Food distributionVertical industry brief

Production and design: Global Sales and Marketing department

IBS, ASW and IBS VIRTUAL ENTERPRISE are registered trademarks of IBS AB, in the European Union and in other countries. IBM, AS/400, iSeries, Lotus Notes, andWebSphere are registered trademarks of International Business Machines Corporation. All other trademarks or registered trademarks mentioned herein are the propertyof their respective holders. The information contained in this document is summary in nature, subject to change and intended for general information only. The details

pertaining to functionality and routines are based on IBS software, post release 5.50. For updates of this information, please contact your local IBS representative. © Copyright IBS 2004.

ContentIntroduction

Market situation and trends 3Increased wealth and lifestyle changes

Global supply patterns

Pricing policies and rebate handling

Frozen food preparation and warehouse management considerations

Food service distribution

FDA requirements

Improvements in collaborative planning forecasting and replenishment

Implications for the food distribution industry

IBS software - a competitive advantage 7

Tailored for the food distribution industry 8

IntroductionNothing is surer than death and taxes and that we must eat. Food not

only sustains us, it delights us as we devote much of our day in its selection,

preparation and consumption. A major portion of our economy is devoted

to harvesting, processing, storing and distributing food, ensuring a

bountiful supply at supermarkets, restaurants and other food outlets. It

takes a highly sophisticated, global food distribution industry to provide

the variety and choice of food which we expect.

In the US, approximately USD 180b pass through food distribution channels

and a similar amount is spent within the European Union. Extend this

worldwide, and food distribution exceeds USD 500b per annum. This

represents by far the largest distribution sector with two monolithic

channels - supermarket retail and food services. These channels are huge

and clearly defined, so what makes economic and commercial sense

here often manifests itself elsewhere in the supply chain. Food distributors

have used information technology to help them handle customer demands

and the rapid increase in business volumes. Their business process

improvements have set a new standard that other supply channels have

been quick to adopt so they can achieve the same business benefits.

Food giants and technology providers work together to improve the

efficiency of food processing, storage and distribution operations so that

food products can be harvested, stored and moved to the dinner table

quickly and at less cost. This vertical brief focuses on the specific problems

that are paramount in today's food distribution industry, explaining how

information technology can help food distributors improve their efficiency

and reduce the overall costs that drive up profits in what is an extremely

competitive, low-margin business.

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Market situation and trendsThe food industry covers many market sectors. This industry brief focuseson the ones that major in the distribution of these goods: general groceriesand related products, packaged frozen foods, dairy products, poultryand poultry products, confectionary, fish and seafood, meat and meatproducts, fresh fruit and vegetables, and grains and field beans.

Increased wealth and lifestyle changesModern lifestyles and disposable incomes now dictate that food productsnot only come to us fresh, but also processed and packaged in differentways. This means that we spend less time in the kitchen preparing foodand more time in the active enjoyment of eating. Cultural differencesplay a big part in how we prepare and cook our foods. We also tend toeat out more, choosing from a variety of restaurants and eatingestablishments. This requires that food products are readily availablefresh or at different levels of preparation to suit our convenience. Thefood industry has been very creative in providing choices that cater toour preferences, in order to increase turnover and gain market share.

Global supply patterns We now expect a year-round supply of seasonal products. It is an extremelycomplicated process involving everyone in the food supply chain fromthe grower to the retailer. Many food distributors act as commoditybrokers, negotiating annual supply contracts for the major retail chainsfor a range of food products. Often these are 'own label products' thatare sourced from several different growers or food processors aroundthe world to guarantee a year-round supply. These products are processedand packaged to precise specification and containerised for shipment.Some containers might be shipped directly to a customer's own distributioncentre, whereas others are shipped to the distributor's warehouse or topublic warehousing. The logistics planning, documentation and qualityof the product has to be precise if costs are to be kept under control. Ifthe quality is not up to standard and the consignment is rejected, thefood distributor has the problem of replacement, re-labelling and disposalon the secondary market almost surely at a loss.

