Bakers Delight
integrated supply chain
BAKERS DELIGHT
Our daily
Hickleton, who has worked with Bakers Delight for 12 years, heads up a department of four people who coordinate the company’s supply chain. With a background in management at Woolworths, his own meat business and later as a Bakers Delight supplier of smallgoods and cheese, he has experienced its supply chain from both sides of the fence. “Bakers Delight doesn’t own warehousing space or a fleet of trucks, and as such we rely on our partnerships with national distributors to both warehouse stock and ship it to the bakeries,” he explains.
bread
“Our bakeries can’t operate if they don’t receive their goods and that’s a fundamental.” “The supply chain management team doesn’t order any stock on behalf of the bakeries and doesn’t purchase stock. Our distributors have direct commercial relationships with each bakery which makes it easier for bakeries to order stock directly. The corporate team manages the completeness of distribution and sets specific performance standards to evaluate the performance.” Hickleton says the vast majority of bakeries order ‘today’ and have their delivery completed ‘tomorrow’. “We have a 24-hour turnaround for orders,” he says. “Every bakery requires at least two deliveries a week to be able to maintain that turnover speed for incoming goods. So deliveries are never more than three days away.” “We have an expectation of our distributors to have 10 days’ stock on hand so if at any point they need to replenish, the volume comes into their warehouses when they have no less than 10 days’ stock on hand.”
Bakers Delight Group Supply Chain Manager Phil Hickleton
“Our bakeries can’t operate if they don’t receive their goods and that’s a fundamental,” he adds. “So the [key performance indicator] for our distributors is the constant supply of goods. All [our] energies are about ensuring they have a reliable quantity of stock in their depots to service our bakeries at all times and ensuring we have conceived contingency plans in the event that we suffer a disruption.” “However it’s also about removing the risk of disruptions. So we have high expectations of delivery in full and all of our focus is on making sure that the disciplines for short supply are in place.” When Hickleton came on board as a supplier, the system was direct to store. It later evolved to a one-stopshop where one distributor made just 1,200 deliveries a week. While the new model has doubled the number of deliveries, Hickleton says it wins out by offering a more reliable supply of ingredients to bakeries as well as a more dependable distribution service. “What we had with the one-stop-shop was a very capable supplier of mixed goods and baskets doing a generally good job,” he says. “The change we made about nine years ago was to identify experts in particular categories of distribution and align ourselves with them. The new positioning was necessary to take us from a reliable supply to an expert supply.” The company now has a milling distributor supplying 30 ingredients and a pantry distributor responsible for 100 ingredients. With two, sometimes three deliveries a week to 600-plus bakeries, the total comes to between 2,400 and 2,500 ingredient deliveries per week. Despite this refined process, Hickleton says the model can still improve. When broken down, he argues distribution should not be a significant part of the bakeries’ lives. “Over a trading week of nearly 90 hours, distribution should only take one for the sake of a couple of phone
SOLUTIONS IN VERTICAL STORAGE WHY:
Bakers Delight’s supply chain journey has taken it from a direct-to-store model to a one-stop-shop, but it settled on a two-tier system based on relationships with expert distributors and suppliers. Anna Game-Lopata reports
12
August 2012
don’t buy in finished goods of any sort. In addition, we don’t allow substitutions. We’re a tough taskmaster in that we don’t allow our general foodstuff distributors to substitute brand A for brand B if brand A’s out of stock. “We start from the rawest of ingredients, flours, grains, seeds, fruit and nuts and we mix them. We make all of our products early in the morning and bake throughout the day. So my distribution model is all about bags and boxes. It’s as few tins, bottles and cans as we can get.” supplychainreview.com.au
USES:
Small Item Distribution 3rd Party Logistics and Inhouse Facilities Work In Progress and Buffer Storage Maintenance Spares Tool Storage
SCR-TH-5173241-CS-130-XCC
I
’ve always loved the smell of baking bread, and I’m sure I’m not alone. There’s something primal about being handed a loaf of pungent ciabatta when it’s still warm, isn’t there? That’s one of the reasons I’m a Bakers Delight customer. With over 600 individual bakeries Australia-wide, Bakers Delight prides itself on being a ‘scratch baker’ — no compromises. “Everything is baked onsite at the premises on the day of sale,” Group Supply Chain Manager Phil Hickleton tells SupplyChain Review. “We don’t have cold sites. We
Small Unit Footprint High Speed Operation Dedicated Inventory Control Minimise Manual Handling with ‘Goods to User’ Store 500kg per Tray Clean Stock, Reduced Shrinkage Great ROI, Local Service and Support
