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The importance of efficient supply-chain logistics in Retail

A Case Study

Clinton White, Managing Director of CEVA South Africa

Shopping & Retail SA recently met with the world-renowned CEVA Logistics company with a view to gaining insight into this crucial aspect of Retail. Clinton White, Managing Director of CEVA South Africa, provided us with considerable detail around the following recently completed project.

At the outset
This project began some five months ago where an existing CEVA client required assistance with bulk warehousing and forwarding and clearing solutions due to existing operational and planning issues which were imposing serious delivery constraints.

Kraft-Heinz imports a significant volume of products and also manufactures locally at its factories in Wellington and Atlantis in the Western Cape.

In consultation with Kraft-Heinz, CEVA initiated an in-depth supply-chain value assessment – at their own cost – in order to demonstrate to the client what level of improvement, and importantly, cost-savings, could be achieved with a professional forwarding and clearing and warehousing strategy.

“With this approach the client was able to see and interact with our strategic direction, leading up to what is clearly a win-win scenario – one which vastly improved and stabilised their entire logistic scope,” said White.

The objective:
The primary focus points of the project were as follows:
– improve cash flow;
– reduce stock holding;
– operate using the Just-in time- model (JIT);
– get the optimum product mix into the distribution centres (DCs); and
– ensure that the many facets of the project work smoothly and seamlessly together.

(Photo by Scott Olson/Getty Images)

The process:
Working in close collaboration with the Managing Director of the Kraft-Heinz Company in Southern Africa, Morné Fourie, the CEVA team of five interviewed over 30 Kraft-Heinz staff, touching on every aspect of the Kraft-Heinz forwarding and clearing operations, warehousing and product distribution.

“Buy in from top management in Kraft-Heinz was as imperative prerequisite for the success of implementation and ongoing smooth operation of the project,” continued White. “During our preliminary confidential interviews with staff operational problems and issues were identified which required to be addressed and overhauled.”

For example the inefficient application of transport between Johannesburg and Cape Town was costing the company dearly, as not only was there an inordinate number of transport contractors – over 30 in all – but also in many instances trucks were returning to or from their delivery destinations empty – resulting in costly futile trips.

The CEVA team focused on the two primary categories of the client’s logistical product supply-chain, namely:
the “ambient” – or non-perishable product line, such as bottled and canned products; and
the “frozen” – or perishable product line, which includes pies, sausage rolls, dough and so on.

The current supply-chain configuration was plotted and analysed, with reverse logistics being applied to establish solution options.

The solution
Within three months CEVA presented a solution which would satisfy and surpass the following criteria:
reduce stock-holding;
focus on specific “final mile” distribution to retail; and
realise measurable cost-savings – this being key to the project overall.

A CEVA manned and operated “control tower*” was put in place at the client’s Western Cape premises to directly manage and operate the following:

– warehousing and distribution centres (DCs)
– forwarding and clearing operations
– end-to-end transport management
– sales and operations planning (S&OP) was to be kept in-house with Kraft-Heinz

* A “control tower” in the logistics sector is jargon for a flat-structured management team, in this instance comprising CEVA specialists working in close collaboration with the Kraft-Heinz Logistics Manager. Globally CEVA runs massive control towers for numerous individual companies.

As the control tower is designed to operate as a separate entity, it is important that is remains totally objective in all its functions. To achieve this, control tower staff and management must – in all their actions – always be consciously unbiased, objective, transparent and aware of the bigger picture. In addition, high visibility of their activities, openness and strong collaboration with the client are also key factors.

The outcome
Two bulk facilities were proposed – which opened up much-needed factory space for Kraft-Heinz. In addition, the number of transport service providers was reduced to 10, enabling an exceptional level of efficiency. Much improved use of available transport and bi-directional loads was achieved together with far greater ease of management of this function.

After five months the Kraft-Heinz logistics function has been overhauled from end to end with all related disciplines now functioning smoothly as one.

As a result significant cost savings have been realised throughout, particularly in transport.

“The importance of a recognised professional external company taking control of the entire logistical chain is an essential element for suppliers and manufacturers for the retail sector,” says Fourie. “What CEVA has achieved for Kraft-Heinz has been remarkable indeed, and one can only look on in awe at the level of professionalism and efficiency they have applied in the roll-out of this project.”

CEVA Logistics makes business flow. As one of the world’s leading non-asset- based supply-chain management companies, CEVA designs and implements industry-leading solutions in both freight management and contract logistics.

Over 42 000 dedicated employees, working in 17 regional clusters around the globe, deliver operational excellence – to provide viable answers to the most challenging supply chain questions.

CEVA applies its renowned operational expertise to provide best-in-class services across its integrated worldwide network, where our focus is equally on general business and the specialist needs of the automotive, consumer and retail, energy, healthcare, industrial and aerospace and technology sectors.

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