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Food logistics – the squeezed middle

Logistics providers in the food sector are the squeezed middle says Dan Myers, head of Norbert Dentressangle’s food unit.

“We’ve got a manufacturing supply base that want to keep stocks very, very tight. We’ve seen stock-holding reduce and inventory turn increase. They are working the stocks work much harder and reducing their working capital as much as they can but equally we continue to see the high promotional activity as well.

“Stock cover is less, promotional activity is becoming greater so our need to respond – whereby literally stock is almost being manufactured to order, it’s coming into the warehouse, it’s spending less than an hour in the warehouse before it’s being outloaded ready for delivery to retailers.

“We do a huge amount of cross-docking activity in an industry that tended to be operated from a stocked environment. We see that continuing. It’s not only flexibility in having the additional vehicle resources to deliver it but creating flexibility in warehouse environment that allows us to respond to stock coming in on a just-in-time basis and outloading it to maintain on-time, in-full,” he said in an interview with Just-food.com.

“There’s always been a drive for what the retailers all refer to as ‘faster, fresher’. Although we’re dealing with predominantly frozen goods, it is about having a far more responsive supply chain, something far capable of reacting to seasonal and weather-related peaks and demands,” he said.

Retailers are looking to shorten their supply chain and lead times. “As a supply chain provider, it’s absolutely incumbent upon ourselves that we are able to respond to meet their demands. In the last few years, we’ve moved increasingly from a day-one-day-three environment to a day-one-day-two environment and in cases are now operating in a day-one-day-one environment on order lead time. That gives us very little flexibility of future demand and requires us to be exceptionally flexible to meet the requirements of the retailer,” he said.

“We’ve seen our stocks being work harder so it’s become v important to make sure we fill that space that we’ve created through under-utilisiation with new customers, which we’ve been relatively successful at doing. It’s not about over-complicating what we do. It’s about being better at what we do. We don’t want to be a jack of all trades.

“We want to be good at our core business. Diversification can lead to a loss of focus of what you are and what you are truly good at. Our business is predominantly frozen but we work with a lot of cereal manufacturers – Kellogg, Weetabix – and other large FMCG businesses but in temperature-controlled, it is predominantly frozen.

“One of the unique things about our business when we look at a lot of our competitors is we cover the whole supply chain. We go from pre-manufacturing to core manufacturing to co-packing through to freight forwarding and primary distribution and storage to secondary distribution and storage. There’s few businesses that covers the whole supply chain but ND does. And that gives you a unique perspective.”