Cott Beverages gets supply chain singing with web-based fulfilment

Cott Beverages, the huge retailer-brand soft drink supplier, is rolling out novel, low cost packaged web-based supply chain collaboration software which could suit manufacturers of all sizes and types. It’s providing automated, real-time, exception-based demand and fulfilment communications and alerts for Cott and its suppliers; it sits on top of Cott’s ERP system, provides downloadable data for the suppliers, and it’s very, very slick. Most important, the firm says that it and its suppliers are already seeing benefits in terms of reduced admin throughout the materials ordering, delivery and billing cycle. Additionally, getting two-way web browser-based visibility of stocks, goods in transit and production across its supply chain, will improve responsiveness to Cott’s customers. Beyond this, the system gives Cott an excellent development route towards supplier performance monitoring, vendor managed inventory (VMI) and further cost reduction. And, interestingly from a technology and investment perspective, it’s being delivered very simply and inexpensively over the web on an ASP (application service provider) model by automotive industry software provider Wesupply – so there are no set-up costs, only a fixed monthly rental (Wesupply sells at around £150 per supplier per month). So confident is Cott’s management team of success that, despite the project only getting underway in April (with a pilot across 10 key partners), it’s going fully live as we go to press, and Cott is already committed to rolling the system out across by far the majority of its supply chain within three months. This is e-business with a capital ‘e’! Quick background: Cott’s operations are highly automated, high volume and high speed, with two plants – the main one at Kegworth, Derbyshire and the other at Pontefract, Yorkshire. At Kegworth, for example, which covers 25 acres with three independent plant units, it’s a picture of PLC-controlled blow moulding machines feeding conveyor-linked bottling, packaging and palletising machines, and then onto high and low bay automated warehouses serviced by AGVs (automatic guided vehicles). A whirlwind tour makes it clear that best practice, team-based manufacturing (including Six Sigma) is practised here. But it’s all fed by materials from 40-plus suppliers – and that’s what this is all about. Mike Turner, Cott’s resource planning manager, takes up the story. “We had spent the last two years building our process management model to make it highly customer-focused.” Beyond its machinery investment and manufacturing best practice programmes, the firm had moved from a traditional departmentalised hierarchical structure to entirely process-based businesses. “It meant breaking down barriers,” says Turner, “and forming ourselves into business units built around our strategic customers (organisations like Sainsbury’s, Asda/Walmart, Safeway, Tesco, Somerfield, Morrisons and Marks & Spencer), with representatives from each of the old departments in the new teams.” The result was noticeable improvement, with customer service moving up from 82% to 99% in the last nine months. But the next phase was to “close the loop”, as Turner puts it. He explains: “To go for the highest service level possible, we needed to involve the supply chain itself as part of the smooth delivery mechanism feeding our customers.” Briefly looking at the IT, Cott had implemented SSA GT’s BPCS ERP system two years ago, and upgraded to the latest version in March. It covers everything from financials and inventory management, to MRP, bills of materials and the rest. Before putting in Wesupply, BPCS was used to generate supplier schedules for ingredients and packing materials (caps, bottles, labels, film, etc) these being faxed automatically on a weekly basis. Just rounding that out, Cott also has a Demand Solutions planning suite for forecasting and master scheduling, with a Preactor system alongside for short range finite capacity scheduling across both plants. BPCS raises works orders daily for Preactor to schedule; Preactor then pumps its results back into BPCS – and the system reconciles production consumption against incoming order requirements for the next weekly suppliers’ batch run. To move this and its supply chain forward, Cott identified five key areas for development: innovation, service levels, technical excellence, cost reduction and communications. On innovation, Cott set its target at 20% of turnover to come from new materials, processes and products – driven by suppliers, not just customers. Then for service, the firm wanted to align its internal and external standards, which implied a system for measuring and monitoring performance against KPIs. On quality, it needed suppliers to enact due diligence on their systems: “We have the highest levels of accreditation for our own facility; that had to go out through our supply chain,” says Turner. And similarly on cost, he says: “For us to be world class it follows that our suppliers also have to be world class in optimising their costs. So our Six Sigma programme had to move out to our suppliers as well.” But the biggest challenge was on communications: the firm wanted to replace its existing weekly suppliers’ re-schedule with an automated, real time, exception-based system that was two-way. It wanted this to be the cornerstone for getting suppliers and Cott working together as a virtual enterprise, all aware of everything from materially changing schedules to what was currently being accepted (and rejected) at Cott’s goods-in – and everything in between. And it had to be linked directly to people and actions. It was a tall order. “We looked at the market for about six months,” says Gavin Totman, IT manager, “and at first we found nothing.” Then he came across Wesupply, offering IT that seemed to do it all by focusing on collaborative supply chain fulfilment – and with a ready-made BPCS interface. Wesupply, which has reference sites at Lear in Belgium and Halewood, TI Bundy in Telford and IMI Norgren at Witton, was formed two years ago by CEO John Luscombe, founder of SSA Acclaim, now part of SSA GT. The software is ideal for closed environment supply chains