Case study:

Inbound Supply Assessment

Leading Specialist Wholesale Food Company


Background & Brief

This UK-based trader of ethnic and speciality foods (part of a £13.3bn T/O group) wished to compare the cost of finished goods packing in a UK manufacturing location with the alternative of bringing in finished goods packed in India.  In order to include transport and storage costs, the manufacturing-led improvement team identified the need to build a costing model for packed spices sourced in India. SCALA was asked to build the model using a mix of existing data and industry standards.

Project Approach

The project was made up of 4 major phases: data collection and analysis, model construction and population,validation of data and results, and presentation and hand-over of the model to the user group. The data collected included demand and sales, SKU’s, product configuration details (e.g. cases per pallet, weight etc), container fill, customer service levels, lead times, haulage and warehouse storage tariffs, etc.

The model was structured to enable all the variables to be changed to allow volumes, sensitivities and assumptions to be tested and comprised the following elements:

Shipping from India to UK – Various containers and container fill scenarios. Possible UK site variations for intermediary handling (eg palletising) and possible direct PCC delivery

UK Inventory – calculations based on historic sales forecast and actual sales demand, order lead times from India and a range of individual SKU minimum order sizes.

UK Warehousing – Pallet Storage – requirements including impact on overflow storage

UK Warehousing – Handling – Staffing and equipment requirements for a range of options; including possible additional goods-in space requirements

UK Delivery costs – assumed as current but possible variation by direct PCC delivery

 

Benefits & Results

The finished model demonstrated that:

  • Total stock inventory remained static despite a 40% increase in finished goods inventory
  • Using high-cube containers would cut handling and local transportation costs by 40%
  • The increased requirement for finished goods storage was offset by other savings
  • The 97% customer service level would be maintained

Final Outcome

The cost model was adopted by the client and is currently in use and embedded as a key tool for modelling the operational and cost impacts of new product launches and range changes.