www.kardex.com.au Contact: 1300 555 101
Shuttle supplychainreview.com.au
Kardex VCA Pty Ltd, Wodonga VIC 3690
Carousel August 2012
13
integrated supply chain
BAKERS DELIGHT FROM DAY ONE • 1980 — Founded by fourth generation baker and CEOs Roger and Lesley Gillespie with first bakery in Hawthorn, Melbourne • 1988 — Gillespies grew the business to 15 bakeries • 1991 — 43 individual franchised bakeries, growing to more than 200 nationally in two years • 1995 — Bakeries opened in New Zealand • 2003 — Bakeries opened in Canada under COBS Bread brand • Today more than 700 national/international stores
BAKERS DELIGHT
calls and the enactment of deliveries at the bakery level,” he says. And Hickleton wants to reduce this time further. To do this the company is interested in technology, such as electronic data exchange and dynamic ordering to replace telephony. “Our bakeries are all about producing best quality bread and interfacing with our consumers,” he maintains. “That should be their primary focus and that is their primary focus. So any time that we can give them in that pursuit is going to be time well served. So ideally we’re trying to reduce the interface time between our bakeries and the delivery service.” In addition, time and touch points along the way mean cost, so Bakers Delight continues working towards identifying them. While he says no supply chain handles surprise disruptions perfectly, as a mature business, Bakers Delight makes forecasting a critical imperative.
“Ideally we’re trying to reduce the interface time between our bakeries and the delivery service.”
There are more than 600 Bakers Delight stores Australia wide
14
August 2012
“We are an accumulator of data. We put it into a meaningful form to identify seasonality and other trends. It’s just knowing what stock is going to be required based on history.” New product launches and promotional events are well researched so that the company can provide as much information to manufacturers and suppliers based on history. “We build some security volumes in there but by and large it’s about using the data we’ve had in the past and building up some intelligence from that as a forecaster,” Hickleton says. “It’s the contingent stock that covers the timetable. That’s stock on hand, not only in the suppliers’ warehouses but also in those of the distributors.” Hickleton believes communication is the key to the success of this process, not just between Bakers Delight and its distributors but with suppliers and manufacturers whose lead times are critical to efficiency. And he says in this way, Bakers Delight’s relationships with its suppliers set it apart from other businesses. “We prefer to foster good, long-term relationships and manage them rather than jump between short-term transactional relationships ,” Hickleton says. “A lot of our suppliers have been in our network for over 20 years.” “Our relationships with suppliers enable us to avoid short supply, maintain a consistent quality and of course, retain competitive costs,” he says. “We expect critical KPIs to be met but we also give them the rewards of long-term supplier arrangements. And it’s our openness with suppliers that gives them some comfort within the relationship.” But to make it work, Hickleton says the company is ‘forensic’ about transparency. supplychainreview.com.au
“Through open book costings with suppliers we witness all of their input costs to source a product and get it into our network,” he says. “We understand there is volatility in agriculture products and commodity pricing and suppliers talk to us about that.” “In the early days they were nervous about how transparent we wanted them to be. But we’ve been able to convince them transparency works in both our favours, and that we are genuine.” In addition, Hickleton says Bakers Delight makes a point of meeting face-to-face with as many suppliers possible. “We get as far back into the chain as we can,” he says. “We go out on to the farms and plantations where they can be identified, such as Kununurra and Birregurra. If we can’t talk to them directly, we ask our traders and suppliers to let them know they are supplying into Bakers Delight.” And that strong leadership culture filters down from management. Hickleton says company executives, right down to founders Roger and Lesley Gillespie, are inclusive when it comes to the decisions about the business. “We are very aware we are servicing 600 small food retail outlets,” Hickleton says. “There are many variations, impacts and trading conditions they face on a day-to-day, week-to-week basis. So our general
Bakers Delight now has a milling distributor supplying 30 ingredients and a pantry distributor supplying 100 ingredients
management team are all actively involved in our business and very hands-on through operations and marketing.” Behind the scenes, the supply chain team will keep quietly beavering away. “But it’s a constant work in progress,” Hickleton asserts. “It’s an evolution of efficiency over three or four different departments. We have got a far more efficient supply chain now than what we did five or six years ago and I imagine in five or six years’ time we’ll have a better one again.”
