Logistics - the role of the logistics service provider
Logistics companies, far from being simple hauliers, have adapted to meet the increasingly complicated and specialised needs of customers in the food manufacture and retail spheres, such as tracking and traceability and flexible volumes. In the second part of his feature on logistics, Stuart Todd gains insight from major logistics providers about this fascinating industry.
A road haulier delivering product from A to B (or factory to warehouse) and from B to C (warehouse to store) is the common perception of the Logistics Services Provider (LSP).
But, in reality, LSPs are much more than truck and storage providers. Their role has evolved considerably over the past few years in order to meet the demands of the increasingly complex supply chains of their food manufacturing and retailer customers.
It now extends from pure transport, storage and distribution to encompass a broad range of value-added services from the re-packing of goods to warehouse management systems (WMS), which allow full tracking and traceability of products.
Norbert Dentressangle is one of Europe's leading contract logistics groups in Europe for food, its biggest markets being France, the UK, Benelux and Spain.
Ambient, chilled and frozen food represents 40% of the EUR1.7bn.global turnover of Norbert Dentressangle's contract logistics division and it has a stock of 4m cubic metres of cold storage located in several European countries.
"We run a truly pan-European logistics operation in food and retail and one we are committed to expanding through organic and external growth," explains Jean-Luc Declas, executive vice president for Norbert Dentressangle's logistics division.
Norbert Dentressangle's logistics division's biggest customer is Carrefour, followed by Danone, for which it handles finished goods across Europe. Its business with the French dairy giant spans large-volume supply to major retailers in Spain to delivering modest quantities to a multitude of small outlets in Romania.
"Food manufacturers and retailers are from two different worlds and cultures and having both as major customers gives us a valuable perspective of their respective needs, allowing us to fulfil the role of facilitator between the two," Declas insists.
He says the next stage of development in Norbert Dentressangle's food business and in contract logistics as a whole, will be in accompanying its customers into new countries and even continents. "The scale and scope of the network we have built in Europe demonstrates that we have the capability to offer major food groups and retailers supply chains with a global reach."
Another major food LSP is Geodis which operates principally in France, Spain, Germany and Hungary. It provides logistics services for the finished goods of manufacturers such as Danone, Nestlé and Coca Cola Co., as well as working for retailers which include Auchan and Carrefour.
This month, the group opened a 25,000 sqm distribution hub in Bucharest, dedicated to a German retailer. "80% of the product handled at the hub is food with inflows of product from Romania, Hungary, Greece and Italy. Our task is to manage the hub, which is the focal point of 220 truck runs daily and carry out distribution throughout Romania," says Geodis assistant director for logistics Laurent Parat
While food and retail majors tend to to work principally with leading LSP groups in Europe, there remains plenty of scope for smaller-scale operators.
For example, NFT provides logistics solutions for chilled and ambient food manufacturers and retailers in the UK. Its customer portfolio includes Sainsbury's, Asda, Marks and Spencer, Yoplait and Nom Dairy and offers a broad range of storage, product picking and distribution services.
"We've invested heavily in a warehouse management system (WMS) solution, offering customers real-time visibility on their stock and sales profiles 'live' from our warehouses via web portals," says NFT sales and marketing director Dale Fiddy.
"Without doubt, the role of LSP's like ourselves has become more specialised in response to growing demands from customers. We are able to provide full tracking and traceability of their products, the necessity of which is of paramount importance when food scares and product recalls arise. Instant information is of the essence in order to react swiftly to such unforeseen circumstances. We have not only been entrusted with customers' logistics but their brands too.”
Atchison Topeka is a UK-based LSP that has cut itself a niche role in supplying food ingredients to manufacturers.
"We are not selling empty trucks and warehousing but a value proposition of key supply chain skills within the food sector," says sales manager Scott Waters.
Atchison Topeka stores and transports food ingredients such as chocolate, starches, sugars, jams, bakery mixes, whey powders and milk powders, mainly used in the bakery and confectionery market for major ingredient suppliers such as Cargill, Kerry Group, Archer Daniels Midland and Barry Callebaut.
The business is separated between a bulk tanker operation and palletised goods storage and distribution. Atchison Topeka has a European dimension to its operations too, distributing milk from the UK to the continent and bringing in juices from the Netherlands and chocolate from Belgium.
Waters says: "Our work with [United Biscuits'] McVitie's perhaps best demonstrates our business model as a consolidator and networker of food ingredients based on groupage rather than full-truck loads. We deliver a variety of ingredients used in the production of jaffa cakes at its Manchester plant on a single truck having each of McVitie's suppliers as customers too.
"This model supports two key initiatives of manufacturers, both of them crucial in the present economic climate : the reduction of working capital and just-in-time delivery which supplies product as and when required."
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