This is a bulk low-margin business with linked customer and supplycontracts. In order to guarantee year-round availability, the suppliers arespread around the world and are invoiced in different currencies.Commodity traders are well aware that contracts to supply over a twelve-month period can severely erode profit margins if currency exchangerates fluctuate significantly, so they buy or sell their currencies forwardto protect their margins. Some retail chains share the risk in exchange forlower shelf prices by negotiating sales contracts with built-in currencyclauses. If the exchange rate fluctuates outside predefined tolerances,the food distributor can adjust the customer's pricing to maintain margins.

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Wealth and lifestyle changes

• Lifestyle and income change foodconsumption

• Less home preparation of food

• Higher consumer expectations.

Global supply patterns• Year-round supplies of seasonal

food demanded

• Annual supply contracts play a large role

• Logistics and quality must be upto standards

• Low margins, contracts, exchangerates all bear on pricing.

Everfresh is a young com-pany and with IBS software asa tool, we have been able toincrease our market sharefrom 7% in 1997 to 25% in2003. It goes to show that agood IT partner is essential forsurvival in today's competitivebusiness environment.

Lars Åström, Managing Director, Everfresh

Pricing policies and rebate handlingFood has two monolithic distribution channels which represent 95 percentof turnover, notably supermarket retail and the food services industry.Their customers want guaranteed supplies at guaranteed prices, thoughsome specialty products do have seasonal variations. Their preference isto enter into price/supply contracts for periods of up to one year. The foodservices industry has organised buying groups to negotiate better prices,whereas major retail chains are large enough to negotiate their own pricing.

This is predominantly a contract pricing business but there the similarityends, as contract pricing and discounting can be very complex. Most pricesare volume-based, with various chain discounts based on almost anyvariable from product line to manner of transport. Suppliers are constantlyinventing new products and repackaging old ones with special pricing,promotional offers and marketing campaigns. Customers demand rebates,overriders and retro adjustments which are commonplace in the foodindustry. This practice leaves the food distributors hard-pressed to figureout overall gross and net margins on their products.

Catch weight pricing predominates in food supply. Most poultry meatand fish products are bought and sold in cartons or packages and arepriced by weight, so food distributors need to be able to accuratelyweigh and price by weight at the point of receipt and dispatch. Somefood distributors have a secondary requirement to be able to viewquantities by location in both the stocking unit and by weight.

Frozen food preparation and warehouse management considerations A large portion of the food industry is dedicated to storing and packagingfrozen food products. Here is a fairly typical scenario to highlight someof the issues associated with cold storage.

Grower cooperatives plant a variety of vegetables from spinach and carrots,through peas, beans and cauliflower, to sprouts and celery. The harvestbegins in May and the last vegetables are brought in towards the end ofDecember. The produce is delivered to a freezing unit, where it is quick-frozen to around -20°C and stored in bulk containers in the cold store.Over a twelve-month period the frozen vegetables are prepared, processedand consumer packaged. They are then re-stored or shipped to customerdistribution centres or public warehouses specialising in chilled andfrozen product distribution.

Computer-controlled packaging lines and warehouse automation canimprove efficiency and space utilisation by as much as 40 percent, withconsiderable production and distribution cost savings.

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Pricing policies

• Two major channels: supermarketretail and food services

• Channels prefer price and supplycontracts for up to one year

• Volume-based pricing predominates

• Rebates, overriders and retroadjustments complicate margins

• Catch weight pricing predominant.

Here are a few examples of how food distributors can save on timeand costs by implementing automated, fully integrated warehousemanagement systems (WMS);

• Cold store economics dictate that it is cheaper to store frozen productsin bulk containers than to store them pre-packaged. A WMS linked toinventory forecasting and customer safety stock levels enables betterplanning for when bulk produce should be processed and pre-packaged.The planning algorithms can also take account of the run size, packagingline set-up and switching costs.

