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Nestlé turns to Total Logistics for 'thorough assessment'

12 August 2010

Nestlé decided to take the opportunity to review its UK warehousing and distribution strategy, turning to Total Logistics to undertake a thorough, independent assessment of its current and future supply chain needs

In the UK, Nestlé has traditionally operated from three separate distribution sites; Bardon in Leicestershire; Scunthorpe in Lincolnshire and York in North Yorkshire.

Owing to leasing agreements at two of the sites ending, Nestlé decided to take the opportunity to review its warehousing and distribution strategy in the UK, turning to Total Logistics to undertake a thorough, independent assessment of its current and future supply chain needs.

Ian Hill, director of Logistics at Nestlé UK, explains the background to the project: "For many reasons we’d reached a point where we were faced with various options on our three-site strategy. The time was right to bring in a fresh pair of eyes to review our distribution network.

"With our complex mix of dry and wet goods, including water, coffee, confectionery and mix of perishable goods, we wanted to explore what options were there for us – and the Total Logistics' team was the obvious choice given our longstanding relationship with the consultancy."

The main task facing the Nestlé team and Total Logistics' consultants was to develop a meaningful model by which to really understand the pros and cons of every option that was available. While the York, Bardon and Scunthorpe sites handled foodstuffs including water, confectionery, cereals and coffee, the latter also coped with the huge seasonal demands for confectionery products during periods such as Easter and Christmas.

To add to the complex picture, Scunthorpe also used different technologies to service the international export market, dispatching product to Europe and further afield via deep-sea routes.

Peter Roan, partner at Total Logistics, said: "This project was complex from a supply chain modelling perspective, as it included an analysis of in-bound and outbound flows, transport costs, road links and inventory issues but also risk and service factors created by any new network proposed.

"Time was also a big factor here, given the fact we needed to make recommendations and support the implementation to ensure the client was ready and able to satisfy the crucial peak demand period of Christmas. In short we had a window of just six weeks to completely review and make recommendations on Nestlé's UK distribution network strategy."

In all, 16 different scenarios were developed based on the existing facilities and other potential locations in the UK. After an intense period of analysis, it was decided a twin-site solution provided the greatest cost saving to Nestlé, while enabling it to improve flexibility and delivery performance to supermarkets and other key retailers in the UK and further afield.

Although its delivery performance was already at 99.4%, Nestlé was confident concentration to two locations would allow the already high customer service levels to be improved.

Owing to its central location and existing potential for development, it was decided the Bardon site was the obvious choice to centralise supply chain operations. This decision has, however, meant the closure of the Scunthorpe site, with a major investment programme in place at Bardon, which will increase its pallet capacity from 50,000-110,000.

Considerable investment has now gone into the Bardon site to enable it to handle the array of Nestlé food and drink products - including Kit-Kats, Carnation, Buxton and Nescafé. In addition to this focus, the area of risk management has been key to the team's thinking as the site is updated and fully commissioned.

Peter Roan said: "While our recommendation to consolidate much of Nestlé's food and drink distribution under one roof has reduced the overall cost of distribution, the move has enabled the company to combine its business stream and product supply chains to create far greater flexibility.

"Nestlé now has a much more robust logistics operation that will enable it to meet the growing need to deliver more frequent, lower volume drops to retailers. As well as supporting the Nestlé team through this crucial period, we were also able to work with them on the risk management issues raised by a twin site strategy, holding a risk assessment workshop."

The new £7m facility, said to be the largest of its kind in the UK, was commissioned in 2009, creating more than 60 new jobs.


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