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Supply chain - Time for a transformation

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Grain production is steeped in history and time honoured processes that have served the farming community over many decades, centuries, if not millennia, but the industry is now facing unprecedented challenges.

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									Digital Re-print - September | October 2009
Feature title: Supply chain - Time for a transformation

Grain & Feed Milling Technology is published six times a year by Perendale Publishers Ltd of the United Kingdom. All data is published in good faith, based on information received, and while every care is taken to prevent inaccuracies, the publishers accept no liability for any errors or omissions or for the consequences of action taken on the basis of information published. ©Copyright 2009 Perendale Publishers Ltd. All rights reserved. No part of this publication may be reproduced in any form or by any means without prior permission of the copyright owner. Printed by Perendale Publishers Ltd. ISSN: 1466-3872

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Supply chain

Feature

Time for a transformation
by Roly Taplin, Business Director – Agrifoods, DHL Supply Chain
years since 2000. Climate change has caused uncertainty in terms of yields, meanwhile, reforms of agricultural policies in response to more liberalised trade have seen reductions in national grain stocks. At the same time, the competition to provide this supply has increased, putting pressure on farmers to create points of differentiation and focus Global production levels are down on on building relationships as well as remaining 2008, having rarely met demand in the competitive on price. Traditional values of relationships, flexibility and service “For order management to work effectively should always remain intact but external it must be complemented with operational forces are driving change in the way technology and load tracking. On board the industry is run computers for trucks, mobile communications and the only choice for maintaining a including SMS, and a web-based portal where profitable business is to change with it. the data can be compiled and accessed all One of the oldprovide end-to-end transparency, control and est challenges in the industry is moving management of information so if there are goods from A to B; the simplest of procunforeseen delays, such as traffic congestion, esses if timing, accuracy and the retenall parties know and can plan ahead” tion of goods along

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rain production is steeped in history and time honoured processes that have served the farming community over many decades, centuries, if not millennia, but the industry is now facing unprecedented challenges.

the way isn’t a concern. But when reliability is key to maintaining customer relationships and efficiency is crucial to profitability, this becomes one of the most integral cogs in the machine.

On close inspection
Visibility is the key to a high performing supply chain: knowing what volumes are being produced, where they are going and when they’re going to arrive. Only by identifying inefficiencies in this process can the supply chain be optimised. Recent data shows that while it should take on average 20 minutes to load one truck of grain it is taking most businesses in the region of 45 minutes. Similarly we can see that the time to book-in, weigh, sample and empty a truck at a mill could take as little as one hour but very often takes more than two. The result is often trucks queuing on public roads outside the mill causing congestion and costing approximately UK£40 per hour. Back at the office, it takes the average haulier, on behalf of the farmer, ten days to manage all of the administration associated with this one movement of grain. That’s ten days in which all the transactions associated with the process – including the receipt of payment – are held up. The reason for this delay is that the process still relies on paper

42 | September-october 2009

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Supply chain

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One of the countries leading grain suppliers, responsible for moving around 20 percent of the UK’s harvest each year, worked with DHL Supply Chain to overhaul it’s order management processes including planning and optimising grain movements. There was no off-the-shelf solution for such specific needs so DHL worked with the customer to build a bespoke system that perfectly matched the customer’s requirements. DHL Supply Chain drew on its knowledge and technological expertise gained from working on supply chains in other industries, including automotive and construction, to develop a new best practice model for the transportation of grain in the UK. The model, which encourages greater collaboration and forward planning, introduces a control tower to company’s operations. The control tower at the company’s headquarters is used to open, plan and optimise grain movements, as well as managing payments and providing delivery confirmation and support services. This model is expected to demonstrate improvements in supply chain efficiency, with reductions of up to 10 percent in food miles and a saving of 2,500 tonnes of CO2 per annum.

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it must be complemented with operational technology and load tracking. On board computers for trucks, mobile communications including SMS, and a web-based portal where the data can be compiled and accessed all provide end-to-end transparency, control and management of information so if there are unforeseen delays, such as traffic congestion, all parties know and can plan ahead. At the back end, heavy administration challenges can be countered by digital systems that allow all delivery documents to be scanned and stored into a repository so they can be retrieved and reviewed online. This reduces the amount of time taken to file and store documents and enables easy, quick retrieval of data. The result of which is faster turn-around of invoices and payment. Finally, Process Improvement. It’s one thing having all the data needed for true visibility of the supply chain, but you must do something meaningful with it on an ongoing basis. Regular analysis of the data to find the root cause of the practices that detract from the optimum operation means you can constantly re-engineer processes to reduce waste.

and the post while other industries have long moved on to 'sign on glass' hand held devices. Clear visibility of the supply chain also reveals room for improvement in terms of customer service. The more mature end of the supply chain, the final food processor to retailer, performs, in terms of 'on time' deliveries, in the region of 98 percent +. Meanwhile the at the other end of the supply chain the producer/farmer to primary food processor is only achieving 60 -70 percent, meaning delays in customer deliveries are common place.

try has yet to be developed. And because no two supply chains are the same it’s unlikely this will happen. A root and branch understanding of the industry is vital so that the right bespoke model can be built for the job. Business process mapping systems to plot the entire life cycle of the grain from field to bank account and back again will identify the tools that are needed to track the supply chain in terms of the product itself. The basic systems need to start with strategic planning looking at long term trends in supply and demand. This needs to be overlaid to take account of sensitivities such as economic climate, production yields, consumer preferences, commodity pricing, global production, and technological developments

In tactical terms
Order management systems can dictate where grain needs to be, where and when. DHL has deployed such a system that has been configured to plan deliveries to achieve a 90 percent + on-time performance level, bringing it in-line with the performance of other industries. Compliance to delivery expectation is a hard constraint but the system will ensure deliveries arrive when recipients expect them. This replaces a manual system that is not capable of recognising all the various constraints such as vehicle access, opening and closing times, specific delivery instructions, storage locations, and communication instructions to name a few. For order management to work effectively

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Process mapping for change
The reason for this kind of inefficiency is that the agrifoods industry simply hasn't considered supply chain performance as a critical issue, taking the time to scrutinise and measure it accordingly. But now that these issues are clear to see and market forces are increasing pressure to change, it’s time to start taking lessons from tried and tested operations across other industry sectors in terms of skills, solutions and technology applications. Sadly an off-the-shelf enterprise resource planning system specifically for the grain indus-

Small changes make a big difference
While the changes needed in the grain industry are fundamental they are not wholesale. When there is a clear view of every step in the supply chain some of the most minor changes in processes can make a profound difference to service delivery and efficiency, ultimately improving customer relationships and increasing profitability.

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