with deep relationships. What’s particularly clever is its focus not so much on synchronising inter-company ERP data (as with EDI and so-called ‘web EDI’), but on integrating supply chain users’ relevant business processes. It’s real-world stuff “This is the key,” says Luscombe. “It’s the information and the knowledge that matter.” The software can integrate with the OEM’s and the suppliers’ ERP systems, or provide CSV files for download, effectively sitting on top and updating data via the web. Most important, it also alerts people and their systems of out-of-tolerance exception data – on everything from orders, to shipments, deliveries and invoices (with price, quantity and quality checking etc). And it’s all on a single, easy to use, actions-based universal system. Wesupply managing director Paul Heaven puts it thus: “We’re sifting out the commercial noise across supply chains: 99% is usually confirmed as expected, but exceptions need further dialogue: like the reason for a particular change, and what can be done about it. It’s this visibility that makes the difference: so that the relevant people can put their effort where its most valuable.” ERP doesn’t do this: the system issues orders and sits there assuming materials will arrive with everything present and correct on the due date. But what if there’s a dispute, or parts lost or broken? It’s this real world stuff that makes Cott’s Wesupply system so interesting. And there’s more: Heaven adds that it’s also designed to smooth out the classic problems of different documentation causing confusion between companies’ departments, and how to handle rejects – while also supporting bigger initiatives like self-billing, supplier performance monitoring and VMI. At Cott Beverages there’s no doubt it’s working extremely well. Totman says that at Cott itself, Wesupply only had to interface to BPCS, none of its other systems. Shipping and forward material requirements data from BPCS is pumped out to the Wesupply website, while on the return side, suppliers’ despatch notes and Cott goods-in is done through the Wesupply purchase order receipt screen, which links straight back into BPCS, automatically performing the three-way invoice match. As for the suppliers, they see shipping and forecast data as two separate files on the Wesupply site. They can download as they please – as CSV files to take into an Excel spreadsheet, or an Access application, as EDI or direct into their ERP systems – although Totman says the latter two methods aren’t being used yet. Says Jane Lewis, Cott’s project manager: “Wesupply works: it isn’t a glorified Powerpoint presentation. We’re giving our suppliers total visibility of what we want, and an analysis of how our requirements have changed. In return, we’re getting a greater understanding of what they can deliver and have delivered.” And Turner adds: “We get a clear view of all goods in transit and are automatically alerted to any potential shipment or delivery problems.” Mike Parsloe, operations materials controller, says it all: “In the past there was no visibility of where anything was in transit, or what might have happened to it. Now, the system gives us advice of what’s coming in and where it might differ in terms of quantity. It’s taken out the chasing round.” And he says that when materials arrive, the booking-in process is much faster, with Cott’s own item numbers and stock codes on the Wesupply screen, standard documentation throughout and instant acceptance of everything if all is present and correct. “It means we can all work more efficiently; it frees up staff for tasks like maintaining stock accuracy. And it’s much easier for the finance department.” And he adds that, through the system of automatic alert messages, production teams and schedulers can be instantly alerted to variations – in goods in, for example – so they can make decisions about moving them quickly to plant, changing the plan or whatever. And Tracey Williams, Cott’s operations scheduler, says that where part shipments are rejected, the system lets the supplier know immediately, whether problems are found by QA, at the line side, or wherever, with quantity and reason, via the alerts. That then generates new shipping requirements, automatically updating internal and suppliers’ systems via the web, so they can respond with new ETAs etc. She also says that Wesupply’s performance manager tool means everyone will get visibility of their performance. “We don’t have to go through any of the other departmental systems to find out – it’s all there on the one system.” Serious hard benefits Heaven estimates immediate hard benefits as reduced time in expediting at 30—40%, and improved goods receiving saving 30—40%. As for the suppliers’ benefits, Turner says they too have been immediate. While they get the same information (forecasts 12 weeks out; shipping instructions at seven to 42 days depending on lead times, with delivery date, time and quantity), rather than a fax once a week, now any changes are instantly visible. And, with exception-based alerts pushed to whoever is specified, action is assured: if people don’t open their alert messages within set times, the system generates further alerts for other designated individuals. “And we get a copy too, so we know,” says Turner. It all means that Cott and its suppliers are much better able to handle the pressures of the retail world today. “We can all have flexibility to the changing world as demand varies according to promotional offers and the like,” says Turner. “We can react more quickly because our suppliers get new demand information as fast as we do.” Add this to the improvements in terms of automated financial accounting, the automatic generation electronic documentation and the inevitable dependence on, and resulting confidence in, the system – and the follow-on benefit is better inventory accuracy and reducing ‘safety stocks’. As for the future, Cott intends next to implement document exchange, attaching for example certificates of analysis electronically using Wesupply. And, says Turner, “We also plan to reduce our average stock holding by achieving more ‘just in time’ deliveries through VMI, and we’re working with them on automatic invoicing and self-billing.”