WPIT
South West Wales Food Distribution Pilot
WPIT
South West Wales Food Distribution Pilot Study
Strategic Marketing
5-7 Museum Place
Cardiff, Wales
CF10 3BD
Tel: ++44 (0)29 2030 3100
Fax:++44 (0)29 2023 6556
© Strategic Marketing 2004
ContentsPage
1.Introduction
2.Area Covered
3.Creating the Database
4.Initial Findings
5.Food Categories Analysis
6.Supplier Analysis
7.Outlets by Postcode
8.Number of Outlets by Postcode Area
9.Supplier/Postcode Analysis
10.Supplier Views
11.Food Miles per Case Delivered – Miles/Case Delivered Ratio
12.Conclusion
13.Possible Next Steps
1.Introduction
The Public Sector Food Group has identified difficulties in setting up good distribution arrangements to public sector particularly in South West Wales. As a result of this we were commissioned by the WPI’s Public Sector Food Group to undertake a Distribution Study Pilot in the region.
1.1The object of the study was to investigate the food requirements and the constraints e.g. storage, availability of access for delivery etc. of public sector outlets in the South West and assess the feasibility of setting up cross-sector distribution arrangements.
To meet this need Strategic Marketing undertook several activities including building a database of outlets, food categories and suppliers, and obtaining the views of nominated suppliers.
1.2We also considered alternative options which could improve service, reduce costs or reduce environmental impact
2.Area Covered
3.Creating the Database
3.1This first activity was to create a database of:
- Outlets;
- Locations/postcodes;
- Suppliers;
- Facilities;
- Food categories.
3.2A matrix was also built of suppliers that supply more than one food category. The analysis thus was able to indicate how many suppliers deliver to each postcode area and how many postcode areas each supply to.
4.Initial Findings
4.1 There were a number of initial findings;
- Postcode analysis shows Aberystwyth is isolated i.e. sits in the middle and is difficult to supply from north or south;
- Data appears to be incomplete in some areas i.e. no data for Hospital or Schools in Aberystwyth;
- There is some level of inconsistency in data provided by different organisations i.e. not all data requested was available, so full comparisons/conclusions cannot be achieved;
- Whilst there is some level of standard categorisation of food groups they are not fully defined across all buyers e.g. Fresh Meat, Cold Meat, Savoury Meat products. This makes comparisons difficult;
- Categorisation appears to be based upon key suppliers range of products
- Some level of ‘uniqueness’ by outlet and product group e.g.:
- Schools milk is a different pack size
- Schools demand is variable due to School holidays
- NHS purchase baby foods
- Some organisations provide pre-prepared sandwiches, some prepare sandwiches on-site and some do not provide any type of sandwich
5.Food Categories Analysis
5.1There were 28 different (food) categories specified by the buying outlets:
Strategic Marketing
November 2004
Page 1 of 12
WPIT
South West Wales Food Distribution Pilot
Fresh Meat
Fresh Fish
Fresh Fruit & Vegetables
Dry Goods & Groceries
Frozen General
Bread, Cakes & Biscuits
Dairy
Soft Drinks
Flavoured Milk
Chilled Non-Dairy
Desserts
Sauces
Confectionary
Baby Foods
Beverages
Soups
Cold Meats
Filled Rolls/Sandwiches
Sandwich Fillings
Disposables
Organic Meat
Juices
Welsh Produce
Chilled & Frozen Savouries
Snacks
Water Dispensers
Crockery Suppliers
Specialised Goods
Strategic Marketing
November 2004
Page 1 of 12
WPIT
South West Wales Food Distribution Pilot
6.Supplier Analysis
In the area there are 138 different supplies identified – however many are local milk deliveries from small local suppliers.