• Many cold stores maximise space utilisation by using mobile racks andcarriages that open for access and then close to save space. If the WMSgives the order to open the aisle to the PLC control of the mobile racks,prior to the forklift's arrival, valuable waiting time can be saved (itcan take up to 60 seconds to open an aisle). When a forklift entersand leaves an aisle it can be reported to the WMS. For safety andperformance reasons, the WMS can ensure that only one forklift isdirected to a dock/aisle combination at a time.

• Random location management has considerable benefits over fixedlocations for seasonal products, which are stored as long as twelvemonths. As the produce is shipped the fixed locations will empty, andwasted space in a cold store is costly. A WMS can maximise the fill ofrandom locations by the operation of a 'double run' or 'pick andreplace' principle, whereby once a rack is opened to remove a palletfor dispatch, it is immediately replaced with a new pallet from receivingor from the production line. This requires a WMS that supports radiofrequency (RF) scheduling and is interfaced to the PLC controls.

• Cold store racks must be as well stacked as possible and their loadswell balanced for the runners to open and close efficiently. The WMScan help avoid unnecessary equipment failures by applying algorithmsto evenly distribute the load along the racks.

• Pallet storage often requires different pallet configurations. Once abase pallet has been assigned for either euro or customer assignedpallet size, pallet stacking must follow the same pallet configuration.

• To facilitate the efficient loading of delivery vehicles, the sequence inwhich pallets are picked to arrive at the staging areas should be instrict delivery unloading sequence. As forklifts load the pallets into thedelivery vehicle, it is also useful to have a pictorial representation ofthe loading process, colour-coded to ensure that the pallets have beenloaded in the right sequence and that nothing has been left in thestaging area.

The food distribution industry, and especially cold store operations, needwarehouse management systems that are fully integrated to the ware-house automation equipment and to RF operations. The major retailchains dictate very demanding service levels and delivery requirementsand expect zero errors. Their turnover volumes are so large that theyoften source the same products from several different food distributors.If a supplier's performance dwindles, the retail chain may suspend theorder call-offs and switch to another supplier for a month or two. Thereare no guarantees: the major retailers have all the power, so it is essentialthat an efficient WMS forms the nucleus of any supply operation tosupport a 'right first time every time' guiding principle.

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Frozen food considerations

• Frozen food product processing,distribution are major industryfacets

• Cold store practices demand automated warehouse managementsystems (WMS)

• WMS must be fully integrated toautomated equipment.

Food service distributionFood services is the second largest food distribution channel, sellingfresh and pre-prepared food produce to be consumed in restaurants andeating establishments outside of the home. Products include cannedfoods, meats, poultry, seafood, dairy, fruits, vegetables, beverages andother ancillary products such as napkins, paper towels, detergents andcleaning materials.

Food service customers, especially the owner-run restaurants, rely on amore individual personalised approach from their suppliers, who oftenemploy a field sales force to generate new business and to take customersorders. This can be an expensive sales channel, so more food servicedistributors are encouraging their customers to order over the Internetor use customised PDA devices, storing product information andinstructions on how to log orders. This suits many restauranteurs, whocan check their stock at the end of the evening and transmit orderselectronically for next-day delivery.

Chain restaurants or public food outlets - such as hotels, hospital andschool canteens - have the buying power to negotiate national andregional contracts with special ordering, billing and fulfilment needs.Quotation, price and cost management are common requirements, asare personalised menu management and menu guides based on orderstructures. This means that suppliers can, for example, deliver on aMonday everything required to prepare Tuesday's menu or all the menusfor the week.

FDA requirementsMost countries have Food and Drug Administrations (FDAs) responsiblefor the regulation of food products, to ensure that they are safe to eatand that they do not contain any harmful additives. Correct labelling offood products is strictly enforced and some countries now exercise strictguidelines relating to product advertising. Food control and safety willonly increase with the closer linking of food supplies among countriesand regions. One current example is the EU's general food law Article15, which will take effect in January 2005. This amendment mandatesfast tracking capability for all food, food products and animals that areused for food. Such regulations underscore the need for an automateddistribution system that can provide prompt and accurate tracking andtracing.

