Keeping a massive network of small stores supplied with fresh food presents a massive logistical challenge. Mark Aylwin, supply chain director of Musgrave Budgens Londis, explains how to Malory Davies.
Mark Aylwin has had the grocery business in his blood ever since he took a job on a market stall as a teenager in Kent. Now he has one of the biggest challenges in the retail market – the complete transformation of a supply chain at Musgrave Budgens Londis.
Fresh produce was central to Aylwin’s early career as he built up a group of greengrocers in the Tonbridge area. From there he decided it was time to move into the supermarkets and joined Safeway in the produce department before moving into store management.
It was when Safeway started moving into sales-based ordering that he started to move into supply chain operations.
Up until that point, store managers had done the ordering. The new system automated the process. Aylwin led the implementation team and points out that Safeway beat both Sainsbury and Tesco to it.
Aylwin went on to become supply chain director of Safeway and stayed on for a year following the Morrisons’ takeover.
He then moved on to take over as supply chain director of Musgrave Budgens Londis.
Musgrave Group was founded by the Musgrave brothers, Thomas and Stuart, in 1876 and is now Ireland ‘s largest grocery distributor with annual sales of more than 3.3 billion euros. In 2004, Musgrave Group turned over some 3.8 billion euros with a pre-tax profit of about 69m euros.
Musgrave’s core strategy is to support independent retail operators in the grocery sector. The aim is to deliver a high level of professional expertise and support services that ensure the success and profitability of the group ‘s customers’ businesses.
In the UK, MBL’s business currently incorporates 2,050 Londis stores, 82 Budgens independents and 130 Budgens corporate stores, all of which are supplied from four depots – South Elmsall, Andover, Thamesmead and Wellingborough.
Budgens is some 125 years old and is particularly strong in the South East. It has over 800,000 square feet of retail sales space, 6,000 staff and serves over 80 million customers a year. Stores range from 2,000 sq ft to 10,000 sq ft. In 1997 it acquired the “7-11” group and has converted those stores into Budgens Express.
Musgrave acquired Londis in 2004. Londis is a “symbol group” – the retailers are all independent businesses but trade under the Londis brand and buy their products through Londis. Typically, the stores are less than 3,000 sq ft and are located all around the country.
The task facing Aylwin is a substantial one – to create a single modern supply chain that can meet the needs of the two brands equally well. And it is complicated by the fact that the store network is not static – the aim is progressively to turn the existing owned Budgens stores into franchises and at the same time expand the Budgens chain outside the South East.
And it is not as though the competition is standing still. In the past the main competition to Londis has come from similar organisations like Nisa-Today’s. However, the past few years have seen a shift in strategy by some of the major supermarket brands – notably Tesco and Sainsbury – which have been buying up local chains and converting them into their own convenience brands.
However, Aylwin is far from daunted. He points out that MBL’s business model has some real strengths that will enable it to continue to compete effectively, notable the fact that independent retailers live and breathe their business.
The key to the strategy will be a focus on fresh produce. Aylwin believes that it is the ability to provide a good range of fresh and chilled food in even the smallest stall is what will keep customers coming back.
Budgens stores are already strong in this area but the smaller Londis stores are much more limited.
At the moment the Budgens Wellingborough warehouse has a full multi-temperature offer. However, the three Londis warehouses have only a limited fresh offer.
“We are building a network to service the whole country with six day deliveries from a multi-temperature fleet,” he says. The fact that most of the outlets are run by independent businessmen means that there is an added pressure to perform. “Our model is based on loyalty to our brand,” says Aylwin. “Our availability target is 100 per cent – otherwise it is a lost sale.”
Budgens is inviting progressive retailers into its brand and selling off its estate so that eventually it will move over to a fully franchised model. “The relationship with the retailer is a long term one,” he says.
As part of the philosophy of servicing the retailers effectively, MBL is treating its depots as “retailer service centres” rather than just distribution centres. One of the practical implications of this has been the upgrading of meeting facilities so that the retailers can go and have their meetings at the depots.
In January, Aylwin brought in two new members to the supply chain management team. Peter Hutchison has taken on the role of fresh controller, focusing on developing the fresh food offering across both brands. He worked for more than 20 years managing the fresh food operations of Presto, Safeway and Morrisons.
Andrew Robertson has become network controller. He spent many years developing extensive delivery networks for Safeway. He will manage the integration of the Budgens and Londis distribution networks, creating a single system that is capable of serving both brands.
The transformation of the supply chain operations is planned in a series of stages. The first stage involves bringing the retailer service centres up to standard while the second focuses on sharing best practice across the system. Stage three focuses on customer service and stage four involves changes to the infrastructure. Over a period of three to four years the depots are being redeveloped to offer full multi-temperature operation.
The aim, says Aylwin, is to “have a supply chain that is more than a match for the multiples”.
In the past, he says, the competition has been the other symbol groups but now the competition is coming from the multiples – Sainsbury’s and Tesco.
“There are lots of successful retailers who can compete and we can help them compete through the supply chain. We are looking at all aspects – challenging all our cost-bases.”
Another part of the strategy involves building partnerships – a notable example of this is the partnership between Budgens and M Newitt and Sons – a high quality family butcher in Thame. The relationship started with delicatessen products and has taken on an added dimension with the launch of packaged Newitt pies and quiches.
Over the coming year MBL will investing heavily in its fleet of vehicles as well as working to get the best out of the existing facilities while plans for the depots are finalised. Then over the next couple of years they will be brought on-stream.
1979 – 1982 Market stall holder
1982 – 1984 Shop manager – Smiths for fruit
1984 – 2004 Safeway stores plc
1984 – 1986 Produce department manager
1986 – 1989 Store manager
1989 – 1992 IT project manager
1992 – 1994 Store support controller
1994 – 1996 Head of supply chain strategy
1996 – 1998 Head of fresh foods
1998 – 2001 Supply chain director
2001 – 2002 Commercial director – non foods
2002 – 2004 Supply director
2004 – 2005 Group operations director
2005 – Present Musgrave-Budgens-Londis – Supply chain director