Of the 138, only 22 suppliers provide products in more than one category and 8 provide products in more than two categories. These are:
- Castell Howell Foods=11 categories
- Peter's Food Service= 7 categories
- 3663 BFS= 6 categories
- Brakes= 4 categories
- Bunzl Catering= 4 categories
- AAH Pharmaceuticals= 3 categories
- Hippo Campo= 3 categories
- Skelfayre= 3 categories
Strategic Marketing
November 2004
Page 1 of 12
WPIT
South West Wales Food Distribution Pilot
7.Outlets by Postcode
8.Number of Outlets by Postcode Area
Strategic Marketing
November 2004
Page 1 of 12
WPIT
South West Wales Food Distribution Pilot
9.Supplier/Postcode Analysis
9.1401 Outlets were identified in 52 Postcode areas
9.2Number of Postcodes serviced by top 22 suppliers
Strategic Marketing
November 2004
Page 1 of 12
WPIT
South West Wales Food Distribution Pilot
Brakes= 40
Skelfayre= 36
Fred Leys= 28
Peter's Food Service= 18
3663 BFS= 14
Castell Howell Foods= 12
Hippo Campo= 10
Bunzl Catering= 8
D&G Wholesale= 8
W.E.Knipe= 8
Luther Lewis= 8
King (1)= 7
DBC Wholesale= 6
Go Foods= 5
Nestles= 4
P&H Snacks= 4
Sweetmans= 4
Farmer Johns= 3
King (2)= 2
Rob Rattray= 2
Delice de France= 2
AAH Pharmaceuticals= 1
Strategic Marketing
November 2004
Page 1 of 12
WPIT
South West Wales Food Distribution Pilot
10.Supplier Views
10.1Strategic Marketing contacted a number of suppliers to elicit their views on the opportunity to work together and the way in which the public sector contracts for food.
10.25 Suppliers + Welsh Health Supplies were initially contacted. The results were not encouraging:
- 2 permanent voicemail
- 1 competitive threat
- 1 requested e-mail to confirm who we were but did not respond
- 1 immediate response, very interested in initiative
10.3In the conversations that were held the following emerged:
- Tenders do not reflect the level of detail required to calculate routes/drops and volumes:
- High vehicle fill required to provide lowest cost therefore operate shared-user deliveries:
- Product wastage could be reduced by changing ordering patterns e.g. schools buying fresh produce on Friday’s which has deteriorated by Monday:
- It is possible to combine outlets in rural areas to reduce vehicle numbers e.g. cottage hospital and primary school:
- There would be the opportunity to collaboration with other suppliers to distribute their product from regional hubs:
- There is also the opportunity to collaboration with other suppliers to backhaul to reduce trunking costs.
11.Food Miles per Case Delivered – Miles/Case Delivered Ratio
11.1Transport cost has the biggest impact on the costs of food:
- Best case scenario = low mileage, high case drop e.g. Tesco Direct home delivery
- Okay = low mileage, low case drop e.g. milk round
- Okay = high mileage, high case drop e.g. trunking
- Worst = high mileage, low case drop e.g. rural deliveries – which the situation we have in large parts of rural west Wales.
11.2How to move from ‘Worst’ towards ‘Best’
- Distance is fixed therefore increase case drop size
- Local Delivery
- Mixed product e.g. Shared-User delivery from Hub
- Multiple drops within region - combine outlets e.g. school & hospital
- Outsourced Hub operation e.g. 3PL or WHS with other customers
- Collaborative suppliers e.g. Freedom Eggs (Usk Valley family-run farms)
- Trunking/Warehousing
- Hub & Spoke network – single supplier
- Hub & Spoke network – collaborative suppliers
- Backhauling – collaborative suppliers
12.Conclusion
- In the pilot area there are 401 delivery outlets in 52 postcode areas supplied by 138 suppliers
- 7 suppliers deliver in 10 or more postcode areas
- 22 suppliers provide more than 1 food category with 8 providing more than 2
- Numerical ‘cost savings’ unavailable without further investigation – but there is the opportunity to collaborate and create savings.
13.Possible Next Steps
Regional Pilot Activities
- Define standard food categories across all buying organisations under frozen/chilled/ambient/fresh hierarchy;
- Establish buying/delivery volumes by food category by region making sure that this is available to tenderers;
- Agree postcode groupings and determine an epicentre e.g. Haverfordwest as a possible Regional Distribution Centre Hub;
- Undertake supplier research to identify current issues and opportunities
- Undertake a Supplier Conference to:-
- Disseminate information about what the public sector is trying to do;
- Identify potential regional suppliers for each food category and hub operation;
- Investigate potential new local and national suppliers;
- Work with identified suppliers to establish ‘food miles’ costs for different options
Strategic Marketing
November 2004
Page 1 of 12