Sven Verstrepen : TRI-VIZOR and Christian Dooms : STEF

Brussels, 28th of May 2014

Horizontal collaboration in fresh and chilled

retail distribution :

The Nestlé – Pepsico – STEF case

Who is BABM ?

The Belgian Brands Association

42 members producing and distributing FMCG branded

products in the BeLux area

BABM members’ turnover: € 5.8 billion in 2010

BABM members accounted for 36,900 direct and indirect

jobs (yearly average between 2003 and 2009)

BABM’s mission: to build the optimum climate for A-brands

to deliver value and choice to consumers, through

constant innovation and free and fair competition

Member services: information providing, networking,

stakeholders contacts

Initiative by 5 BABM members : horizontal collaboration for

their chilled products

Nestlé & Pepsico fresh & chilled products

BABM: is there any distribution synergy between 5 Belgian

chilled networks?

Shipper A

Shipper D

Shipper E

Shipper B

Shipper C

Q1 2010: kick-off; data collection and standardization

Q2 2010: rough network visualization and overlap analysis

Q3 2010: detailed synergy simulation

Q4 2010: Joint RFI + RFQ

Q1 2011: selection of 3PL longlist

Q2 2011: selection of 3PL shortlist

Q4 2011: STEF implementation of 1st company

Q1 2012: STEF implementation of 2nd company

Q2 2012: start of collaborative operations

Project methodology & timeline

(based on annual drop volume in kg per customer)

Significant geographical overlap exists in the 5 networks

No collaboration (stand-alone)

Unsynchronized collaboration (groupage in space)

Synchronized collaboration (bundling in space & time)

3 scenarios

Representative sample (3 weeks) of actual order lines of Shippers A, B, C and D

was uploaded into the ORTEC routeplanner

This was coupled with a realistic Activity Based Cost and CO2 calculation model

Individual and combined network costs and carbon footprint for the

4 companies were calculated

3 scenarios were calculated:

– (1) AS IS/individual transport,

– (2) TO-BE1/traditional groupage or “unsynchronized” collaboration, and

– (3) TO-BE2/horizontal collaboration or “synchronized” collaboration

In October 2010, companies A, C and D

invited 9 Logistics Service Providers

to organize a joint RFI/RFQ for shared

Warehousing and Transportation.

Eventually, STEF won the tender.

1 company drops out but…

Joint tender sent out to LSP longlist

STEF Presentation 9

Who is STEF ? The closest temperature controlled

food network to your markets.

Canary Islands

STEF Partners

235 sites

in Europe

1.1 M sqm

storage and

X-dock surfaces

15.490

employees

9 countries

4.000

vehicles

50% owned

by STEF

€2,6 bn (+5,2%)

2013

Turnover

Flow

Analysis

Transport

Planning

Truck

Optimization

Transport

Execution

MULTI-USER WAREHOUSE

Customer 1

Customer 2

Customer 4

Customer 3

STEF: Optimisation through collaborative transport approach or “pooling”

Advantages of a “pooling solution” for the LSP

Higher fill rate per warehouse

Higher fill rate per truck

Reduction of empty kilometres

Optimised carbon footprint

Attractiveness for new partners to enter

the “pooling solution”

Long term volume stability

Standardization of processes

Necessary condition for a LSP :

redefine the classic “groupage” solution into a “pooling” solution!

Lessons learned after almost 2 years of operation

The path to collaboration was long and difficult, but once there

was an agreement, the implementation and execution went fast

and smooth

Everything starts or ends with trust in each other

-> key role of Neutral Trustee

Open vision on horizontal collaboration and gain sharing is key

First audit has been held and proved that the system is working

Cost and CO2 reduction is a fact!

Questions ? Thank you for your attention !