Smart thinking about primary consolidation has shown just how much cost can be taken out of the supply chain says Elaine Watson
Dean Attwell knows a lot about chickens. However, experience has taught him that storing and distributing poultry meat is more lucrative than taking care of his feathered friends on the farm.
Now the MD of Oakland International, one of the smartest warehousing and logistics operations in the business, Attwell admits he and his wife probably clung to their farming roots for too long.
“After pulling out of livestock in the late 1990s, we tried to resurrect egg production, but it was a disaster. we hadn’t got the critical mass.”
What they had got, however, was a lot of storage space and a solid understanding of how supermarkets and foodservice companies worked. Convinced that they could take cost out of the food supply chain, and armed with some cash from the family, they set up Oakland International in Beoley, Redditch, on the site of their farm.
“We had a freezer on-site and offered that as commercial frozen storage - and it went surprisingly well,” says Attwell.
“So we moved on to chilled and ambient and quickly progressed on to picking and added-value services such as re-packing and labelling.”
With the supermarkets all wanting to reduce their inventories and cut complexity in their supply chains, but at the same time boost local sourcing, primary consolidation is essential, he says.
Supermarkets do not want to receive tiny deliveries from small suppliers at their distribution centres, and yet they are also
reluctant to take direct store deliveries because the IT infrastructure to process them is generally lousy, he adds.
The obvious solution is consolidating goods from several suppliers at one point that serves as the factory gate for the supermarkets. Tesco & co can then pick up full loads to deliver on to their own distribution centres.
“The problem with supermarket primary consolidation centres is that they only take goods for one retailer and they do not break pallets down and pick in smaller quantities,” says Attwell.
That’s not much use for a small supplier that then has to deliver to a clutch of different consolidation centres for all the many different retailers, he points out.
By contrast, Attwell’s facility handles chilled and ambient goods for most retailers and operates at case level, which means it can deal with mixed pallets and suppliers providing just 100 cases a week for major supermarkets.
He has also been spearheading a drive towards consolidated invoicing, which can save more than 20% in administration costs by having the consolidator such as Oakland raise invoices for mixed loads rather than suppliers individually raising invoices - an administrative and costly nightmare for complicated mixed orders.
In less than four years from takeoff, the business is now turning over £3m and handling goods worth £70m. However, Attwell’s most exciting venture is still in its infancy - a network of consolidation centres, such as the Redditch facility, across Europe to speed up and simplify importing for retailers and exporting for suppliers.
The first of these has recently opened in Dunkirk (which involved a few French lessons for Attwell and colleagues). However, his long-term ambition is to have up to 18 multi-temperature service depots offering everything from storage, sorting and grading, barcode verification, cross docking, logistics management, contract packing and labelling to re-palletisation and quality inspection - within the next decade.
The logic underpinning the move is simple, says Attwell.
Currently, a retailer’s overseas suppliers tend to deliver to the UK individually, with goods then going through intermediate consolidators before being picked up through primary logistics networks - a costly and inefficient process.
Under the Oakland system, overseas suppliers instead deliver their goods to the Dunkirk depot where the retailer can then fill up dedicated trucks with cheap French fuel and take mixed loads direct to his UK RDCs. On the return journey, he can then move back down the UK and utilise his trucks for store deliveries from RDCs as he goes. “The whole process can save 25% on the cost of direct imports,” claims Attwell. There is also a big cost-saving opportunity to handle container loads of non-food and other products from the far east that currently go through Felixstowe or Southampton, which are already bursting at the seams and charging through the nose, he says. Typically, containers arrive at Felixstowe, are then transported to a third-party warehouse that destuffs and then transports the depalletised goods to a primary network hub before going to the retailer’s RDCs and finally to the stores - a process that takes six to seven days, and can cost more than £60 a pallet.
By using the Oakland system, the retailer can get containers delivered into the Dunkirk depot, which is 150m from the port container and ferry terminals, destuff and palletise goods there and send them in dedicated trucks to his RDCs - saving a fortune, says Attwell.
Exporters can also benefit from a container-stuffing solution at Dunkirk that is £120 per container lower than the equivalent service at Felixstowe, he claims.
The next step is setting up depots in central and eastern Europe to drive efficiency for retailers and suppliers, and securing venture capital funding to take the family run business to the next stage, he says: “I just want to get things moving. There’s not enough brainstorming in logistics. We’ve still got a bit of an island culture. If people were willing to try new things they could save an absolute fortune.”
