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FEATURE
farm to fork
Improving supply from
by Roly Taplin, Vice President, Agri-food at DHL Supply Chain, UK
he Agri-food supply chain is not only one of the most crucial and ancient of all; it is also instrumental in maintaining the nations economic, as well as physical, health. Although Britain imports around 40 percent of the food it consumes, the food and drink supply chain is the UKs single largest manufacturing sector, accounting for 15 percent of total manufacturing turnover and seven percent of GDP. The supply chain employs 3.7 million people and is worth UK80 billion (US$ 126.5 billion) per year. Farming alone is worth UK20 billion (US$ 31.6 billion) to the UK economy and looks set to become ever more crucial, given the governments ambition to restructure our economy towards manufacturing.
ing weather patterns as a result of climate change. Unpredictable weather means that yields are difficult to forecast, causing increased price volatility and making planning more challenging across the entire supply chain. With 2011 global grain prices hitting three-year highs according to the UN FAO and a volatile economic outlook impacting stakeholders across the Agri-food supply chain; the European Food & Farming Partnerships (EFFP) recently warned that the world might be entering a new era where food is far more expensive.
Strains in supply
Yet despite its importance to the national economy and the national stomach Agrifood businesses face unprecedented pressures across their supply chains. Global food prices in 2011 reached a peak not seen since the 2008 food crisis and the United Nations Food and Agriculture Organisation (UN FAO) predicts a coming period of price uncertainty due to continued global economic uncertainty, which is impacting the worlds commodity and fuel markets. Supply chains across the globe have been affected by recent economic events. Additionally, the Agri-food supply chain is more exposed than most to the chang18 | march - april 2012
including the difficulty of forecasting reliably, and a lack of communication and co-ordination. Maintaining visibility across the supply chain is crucial to boosting performance, particularly where perishable goods are concerned. To minimise wastage, the entire supply chain needs to know which goods are coming and when, so farmers, suppliers and retailers can plan effectively to save time and costs. Straightforward approaches to efficiency could be utilised more widely; recent DHL data shows that while it should take 20 minutes to load one-grain truck, the average for many businesses is nearer 45 minutes. Similarly, it should take around an hour to book-in, weigh, sample and empty a truck at a mill but many businesses take two hours. This often results in trucks queuing on public roads outside mills, at a cost of approximately UK40 (US$ 63.3) an hour, not to mention the impact of congestion on other road users. Overall, for every hour a bulk grain lorry currently spends moving grain around the UK, it spends two waiting at collection and delivery sites. This waste not only time, but also fuel, space and ultimately stock, at a time when these factors are increasingly valuable to producers, suppliers and consumers. The impact of planning and visibility of stock in generating supply chain efficiency is noticeable; further up the supply chain, where the final product is transported from food processor to retailer, stock reaches retailers on time in excess of 99 percent due to more closely managed production and logistics operations.
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FEATURE However, at the more fragmented, less mature end of the grain supply chain from farmer to first manufacturer poor weather, road conditions and inefficiencies have far greater impact, meaning that stock is on time and in quality in only 60-70 percent of cases. The resulting excess stock holding, tying up time and money, impacts the entire supply chain and ultimately, bottom lines. sumer trends. An efficient order management system will ensure that grain is in the right place at the right time. Unlike a manual system, which is incapable of accounting for the variety of constrains within the business from vehicle access to storage locations to delivery instructions a mechanised system ensures that deliveries arrive when recipients expect them. DHL has deployed a grain management system for clients to bring deliveries to a 90 percent-plus on-time performance level, on a par with other industries. Whilst effective order management is essential for reducing costs, it is best complemented with advances in operational technology and load tracking. For all parties to be able to plan ahead, lorries need to be fitted with on-board computers and mobile communications spanning SMS and a webbased portal. Thus the effect of unforeseen delays such as traffic congestion is minimised. These on-board measures can be supported with back-end digital systems, which ensure all delivery documents are scanned, stored and shared across supply chains. Reducing the amount of paper saves administrative time and space, as well as enabling quick retrieval of documents, ensuring faster turn-around of invoices and payment, saving time and money. This data based approach also allows for longer-term data compilation and information management, as process improvement is another area where many contemporary agri-food supply chains could be enhanced. Regular data analysis allows logistics providers to find the root cause of inefficiencies, and re-engineer the process to allow for maximum efficiencies. These efficiencies translate as financial savings, which quickly repay the initial outlay.