Having control over what we eat is a constant concern, and foodnutritionists, scientists and environmentalists watch over the food industryfor health and safety reasons. Batch control of food products - fromplanting and growing through food preparation and storage and on tothe supermarket shelf or food services outlet - is an industry requirement,and information technology is the only way to track food product all alongthe supply chain. Batch control and date control, including manufacturingdates, sell by dates, shelf life and 'best by dates', are essential for manyfood products. Strict FIFO batch rotation is essential if shelf life and 'bestby dates' are to be maximised.

Quality control and quality analysis of food products take place at everyexchange point in the food supply chain, and most product defects orcontaminations are detected well before the product gets to the consumer.Nevertheless, product recalls are frequent occurrences, and food processorsand distributors must have information systems in place to track and traceproducts throughout the supply chain.

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Food service distribution

• Food services (restaurants, etc.) second largest food distributionchannel

• Individualised approach for supply,often through field sales

• Opportunity for customer orderingvia Internet or PDA devices

• Negotiated pricing on national,regional basis.

FDA requirements• Regulatory obligations will increase

for food industry

• Batch control through supply chainis essential

• Complete tracking and tracing necessary for recalls, quality.

Improvements in collaborative planning, forecastingand replenishmentThe fast-moving food and consumer goods industries were the primaryinnovators of 'efficient consumer response', whereby retailers use vastdatabases of sales information to analyse customer-buying patterns andto predict future product and packaging requirements. This informationis useful for food producers and growers to plan product strategies. Majorretail chains use point of sale information to help manage restocking byexamining sales and stocking levels for generating sales orders and deliveryschedules - short- and longer-term delivery plans. This, in turn, helps thefood distributor with the call-offs against the customer's supply contracts,predicting where there may be shortfalls and overruns. The food distributoruses this information to notify suppliers of any changes in their deliveryschedules.

The food industry has been an early innovator in the exchange of electronicinformation, based on the Walmart EDI model. Communication via EDIwith several business partners has never been easy, so it is not surprisingthat other data interchange protocols such as XLM messaging haveemerged. One fact is certain: the development of Internet communicationswith global supply chain partners will continue to expand as food distribu-tors look for simple ways to exchange information. It is essential thattechnology partners can provide open systems that make it far easier forbusiness applications to exchange information.

Implications for the food distribution industryThe food distribution industry is in a constant state of change as suppliersand major retailers compete for market share and innovation. Informationtechnology solutions that can keep up with the physical pace of productmovement from the grower to the consumer in days, if not hours, are ofparamount importance if information is to be meaningful, accurate anduseful.

As companies consolidate and expand through mergers, acquisitions andalliances, it becomes increasingly critical to have systems that are easy tomaintain and integrate across multiple facilities, locations, platforms,regions and languages.

Food distribution is a rapid-turnover, high-volume business that places aheavy burden on the operational and logistics resources of any company.Industry-specific regulations and business practices in forecasting,procurement, warehousing, dispatch and customer service all requirespecialised treatment. Exceptionally powerful software is required to handlethe extremely large transactions volumes and the velocity of theirmovement in day-to-day business. These are important factors for anyfood distributor to consider when looking for a software solution thatwill provide a competitive advantage. This solution must provide the abilityto meet individual customer's expectations and service levels whileprotecting and optimising profits.

Many food distribution companies are experiencing difficult times whenconfronted with low profit margins, global supply lines, increasedgovernment regulation and fierce competition. The increasing use ofEDI, XML and the Internet to communicate with business partners andexchange information has created fresh challenges and opportunities forthose that can cope with the technology changes. Companies are investingmore in vertical industry solutions that require less customisation, providea quicker deployment and a faster Return on Investment (ROI). Don't getleft behind!