Dean Attwell knows a lot about chickens. However, experience has taught him that storing and distributing poultry meat is more lucrative than taking care of his feathered friends on the farm.
Now the MD of Oakland International, one of the smartest warehousing and logistics operations in the business, Attwell admits he and his wife probably clung to their farming roots for too long.
“After pulling out of livestock in the late 1990s, we tried to resurrect egg production, but it was a disaster. we hadn’t got the critical mass.”
What they had got, however, was a lot of storage space and a solid understanding of how supermarkets and foodservice companies worked. Convinced that they could take cost out of the food supply chain, and armed with some cash from the family, they set up Oakland International in Beoley, Redditch, on the site of their farm.
“We had a freezer on-site and offered that as commercial frozen storage - and it went surprisingly well,” says Attwell.
“So we moved on to chilled and ambient and quickly progressed on to picking and added-value services such as re-packing and labelling.”
With the supermarkets all wanting to reduce their inventories and cut complexity in their supply chains, but at the same time boost local sourcing, primary consolidation is essential, he says.
Supermarkets do not want to receive tiny deliveries from small suppliers at their distribution centres, and yet they are also
reluctant to take direct store deliveries because the IT infrastructure to process them is generally lousy, he adds.
The obvious solution is consolidating goods from several suppliers at one point that serves as the factory gate for the supermarkets. Tesco & co can then pick up full loads to deliver on to their own distribution centres.
“The problem with supermarket primary consolidation centres is that they only take goods for one retailer and they do not break pallets down and pick in smaller quantities,” says Attwell.
That’s not much use for a small supplier that then has to deliver to a clutch of different consolidation centres for all the many different retailers, he points out.
By contrast, Attwell’s facility handles chilled and ambient goods for most retailers and operates at case level, which means it can deal with mixed pallets and suppliers providing just 100 cases a week for major supermarkets.
He has also been spearheading a drive towards consolidated invoicing, which can save more than 20% in administration costs by having the consolidator such as Oakland raise invoices for mixed loads rather than suppliers individually raising invoices - an administrative and costly nightmare for complicated mixed orders.
In less than four years from takeoff, the business is now turning over £3m and handling goods worth £70m. However, Attwell’s most exciting venture is still in its infancy - a network of consolidation centres, such as the Redditch facility, across Europe to speed up and simplify importing for retailers and exporting for suppliers.
The first of these has recently opened in Dunkirk (which involved a few French lessons for Attwell and colleagues). However, his long-term ambition is to have up to 18 multi-temperature service depots offering everything from storage, sorting and grading, barcode verification, cross docking, logistics management, contract packing and labelling to re-palletisation and quality inspection - within the next decade.
The logic underpinning the move is simple, says Attwell.
Currently, a retailer’s overseas suppliers tend to deliver to the UK individually, with goods then going through intermediate consolidators before being picked up through primary logistics networks - a costly and inefficient process.
Under the Oakland system, overseas suppliers instead deliver their goods to the Dunkirk depot where the retailer can then fill up dedicated trucks with cheap French fuel and take mixed loads direct to his UK RDCs. On the return journey, he can then move back down the UK and utilise his trucks for store deliveries from RDCs as he goes. “The whole process can save 25% on the cost of direct imports,” claims Attwell. There is also a big cost-saving opportunity to handle container loads of non-food and other products from the far east that currently go through Felixstowe or Southampton, which are already bursting at the seams and charging through the nose, he says. Typically, containers arrive at Felixstowe, are then transported to a third-party warehouse that destuffs and then transports the depalletised goods to a primary network hub before going to the retailer’s RDCs and finally to the stores - a process that takes six to seven days, and can cost more than £60 a pallet.
By using the Oakland system, the retailer can get containers delivered into the Dunkirk depot, which is 150m from the port container and ferry terminals, destuff and palletise goods there and send them in dedicated trucks to his RDCs - saving a fortune, says Attwell.
Exporters can also benefit from a container-stuffing solution at Dunkirk that is £120 per container lower than the equivalent service at Felixstowe, he claims.
The next step is setting up depots in central and eastern Europe to drive efficiency for retailers and suppliers, and securing venture capital funding to take the family run business to the next stage, he says: “I just want to get things moving. There’s not enough brainstorming in logistics. We’ve still got a bit of an island culture. If people were willing to try new things they could save an absolute fortune.”
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