushed up or down the supply chain.

The hierarchy of preferred options for reducing waste are:

• Prevent or eliminate waste

• Redistribute to alternative markets

• Recycle or process into a fresh supply of the same or similar material and reduce consumption of virgin material

• Recover via anaerobic digestion composting, used cooking oil, rendering, energy recovery and mechanical heat treatment

• Dispose of via landfill, thermal treatment without energy recovery or via sewer / controlled water course

A lot of great work is being driven by other organisations to light-weight packaging, reduce household waste and make sure waste is diverted from landfill.  ECR is complementing this work by helping the industry to more efficiently respond to volatile consumer demand and so prevent waste in the supply chain.

ONE — Measure:
To manage something you need to measure it. One way to prevent waste is to focus peoples’ attention on hot spots through measurement, local accountability and communication. 

Across the food and grocery industry there are hundreds of thousands of manufacturing, distribution and retail sites and product items. Identification of hot spots is achieved by undertaking a thorough risk assessment of the supply chain, paying particular attention to where product ownership transfers between internal functions and between organisations. 


TWO — Engage:
Have a measurable waste KPI that everyone can understand and publish it so that everyone knows how much daily, weekly waste there is. A measurable KPI could be one or all of the following: number of singles wasted; weight in kg/tonnes of total waste; £s waste as a percentage of sales. The KPI could be broken down either further to reasons, for example: damaged; out of date; or reduced.

Also creatively engage your colleagues through focus groups and ideas competitions to generate energy. Talk about it! Involve all teams – everyone, wherever they work, has a role to play. Finally conduct regular internal waste audits  and share the results with colleagues.


The primarily focus here is in on reducing waste through minimising over-forecasting. But it is also recognises the business requirement to maximise availability of products. Joined up working along the supply chain will help optimise any trade-offs between availability and waste.

There are a great number of elements that feed into an effective forecasting process, including weather, marketing activity, promotions, new products and seasonality. Certain elements of the forecast may be defined as an ‘art’ while others are more ’scientific’ in nature.

Each input to the forecasting process should be treated differently. Those more ‘scientific’ inputs benefit from taking a more mathematical approach (i.e. statistical forecasting) while others benefit from a more insight-based approach. The common success factor across all inputs to any planning process is the quality of the input. A 2010 survey of top FMCG companies by IGD indicated that planning error occurs from three broad areas:

These include:

• Poor communications which lead to late information, late changes to requirements and inadequate internal collaboration; 

• Inadequate processes which can result in no customer collaboration; lack of internal forecasting process and timely data; 

• A knowledge gap which means it is difficult to forecast new product development, missing information and lack of understanding of customers’ plans.

Food and packaging waste can be reduced by packaging and product design, by:

• Always considering and testing the impact of any packaging reduction initiative on product shelf-life and protection of product. A decrease in packaging may not be beneficial if an increase in food waste is seen; 

• Engaging marketing and packaging specialists at the start of product development with the principles of reducing waste through packaging design; 

• Trialling packaging changes before roll-out to ensure they work;

• Understanding that extending shelf-life by one day can significantly reduce waste throughout the supply chain – every day counts! 

• Considering the use of oxygen scavenging or controlled modified atmosphere packaging to extend shelf-life;

• Looking around, understanding what your competitors are doing and what solutions exist for different categories and markets.

Food and packaging waste also be reduced by having a more efficient product range through:

• Carrying out regular range reviews, looking at sales, volume, profit and waste to enable more informed decisions about your ranging strategy by category; 

• Conducting  some consumer research before introducing new lines to ensure there is a market for them; 

• Conducting regular customer focus groups to check that your product range is still relevant to today’s consumer; 

• Managing your long tail stockkeeping unit (SKU) - analysis generally shows many slowmoving SKU’s generate higher levels of waste due to inflexible supply chains and lumpy, unpredictable demand patterns. Reducing SKU counts to focus the supply chain only on the faster moving products can prevent waste;

• Carrying out product reviews at sixweeks and 12 weeks after introducing new products, to ensure they are meeting your sales and profit expectations; and whether they are causing waste.

The IGD is bringing the food and drink industry together under an overarching target to prevent 75,000 tonnes of waste by the end of 2012, and to also divert a further 150,000 tonnes away from disposal. This follows the successful model begun in 2007 to save HGV miles through a series of measures, including sharing lorries. The ECR ‘miles saved’ project has so far removed 124m miles from the supply chain.
There are currently 33 companies who have signed up to these targets. They are all IGD members and are leading retailers, manufacturers, wholesalers and foodservice operators.

Efficient Consumer Response (ECR) UK has put together a new FREE Supply Chain Waste Prevention guide FREE Supply Chain Waste Prevention Guide It is one of the outputs of 18 months’ work by a team from Asda, Booker, Brakes, Kellogg’s, Kraft Lactalis, Morrisons, Müller, Nestlé, Sainsbury's, Tesco and Unilever.”

* ‘Waste arisings in the supply of food and drink to UK households’

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Culina Logistics Long Service Event at Uttoxeter Races

Culina Logistics, the leading provider of logistics services for food and drink companies in the UK and Ireland, hosted its annual Long Service Event to recognise staff who have dedicated up to 40 years of service to the company.

Seventy staff members and their partners enjoyed a celebratory day out at Uttoxeter Races, to mark significant milestones in service to the company starting at five years.

Thomas van Mourik, Chief Executive of Culina Logistics, said: “Each year we like to do something special to thank our staff for all the years of hard work and dedication to the business. Culina has enjoyed much success over the years and this is all down to the valid contributions made by our staff to uphold the company policy of customer service excellence.”

John Edkins, celebrating 20 years’ service with Culina, said: “I have very much enjoyed working as a driver for Culina for the past two decades, and it was great to be treated to a wonderful day out with my colleagues to celebrate this milestone in my career.”

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