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FEATURE
The International Milling Directory now is now available on your mobile! A CASE STUDY
Openfield was formed in 2008 by the merger of Centaur and Grain farmers, two of the countrys largest farmer-owned businesses. Wastage across the supply chain was a serious concern for the company, as logistics make up 60 percent of its cost base. DHL was tasked with finding ways to increase efficiency and add value to the merger. DHLs first step was to set up a 24-hour control tower at Openfields offices in Lincolnshire. This is staffed by a combination of DHL and Openfield personnel, giving the perfect blend of grain industry knowledge and supply chain management techniques. DHL was able to get the control tower up and running within six weeks, while Openfield was in the middle of its merger. DHLs control tower is now responsible for planning and managing the movement of more than 15 percent of the UKs grain, collecting from around 4500 farms spread across the country and executing up to 1000 grain movements a day. Despite these impressive numbers, DHL has been able to increase Openfields sustainability credentials, with mileage reduced by 10 percent through smarter planning, leading to savings in carbon emissions. The relationship between Openfield and DHL is bringing value to both parties, but it is also part of a bigger movement in the cereals industry. Both companies have been collaborating with Rank Hovis, the UKs leading miller, working in conjunction with EFFP and other parties on Project Marlin, an exploration of the cereals supply chain. Through Project Marlin, DHL was able to identify areas of hidden value in the supply chain. For example, many unprofitable areas of downtime were linked to transport, so DHL designed methods for making deliveries and collections more efficient, such as giving hauliers a 15-minute delivery window instead of two hours, reducing on-site waiting times all of this achieved through leading edge visibility and improved planning tools. These principals are now being deployed across a number of customers including Openfields own export facilities. The whole process - which engages all stakeholders across the chain; farmers, hauliers, grain stores, grain traders, millers, maltsters and wheat buyers encourages communication throughout the supply chain, improving visibility and minimising wasted time. In trials, timesaving of up to 19 percent at farms and 27 percent at mills was achieved, with delivery rejections on quality grounds falling from seven percent to one percent - all positive results for Openfield. Openfield with DHL are looking to the future and are already developing plans for further business simplification, with the purpose of enhancing the customer experience through their Service Excellence approach. Included in these are technological advances that will significantly improve the communication of real-time data through the supply chain.
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DHL has been working with these industry leaders to identify areas for improvement across the agri-food supply chain, with the view to identifying and removing waste and inefficiency. By utilising its supply chain expertise, DHL has improved delivery and collection efficiency, resulting in serious time and ultimately cost savings for all involved. By collaborating with DHL, Openfield could focus on what it does best: marketing grain and nurturing its relationships with farmers and customers, safe in the knowledge that DHL was looking after all areas of its supply chain.
ers and retailers, as well as consumers, all of whom stand to gain from the cost and environmental benefits of an improved supply chain. Moreover, despite the large gains to be made, the adjustments are not expensive or unwieldy, though they are impactful. Small, crucial steps at each stage of the supply chain could have a profound impact on service delivery and efficiency, improving customer relationships, logistical efficiency and ultimately everyones bottom line.
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References
Source: Food and Agriculture Organisation of the United Nations, FAO Food Price Index ends year with sharp decline, 12.01.12 http://www.fao.org/news/ story/en/item/119775/icode/ Source: Food and Agriculture Organisation of the United Nations, FAO Food Price Index up slightly in June, 07.07.12 http://www.fao. org/news/story/en/item/81577/icode/
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Westeel: International 2012 Grain & Feed Milling Techniques: 90 mm x 270 mm"
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