Multinational food and drinks company Diageo is to invest more than
£10m in a global e-collaboration project that will make its supply
chain visible to over 400 suppliers and customers.
A pilot project in the Johnny Walker whisky division carried out
over the past few months removed 10% of inventory and increased
service levels for on-time, in-full delivery to 97%.
Steve Saxby, global supply chain planning system director at Diageo
- whose brands include Guinness, Bailey's, Smirnoff and Jose Cuervo
- said the project is designed to underpin growth driven by
"unexpected demand" for the company's products.
"The Guinness division experienced 14% growth last year. It was
quite exceptional, and without improving the supply chain in this
way we would struggle to satisfy customer requirements," he
explained.
Diageo's e-collaboration programme aims to link the company's 18
manufacturing plants around the world with suppliers of raw
materials and packaging on the one hand and distributors and
customers of finished products on the other.
Planning began in January 2000 and a pilot roll-out took place
between December 2001 and March 2002, linking Johnny Walker's raw
materials and packaging suppliers with shippers and distributors to
the Greek market.
Deployment will be in stages, linking 200 internal sales points to
more than 200 customers and distributors. Communication of supply
requirements will include Web-based ordering and EDI but also flat
file-based requests for the less sophisticated partners in the
supply chain.
The project will use the principles of vendor-managed inventory
(VMI) and collaborative planning forecasting and replenishment
(CPFR).
Vendor-managed inventory allows the manufacturer to plan the
delivery of product more effectively by having access to the
distributor's sales and stock levels rather than awaiting an order.
CPFR is the process of collaboration between suppliers and
customers where likely spikes and troughs in demand are identified
so that customers can trigger delivery within pre-defined
limits.
Saxby said the company is aiming to have a single stock system that
is visible worldwide but it is still some way from achieving it.