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Collaborative planning

• Food industry early innovator inconsumer response analysis

• Point of sale information helpsmanage restocking levels

• More accurate predictions helpreduce shortfalls and overruns

• EDI procurement innovative in cutting costs

• XML, Internet continue to opennew saving methods.

IBS software - a competitive advantageIBS' ASW is a world-leading business software suite for supply chainmanagement, distribution, demand-driven manufacturing and financialcontrol. It is designed to fulfil the requirements of worldwide business-to-business trading. According to studies conducted by AMR Researchand Frost & Sullivan in 2001, IBS is the market leader for supply chainexecution software. IBS also ranks among the top three globally activeSCM suppliers.

IBS provides the food distribution sector with a complete solution,including hardware, software, financing and services. IBS can take on thefull responsibility for an entire customer installation as a one-stop-shopsupplier. The solution combines the use of excellent servers, operatingsystems and application software and provides up-to-the minute statusof all processes in the supply chain. At the same time, it can processmore than two million order lines per hour with a response time of 0.04seconds in a productive environment.

The software and services observe 'best practice' methodology, withbuilt-in security, flexibility and process logic to prepare your business forthe new generation of collaborative computing. The software is designedto provided a measurable Return on Investment (ROI) through its businessintelligence capability, monitoring your increased asset utilisation, customer/supplier service levels, profitability, productivity and costs. At the sametime, the system integrates complete knowledge about your customers'buying patterns, preferences and profitability, enabling you to personaliseservice, based on their value to your business.

IBS consultants provide an unmatched level of industry expertise. Theywork closely with our customers to fully understand what drives theirbusiness, to anticipate future growth and to encourage the adoption of'best practices'. IBS' extensive experience helps clients to stay ahead byleading the way with timely, reliable applications and solutions fordistribution and supply chain management.

IBS' service portfolio offers a range of professional services, includingbusiness process mapping, project management, technical support,implementation, training and pure business consulting. These servicesare characterised by quality and competence. As IBS' consultants acquireknowledge about the customers' business operations, they are able providecontinuous advice and guidance to help sustain a competitive advantageand grow the business. This long-term partnership generates majorbenefits for our customers in terms of business advantage and value formoney. That is a primary reason why IBS repeatedly ranks very high incustomer satisfaction ratings.

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IBS solution for food distribution

Solution:Software: ASW 5.50+

Modules:

• ASW DISTRIBUTION

• ASW INVENTORY CONTROL

• ASW NETSTORE

• ASW SALES AND MARKETING SUPPORT

• ASW WAREHOUSE MANAGEMENT

• ASW FINANCIALS

• IBS BUSINESS INTELLIGENCE

• IBS DYNAMAN.

Hardware: IBM iSeries eServers

Tailored for thefood distribution industryASW - IBS' integrated IT solution - is tailored for the global food distributionindustry addressing the needs of commodity traders, importers anddistributors. The solution's high functional product fit for the foodindustry focuses on and warehouse management, customer service,collaborative forecasting, procurement, distribution logistics, financialsand business intelligence.

The ability to link customer to supplier contracts, to capture and analysedemand at the retail level, and to aggregate this information back to theregional and national level for production and replenishment, can improvenational and regional sales performance. Additionally, closer alignment ofglobal supply contracts tied to FOREX contracts guarantees margins andensures that currency cash flows are aligned to purchasing commitments.

The IBS solution is designed to optimise business operations and analysis,helping you to maximise profits by focusing on:

• Increased customer awareness and personalised service

• FDA and EU regulation and compliance

• Asset control

• Optimised warehouse utilisation

• Reduced costs

• Improved productivity

• Optimised supply chain collaboration

• Closed loop batch control and 'best by date' handling

• Automated decision support

• Improved profits and measurable ROI.