13 York Street, South Melbourne, Victoria, Australia, 3205 P +61 3 9326 7422 F +61 3 9326 7588 E [email protected]
W microlistics.com.au
ISIS Warehouse Management Systems • World-class • Affordable • Robust • Australian owned
Making complex supply chains simple
• Currently delivering ROI to over 100 sites across four continents
• Practical user-interface
• Fits seamlessly with existing business or financial applications
• Wholesale, Retail, 3PL, Multi Client, Multi Site and Multi User
• Innovative configurable functionality
• Real Time RF. RFID, Inbuilt Scan Packing functionality
• Client base includes multi-national and privately owned businesses
• Fully supported by a local team – 24/7.
• Suitable for all products, and any size warehouse
Today ISIS is the most cost-effective, sophisticated warehousing tool available to help dramatically reduce operating costs and deliver leading world-class functionality.
We understand the challenges of warehouse management - and we built the solution. supplychainreview.com.au
August 2012
15
BAKERS DELIGHT
Our daily
Hickleton, who has worked with Bakers Delight for 12 years, heads up a department of four people who coordinate the company’s supply chain. With a background in management at Woolworths, his own meat business and later as a Bakers Delight supplier of smallgoods and cheese, he has experienced its supply chain from both sides of the fence. “Bakers Delight doesn’t own warehousing space or a fleet of trucks, and as such we rely on our partnerships with national distributors to both warehouse stock and ship it to the bakeries,” he explains.
bread
“Our bakeries can’t operate if they don’t receive their goods and that’s a fundamental.” “The supply chain management team doesn’t order any stock on behalf of the bakeries and doesn’t purchase stock. Our distributors have direct commercial relationships with each bakery which makes it easier for bakeries to order stock directly. The corporate team manages the completeness of distribution and sets specific performance standards to evaluate the performance.” Hickleton says the vast majority of bakeries order ‘today’ and have their delivery completed ‘tomorrow’. “We have a 24-hour turnaround for orders,” he says. “Every bakery requires at least two deliveries a week to be able to maintain that turnover speed for incoming goods. So deliveries are never more than three days away.” “We have an expectation of our distributors to have 10 days’ stock on hand so if at any point they need to replenish, the volume comes into their warehouses when they have no less than 10 days’ stock on hand.”
Bakers Delight Group Supply Chain Manager Phil Hickleton
“Our bakeries can’t operate if they don’t receive their goods and that’s a fundamental,” he adds. “So the [key performance indicator] for our distributors is the constant supply of goods. All [our] energies are about ensuring they have a reliable quantity of stock in their depots to service our bakeries at all times and ensuring we have conceived contingency plans in the event that we suffer a disruption.” “However it’s also about removing the risk of disruptions. So we have high expectations of delivery in full and all of our focus is on making sure that the disciplines for short supply are in place.” When Hickleton came on board as a supplier, the system was direct to store. It later evolved to a one-stopshop where one distributor made just 1,200 deliveries a week. While the new model has doubled the number of deliveries, Hickleton says it wins out by offering a more reliable supply of ingredients to bakeries as well as a more dependable distribution service. “What we had with the one-stop-shop was a very capable supplier of mixed goods and baskets doing a generally good job,” he says. “The change we made about nine years ago was to identify experts in particular categories of distribution and align ourselves with them. The new positioning was necessary to take us from a reliable supply to an expert supply.” The company now has a milling distributor supplying 30 ingredients and a pantry distributor responsible for 100 ingredients. With two, sometimes three deliveries a week to 600-plus bakeries, the total comes to between 2,400 and 2,500 ingredient deliveries per week. Despite this refined process, Hickleton says the model can still improve. When broken down, he argues distribution should not be a significant part of the bakeries’ lives. “Over a trading week of nearly 90 hours, distribution should only take one for the sake of a couple of phone
SOLUTIONS IN VERTICAL STORAGE WHY:
Bakers Delight’s supply chain journey has taken it from a direct-to-store model to a one-stop-shop, but it settled on a two-tier system based on relationships with expert distributors and suppliers. Anna Game-Lopata reports
