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WPIT

South West Wales Food Distribution Pilot Study

Strategic Marketing5-7 Museum Place

Cardiff, WalesCF10 3BD

Tel: ++44 (0)29 2030 3100Fax: ++44 (0)29 2023 6556

© Strategic Marketing 2004

WPITSouth West Wales Food Distribution Pilot

Contents Page

1. Introduction.........................................................................3

2. Area Covered.....................................................................4

3. Creating the Database........................................................5

4. Initial Findings.....................................................................5

5. Food Categories Analysis...................................................7

6. Supplier Analysis................................................................7

7. Outlets by Postcode...........................................................8

8. Number of Outlets by Postcode Area.................................9

9. Supplier/Postcode Analysis..............................................10

10. Supplier Views..............................................................10

11. Food Miles per Case Delivered – Miles/Case Delivered Ratio ......................................................................................11

12. Conclusion....................................................................12

13. Possible Next Steps.....................................................12

Strategic MarketingNovember 2004

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1. Introduction

1.1 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.

1.2 The 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.

1.3 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.

1.4 We also considered alternative options which could improve service, reduce costs or reduce environmental impact


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2. Area Covered


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3. Creating the Database

3.1 This first activity was to create a database of:

Outlets;

Locations/postcodes;

Suppliers;

Facilities;

Food categories.

3.2 A 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


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Some organisations provide pre-prepared sandwiches, some prepare sandwiches on-site and some do not provide any type of sandwich


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5. Food Categories Analysis

5.1 There were 28 different (food) categories specified by the buying outlets:

Fresh MeatFresh FishFresh Fruit & VegetablesDry Goods & GroceriesFrozen GeneralBread, Cakes & BiscuitsDairySoft DrinksFlavoured MilkChilled Non-DairyDessertsSaucesConfectionaryBaby Foods

BeveragesSoupsCold MeatsFilled Rolls/SandwichesSandwich FillingsDisposablesOrganic MeatJuicesWelsh ProduceChilled & Frozen SavouriesSnacksWater DispensersCrockery SuppliersSpecialised Goods

6. Supplier Analysis

6.1 In the area there are 138 different supplies identified – however many are local milk deliveries from small local suppliers.

6.2 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


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7. Outlets by PostcodeNumber of Outlets by Postcodes

0

5

10

15

20

25

30

35

SA1

SA2

SA3

SA4

SA5

SA6

SA7

SA8

SA9

SA10

SA11

SA13

SA14

SA15

SA16

SA17

SA18

SA19

SA20

SA21

SA31

SA32

SA33

SA34

SA36

SA37

SA38

SA39

SA40

SA41

SA42

SA43

SA44

SA48

SA61

SA62

SA64

SA65

SA66

SA67

SA68

SA69

SA70

SA71

SA72

SA73

SY10

SY16

SY18

SY20

SY21

SY23

Postcode Areas

No

of O

utle

ts

8. Number of Outlets by Postcode Area

0

20

40

60

80

100

120

140

160

180

Sw ansea Llanelli Llandeilo Unknow n Carmarthen Cardigan Haverfordw est Aberystw yth

Postcode Area

Num

ber o

f Out

lets

9. Supplier/Postcode Analysis

9.1 401 Outlets were identified in 52 Postcode areas

9.2 Number of Postcodes serviced by top 22 suppliers

Brakes = 40Skelfayre = 36Fred Leys = 28Peter's Food Service = 183663 BFS = 14Castell Howell Foods = 12Hippo Campo = 10Bunzl Catering = 8D&G Wholesale = 8W.E.Knipe = 8Luther Lewis = 8

King (1) = 7DBC Wholesale = 6Go Foods = 5Nestles = 4P&H Snacks = 4Sweetmans = 4Farmer Johns = 3King (2) = 2Rob Rattray = 2Delice de France = 2AAH Pharmaceuticals = 1

10.Supplier Views

10.1 Strategic 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.

10.2 5 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

10.3 In 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

11.1 Transport 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.

11.2 How 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

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