Friday 15th Dec 2017 - Logistics Manager

Public Sector Award Winner 2008: Electrabel

The Public Sector, Services & Utilities category is one of the most difficult awards to judge. The great diversity of entries, from power generation and railways to medical services, makes direct comparison a tough task. However, the scoring mechanism stood up to the test and a thorough analysis of the submitted material, together with further in-depth questions at the interview stage, enabled the judges to reach a sound conclusion.

In the rail industry change does not come easily. Metronet has worked from a low base to achieve improvements in ordering, tracking and controlling stored goods and materials. By working closely with several partners Metronet has simplified its pricing regime, which has resulted in a 12 per cent return on sales. Major changes too have been made to stores areas and satellite stores are being introduced. Although these are early developments, the judges fully appreciate the great efforts that have been made to get this far.

Over the past 12 months Guy’s & Thomas’ NHS Foundation Trust has been focusing on gaining control over basic supply chain practices, such as category management, rationalisation of supply base, inventory tracking, and fill-rate improvement from suppliers. Under the previous process clinical staff counted stock and completed paper requisitions to re-order supplies from multiple suppliers. The process was time consuming, inefficient, and created over-stocking and obsolete stock. The introduction of a JIT service has reduced stock levels down to between one and five days, saved individual theatre sisters four hours per week, achieved non-recurrent stock holiday savings, and reduced the risk of waste from over-stocking and breaking bulk.

But what really impressed the judges was the introduction of a totally new automated replenishment system in theatre as part of the supply chain network – this system does not exist on this side of the Atlantic. And for this the judges put Guy’s & Thomas’ forward for consideration for the Innovation award – what’s more, it won.

However, the winning entry for the Public Sector, Services & Utilities category came from Electrabel, the Belgium-based power generation company. On a two-year journey the company moved from a cost-plus operating model to one based on availability. This transformation centred on a project named WING, which focused on warehouse, inventory, master data management and maintenance and involved the service requirements of 15 power plants across Belgium.

Before the WING project, Electrabel had an isolated logistics department lacking recognition in the overall strategic objectives of the company. The department had limited integration with other related departments like maintenance, purchasing and SAP master data management.

This transformation centred on a project named WING, which focused on warehouse, inventory, master data management and maintenance and involved the service requirements of 15 power plants across Belgium.

Moreover, the logistics function was organised in a decentralised way, leading to inefficient and not-standardised fulfilment and inventory management activities – each production plant had its own local warehouse with its own warehouse processes and inventory/master data management. The result was poor service for the internal client. Electrabel’s solution was to build a new central warehouse for the whole of Belgium to hold fast moving items. Somewhere in the order of 40,000 SKUs were centralised, which represented 30 per cent of the total number of SKUs in the local warehouses, but was responsible for more than 80 per cent of logistics activities. The result was a ten million euro reduction in inventory and a payback on the project within 18 months.

The judges viewed Electrabel’s supply chain transformation as a significant and successful redefining of the company’s strategic focus to create a structure that responds efficiently to the new service challenges of a fixed contract operation. With this in mind, the decision was made to give Electrabel the award for the Public Sector, Services & Utilities category.