IBS' food solution is built around customers' needs, with advancedcustomer-oriented functionality that focuses on performance and service.Designed in cooperation with world-leading food producers and dis-tributors, the solution meets such critical requirements as processing highorder volumes, EDI, XML or web services communications, and deliveryof pallets or cartons in-sequence with extremely short lead-times.

The software supports rapid identification of products with supportingspecifications and pricing, online availability checking, original manufactures'recalls and product sales restrictions - translating sales demands directlyto suppliers' products. Furthermore, all applications are multi-language,multi-currency and multi-company and, where appropriate, equipped tohandle all major international and national legal and fiscal regulationsfor sales tax, GST, VAT, taxation and reporting.

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Just like the food we produce, our supply chain hasto be prepared to handle thetough regulations and guidelines in the food industry.It has to run quick, flexibleand error-free. This requiresefficient business softwareand a creative IT partner. I amhighly satisfied with both thesoftware and the services provided by IBS.

Flor Dierckx, CFO, Heinz Belgium

Sales order management IBS software has broad functionality that is designed to support salesrepresentatives, front-line distributors and commodity traders who managedirect sales to customers, including:

• Contract sales pricing - Including product-specific and store-specificdiscounts and promotions, with full support for reverse billing or creditclaim generation for supplier rebates, over-riders and retro adjustments.

• Electronic catalogue support - Easy, quick access to web-basedcatalogues, online pricing, personalised shopping lists and productavailability. EDI and XML support for PRICAT pricing updates

• Contract profitability and currency exposure - Visibility of linkedcustomer and supplier contract details, purchase commitments andFOREX contract bookings.

• Order entry automation - IBS' solution supports high-volume EDIorder entry by customer, RDC and retail branch. Sales orders can alsobe received by fax and phone.

• Internet customer self-service - ASW NETSTORE lets customers placeand track orders, helping to reduce your administrative costs. Creditcard payment is supported.

• Laptop and remote ordering - Sales reps and authorised customerscan enter orders from remote locations, using laptops and handhelddevices, enabling quick 24/7 service and order entry and next daydelivery.

• Order structures - The IBS solution can take a menu order consistingof all the ingredients and ancillary products required for the meal andthe number of covers.

• Substitutes and complementary products - The system can findand suggest substitutes for non-stocked items, helping to capturesales and retain customers, and it can also recommend complementaryproducts for additional sales.

• Automated delivery schedules - The IBS solution automaticallycalculates required stock levels and creates orders based on customerforecasts transmitted via EDI. Forecasts are based on net or gross forecastsand current inventory, helping to ensure optimum stock levels andaccurate deliveries.

• Proof of deliver handling -Orders can be held prior to invoicing fordelivery confirmation, preventing disputes and delayed payments.

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We now have completetraceability of our inventory -not only in the store, but alsowith our customers. We candrill down to individual fooditems, which is very importantin order to comply with foodsafety acts in various coun-tries.

Marc Behaegel, Managing Director, Begro

Warehouse managementIBS software supports advanced automated warehousing to increaseresponse times. This capability helps to manage the velocity of throughputand optimises warehousing operations and space utilisation, benefitingyour working capital and asset returns.

The IBS solution helps you keep tabs on warehousing operations andinventory levels throughout your own internal supply chain, ensuringthat products can be easily located and dispatched to where they areneeded. IBS's automated warehousing solution handles all phases ofproduct distribution, from reception all the way to put-away, pickingand dispatch. Your warehouse configuration can be fully mapped withbulk storage zones for produce awaiting processing, down to aisles,rows, rack and bin level. You can also choose to have fixed or randomlocations.

Specific warehouse management advantages for the food industry include:

• Full pallet and package tracking with information on inner and outerconfigurations from reception to warehouse location and out todispatch. Whether you handle pallets or break bulk to forward picklocations, warehouse management will help you automate youroperations, maintaining complete visibility of inventory movementsand your warehouse staff.

