Winner: NHS Logistics Authority

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This sector typically attracts a widely disparate set of entries, and 2004 was no exception. They ranged from airline catering to hospital supplies, and from a privatised utility to a service company for the electronics industry.

British Airways, in a joint submission with Gist (the latter’s second joint entry to be shortlisted this year), focused on the global distribution operation for nonfood inflight services, from flight trolleys to children’s entertainment packs. Although 60 per cent of the business goes through Heathrow and Gatwick, there is another 20 per cent across the US, and the remainder, equally vital to BA’s reputation, is spread across 150 airports worldwide. Peter Hough, BA’s manager, inflight planning and logistics, notes ‘In a drastically constrained financial environment provision of everything the customer expects on every flight no matter where in the world you are flying is one of the true global supply chain challenges’.

The assessors found an effective operation, with availability ex-warehouse in excess of 97 per cent, aided by effective use of RF picking. But, despite an on-going Vendor Managed Inventory pilot, the judges felt there was too little evidence of continuing innovation and development, no doubt a result of the lean times the airline industry has been experiencing, to merit the term ‘excellent’.

No greater contrast could have been found than with the next finalist, Matáv of Hungary. This was, until 1996, the state owned telecoms operator in Hungary, and the story here is how they have changed from a communist-style command and control organisation to one which is successfully oriented to a dynamic marketplace.

For Matáv, director Zoltan Werle says ‘The strategy was adopted to embrace IP and web technologies; almost all steps of the supply chain process are supported by electronic business and communications, databases and information systems, resulting in a much greater transparency in supply chain activities’. The assessors confirmed that, with ISO accreditations, and EQM in place, service levels linked to processes all the way to customer supplier, consistent, 100 per cent use of either e-catalogues or e-auctions for procurement, the firm really has built in a remarkably short stretch of time, true end-to-end, real time processes (instead of five-year plans) to support the business.

Indeed, the assessors pushed the bounds of professionalism in their enthusiasm, especially for the way Matáv interacts with the still largely Hungarian supply base: ‘This supply chain is changing not just the way the company, but the way the country, runs’. The judges also were impressed at how far, how quickly, the company has come, but felt in fairness that there is still some way to go before Matáv can rest on its well-deserved laurels.

The third entry in this sector was ModusLink, based in Apeldoorn, The Netherlands. This company was formed from a seven-way merger in 2000 to become a global, technology-based service provider of warehousing, distribution, kitting/assembly and proof of delivery for clients such as Sun, HP and Microsoft. Catherine Murphy, marketing manager EMEA, says ModusLink has created ‘a comprehensive infrastructure that supports a same day/ next day high quality build service. Relieving our clients of the burden of building and delivering their products allows them to concentrate on design and marketing’.

The basic operation, in the judges view, is, though highly efficient, not in itself spectacular, but they were well impressed by the planning procedures – for each business unit (effectively, each client), a version of the common ‘Inventory Rules Generator’ operates, which balances peaks and troughs, inventory requirements, production schedules, orders and so forth, using client forecasts and historical data. So highly customised, each case is different, but inventory reductions of over 30 per cent are claimed in some cases. In the sense that entire processes are fully customised to customer requirements, this certainly counts as an ‘adaptive’ supply chain.

But the winner in this category was none of these – it was the NHS Logistics Authority. NHSLA is no stranger to the Awards, having won the Sourcing & eProcurement category in 2002.

The judges have always been impressed by the total commitment of ceo Barry Mellor and his team at all levels – this year NHSLA was also able to produce the KPIs and metrics to demonstrate the effectiveness of their, in the judges’ words, ‘good, balanced portfolio of initiatives’. The Authority claims to have improved availability on the 43,000 strong range from 98.12 per cent to 98.3 per cent; on time deliveries, often to half-hour windows (constrained often by curious factors such as consultants’ surgery hours) are running at 98.9 per cent, and meanwhile the business has grown 14 per cent in a year. All this, bear in mind, in an organisation which has a very arms-length relationship with most suppliers (a separate Agency carries out most NHS procurement).

The Authority has invested wisely but extensively in e-solutions, from order to invoice – especially in automated data capture for front end staff (eg ward sisters) but also right across the supply chain, down to really functional supplier portals. In the process, procurement and supply costs have been driven down ‘from pounds to pence’ – an independent audit easily identified $150 million of savings realised by NHS Trusts using the Authority’s services.

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