Monday 20th Nov 2017 - Logistics Manager

Winner: GlaxoSmithKline

Borealis and Henkel both presented traditional, practical organisations. Borealis, based in Mechelen, Belgium, is a manufacturer and distributor of polyolefins (the monomer being manufactured by another business unit) and a market leader. With a turnover of some e3.6 billion, and around 2000 product lines, 90 per cent of manufacture goes to direct customers such as injection moulders. Jeremy Bentham, the vice president for supply chain, notes that the current supply chain structure is less than three years old but has achieved significant change and performance improvement, driven by customer satisfaction and a structured sales and operations planning process. They are driving service further by measuring service levels against request rather than, as hitherto, against promise.

The assessors and judges found real excellence in the outbound side of the operation, but were less convinced by some of the upstream activities – a lot of front end processes are managed in other divisions and there was some lack of ‘end to end’ capability. Nonetheless, shared foresights with suppliers and customers and evidence of some innovative thinking in supply/demand forecasting and fulfilment were impressive.

Henkel Consumer Adhesives based in Winsford, Cheshire, is the UK subsidiary of a German multinational, manufacturing adhesives, and distributing these, adhesive tapes made at Hatfield, and other goods brought in from Germany, under familiar brands such as Solvite and Sellotape and supplying major accounts such as B&Q, Homebase and Focus as well as the general retail trade. There are 60,000 shipments a year to over 1250 customers, and the operation turns over $150 million. Operations director Mark Hamlin says that Henkel actively uses supply chain capabilities as a competitive weapon and a marketing tool to gain and retain business. ‘The functions within our supply chain organisation together with suppliers and service providers act as one unit with a common focus – the customer. Combined with fully integrated data systems this enables us to provide high levels of service and flexibility’.

With 95 per cent of orders shipped within 10 hours of receipt, the judges described the operation as ‘not hugely complex, but demanding customers and a growing product range present challenges that seem to have been well met’. The lean, low inventory approach was praised. There has been investment in new warehousing although the assessors were a little surprised at the low level of technology employed – the operation appears to be a natural for radio frequency control of picking, for example. ‘For a small organisation, Henkel is punching above its weight and delivering strong, credible results’.

By contrast, GlaxoSmithKline and Syngenta are both global supply networks and put forward the whole organisation, rather than a specific supply chain, for consideration, thus creating a dichotomy for the judges: at a small company you can ‘kick the tyres’ of the supply chain; a global entry is necessarily more of a head-office, PowerPoint, presentation.

Syngenta has twice previously been shortlisted, and was formed from the merger of Zeneca and Novartis. With global sales of 6 billion, of which 2.1 billion in Europe, Syngenta is a major player in the agrochemicals business. A huge supply chain, 6000 SC staff in total, 3,600 in Europe alone, has nonetheless removed 600 million in cost over the past three years and has plans to excise a further 300 million in the next three.

Having some familiarity with the organisation, the assessors were able to note a ‘step change in performance’ compared with previous years – indeed, a recent supply chain efficiency programme has been so successful it is now being applied to other areas of business performance worldwide. The Sales & Order Planning system has clearly been highly successful in underpinning the flexible and responsive processes needed to react to changing pest conditions worldwide.

GSK demonstrated all the same virtues and much the same scale as Syngenta in an extremely complex and sensitive product area – the judges were especially impressed, for example, by radical and comprehensive disaster recovery plans. For the judges, the differentiation was to some extent one of attitudes to the challenges of merger. While Syngenta has successfully taken the perhaps safer approach of integrating the best features of each component company, GSK showed ‘a refreshing attitude to supply chain design. They went back to blank sheets and grass roots and designed a new supply chain for the combined business’. Remarkably, according to GSK’s Phil Priest, director, supply chain services, ‘There was no deterioration in service to GSK’s customers during the merger – in fact, performance significantly improved. Our approach was one of defining the key processes needed to successfully operate the supply chain and support this through the continuous development of people’.

It was difficult to separate the two – Syngenta impressed by its very detailed process mapping, and also its highly tax-efficient supply chain structure. GSK’s use of new technology such as intranets around supply chain learning and governance issues, and the very agile capability for handling exceptions and shortages, were also praised. In the end the ‘people’ aspect probably won it – the judges opined ‘Both show real excellence, but Glaxo has the edge’.