• Bar code and radio frequency (RF) support - Fully integrated supportfor bar coding and RF handling automates the recognition, trackingand communication of bar codes and batch numbers. Forklift truckmovements and totes can also be tracked so that produce can alwaysbe located - even between locations. This avoids pick and put-awayerrors, increasing customer satisfaction.

• Repackaging and labelling - Provides customer specific value-addedservices such as repackaging, own label products and the printing ofcustomer labels. Order structures provide simple assembly and packagingroutines in the warehouse without recourse to production control.

• Batch control - In conjunction with RF, provides total closed loopsupport for batch controlled products including FIFO rotation andbatch expiry dates.

• Full support for inbound shipments and landed costs - As part ofthe receiving process, all freight duty and shipping costs, in any currency,can be allocated against container contents to update inventory valueswith landed cost.

• Receiving, cross-docking, put-away, picking and packing - TheIBS solution helps to increase the velocity of your warehouse through-put aimed at faster receipt and delivery. Receipt against ASN's, RFdispatching and scanning or bar-coded are all designed to ensure thatstock movements are recorded as they occur.

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ProcurementEfficient procurement processes and forecasting are critical, especially inthe food services industry, and help you to reduce total procurementcosts while you maintain high service levels. With the IBS solution, youcan gain these benefits that address specific needs for food distribution:

• Automated purchase simulation and suggestion review - Youcan obtain help in anticipating real procurement costs, maintainingsafety stock and identifying critical purchasing needs. The IBS solutionprovides automatic simulation and suggestion management capabilitieswith review codes for product lines, helping to ensure accuracy,maximum line value, stock levels and optimised values.

• Supplier delivery performance analysis - Based on current infor-mation from throughout the system, this analysis capability helps youto monitor suppliers' delivery performance and to make supplier deliverycost comparisons. Purchase ordering includes a quick comparison ofsuppliers' prices and their lead-times.

• Surcharge handling and packaging reporting - Surcharges such asscrapping or package disposal fees are calculated automatically. Specificenvironmental taxes and statistics can be captured for country-specificreports.

• Supplier contracts and pricing - ASW SUPPLIER MARKETING SUPPORT letsyou take greater advantage of supplier discount programs. The softwarehandles complex supplier rebate rules and can help you negotiate thebest contract prices and record your FOREX cover against your forwardpurchasing commitments.

• Centralised procurement support - Requests for quotations aregenerated automatically and sent to suppliers through EDI, XML, webservice communications, fax or email. This quick creation and transmissioncan result in lower administrative costs, better prices and the ability tonegotiate more favourable terms and conditions.

• Stock optimisation - ASW INVENTORY CONTROL provides you with toolsfor dynamic demand forecasting for different item segments, automatedreplenishment suggestions, inventory analysis and simulations. All ofthese functions help to ensure that the right products are available instock, keeping lead-times on target and inventory at economical levels.

• Automated delivery schedules - The IBS solution automaticallycalculates required stock levels and creates orders based on customerforecasts transmitted via EDI. Forecasts are based on net or grossforecasts and current inventory, helping to optimise stock levels andensure accurate deliveries.

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Distribution and logistics Transport and shipping optimisation help you to reduce costs to yourcustomers and deliver in the time slots allocated. It is especially criticalfor food distributors who want to plan and dispatch their outboundshipments based on call off orders from their customers. IBS softwarehelps you achieve this with these automated solutions:

• Truck routing and planning - Automated shipping optimisationhelps you dispatch stock efficiently based on system-supplied shipmentplans, delivery advice and route plan creation, along with freightdocuments and loading area instructions. The IBS solution also providessupport for non-fleet shipping management.

• Shipment and transport documentation - Including load plans,transport notes, shipment manifests, bills of lading, customer labels,export documents and proof of deliver (electronic capture of signatures)

• Back to back delivery - You can easily coordinate and cross-dock directdeliveries from suppliers to customers, helping to avoid the delays input-aways and picking. Direct shipment to customers is fully supported.

• Reverse logistics - Transporting, handling and returning used productsfrom end customers to a processing facility is a critical activity forfood distributors, especially with recalls of non-conforming stock.ASW BUSINESS PARTNER REQUEST is specifically designed to managereturned product in close collaboration with your warehousingoperations, helping to accelerate the returns and credit process.

FinancialsAlong with powerful support for standard financial transactions, theIBS financials solution provides benefits that can enhance profitability,especially for food distribution, including:

• Customer invoicing - Major retail stores and some food servicescustomers have very specific invoice formatting and transmissionrequirements. Invoices are often consolidated with the item lines sortedinto store location order. Some retail chains require EDI invoices whereasothers pay on proof of delivery.

• Accounts Receivable - ASW FINANCIALS helps you reduce the timetaken to process customer payments and open item settlement usingrules based manual or automated payment settlement. Credit manage-ment is another important focus to help manage customer debt andreduce average days outstanding. Statements, dunning letters, draftand bills discounting and interest charging support extensive enquiryand debt reduction capabilities.

• Accounts Payable - Allows you to register and track supplier andexpense invoices, book VAT or GST and match against purchase orderand reception information including invoices for landed costs. Paymentscan be scheduled for when they are due, creating the appropriatepayment documentation and EFT transmissions.

• Asset management - IBS helps you manage your fixed assets includingphysical location management, insurance, servicing, depreciation,retirement and disposals. All the information that you need to maintainproper stewardship of your assets can be organised in a way that youfind most appropriate.

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• Activity-based costing reporting - Gives you the opportunity tomeasure and improve the efficiency of CRM and SCM processes. TheIBS solution takes an ABC approach to customer and product netprofitability without the need to employ management accountants.The net margin calculations are based on balance information that hasalready been captured as part of day-to-day transaction processing.

• International currency and language capability - The system handlesany currency and provides FOREX cover against forward currencycontracts, helping to protect your margins from losses associated withadverse exchange rate fluctuations. Far-ranging language support meansthat you can communicate with customers all over the world in theirlanguage with, for example, multilingual transaction documentation.

Business IntelligenceIntegrated tools for business process measurement can enable you tomaximise profits and control critical success factors such as:

• Improvements in Key Performance Indicators (KPIs) and subsequent ROI

• Fill rates and on-time deliveries

• Business partner performance overviews based on item and customerprofitability

• Operational costs and productivity

• Optimised supply chains and collaboration

• Automated business processes

• Automated decision support and event management.

IBS software offers a business processes assessment solution that letsyou extract, measure and compare information from a data warehousethat reflects all information contained within your business system. Itcan be used by all levels of employees and produces reports in a widevariety of formats. IBS BUSINESS INTELLIGENCE comes with pre-loaded clientapplications that are designed for supply management needs. Industry-standard OLAP (On-Line Analytical Processing) tools for Datamarts areincluded.

All ASW transactions that occur in your business system, which carry a cost,quantity, or other properties, are transferred to and sorted within thedata warehouse. The balances can be compared against any number ofkey values, including those such as business partner, item, item group,salesperson, account number and cost centre.

You can also leverage data that is collected from external databases,including business partners and other external sources. Trade statisticsand benchmark data, forecasts on general market trends and creditinformation are all at your disposal for analysis. A full range of reportingoptions, through Report Writer and Quick Report Writer, puts theinformation at your fingertips.

IBS has the right software for you, and the experience ofworldwide installations. Are you interested in finding outmore?

Contact IBS today - food@ibs.net or visit www.ibs.net

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IBS corporate headquarters: +46-8-627 2300 • food@ibs.net • www.ibs.net

IBS is a world leading provider of supply chain management solutions for distribution, demand-driven manufacturing,financials and business intelligence. IBS delivers measurable value through software solutions, services, hardware,outsourcing and financing. IBS offers industry solutions for food services, groceries, fresh fruits and vegetables withBakemark, Everfresh, Haribo, Heinz, ICA Handlarna and Sardus among its 5,000 customers in 40 countries.