12
August 2012
don’t buy in finished goods of any sort. In addition, we don’t allow substitutions. We’re a tough taskmaster in that we don’t allow our general foodstuff distributors to substitute brand A for brand B if brand A’s out of stock. “We start from the rawest of ingredients, flours, grains, seeds, fruit and nuts and we mix them. We make all of our products early in the morning and bake throughout the day. So my distribution model is all about bags and boxes. It’s as few tins, bottles and cans as we can get.” supplychainreview.com.au
USES:
Small Item Distribution 3rd Party Logistics and Inhouse Facilities Work In Progress and Buffer Storage Maintenance Spares Tool Storage
SCR-TH-5173241-CS-130-XCC
I
’ve always loved the smell of baking bread, and I’m sure I’m not alone. There’s something primal about being handed a loaf of pungent ciabatta when it’s still warm, isn’t there? That’s one of the reasons I’m a Bakers Delight customer. With over 600 individual bakeries Australia-wide, Bakers Delight prides itself on being a ‘scratch baker’ — no compromises. “Everything is baked onsite at the premises on the day of sale,” Group Supply Chain Manager Phil Hickleton tells SupplyChain Review. “We don’t have cold sites. We
Small Unit Footprint High Speed Operation Dedicated Inventory Control Minimise Manual Handling with ‘Goods to User’ Store 500kg per Tray Clean Stock, Reduced Shrinkage Great ROI, Local Service and Support
www.kardex.com.au Contact: 1300 555 101
Shuttle supplychainreview.com.au
Kardex VCA Pty Ltd, Wodonga VIC 3690
Carousel August 2012
13
integrated supply chain
BAKERS DELIGHT FROM DAY ONE • 1980 — Founded by fourth generation baker and CEOs Roger and Lesley Gillespie with first bakery in Hawthorn, Melbourne • 1988 — Gillespies grew the business to 15 bakeries • 1991 — 43 individual franchised bakeries, growing to more than 200 nationally in two years • 1995 — Bakeries opened in New Zealand • 2003 — Bakeries opened in Canada under COBS Bread brand • Today more than 700 national/international stores
BAKERS DELIGHT
calls and the enactment of deliveries at the bakery level,” he says. And Hickleton wants to reduce this time further. To do this the company is interested in technology, such as electronic data exchange and dynamic ordering to replace telephony. “Our bakeries are all about producing best quality bread and interfacing with our consumers,” he maintains. “That should be their primary focus and that is their primary focus. So any time that we can give them in that pursuit is going to be time well served. So ideally we’re trying to reduce the interface time between our bakeries and the delivery service.” In addition, time and touch points along the way mean cost, so Bakers Delight continues working towards identifying them. While he says no supply chain handles surprise disruptions perfectly, as a mature business, Bakers Delight makes forecasting a critical imperative.
“Ideally we’re trying to reduce the interface time between our bakeries and the delivery service.”
There are more than 600 Bakers Delight stores Australia wide
14
August 2012
“We are an accumulator of data. We put it into a meaningful form to identify seasonality and other trends. It’s just knowing what stock is going to be required based on history.” New product launches and promotional events are well researched so that the company can provide as much information to manufacturers and suppliers based on history. “We build some security volumes in there but by and large it’s about using the data we’ve had in the past and building up some intelligence from that as a forecaster,” Hickleton says. “It’s the contingent stock that covers the timetable. That’s stock on hand, not only in the suppliers’ warehouses but also in those of the distributors.” Hickleton believes communication is the key to the success of this process, not just between Bakers Delight and its distributors but with suppliers and manufacturers whose lead times are critical to efficiency. And he says in this way, Bakers Delight’s relationships with its suppliers set it apart from other businesses. “We prefer to foster good, long-term relationships and manage them rather than jump between short-term transactional relationships ,” Hickleton says. “A lot of our suppliers have been in our network for over 20 years.” “Our relationships with suppliers enable us to avoid short supply, maintain a consistent quality and of course, retain competitive costs,” he says. “We expect critical KPIs to be met but we also give them the rewards of long-term supplier arrangements. And it’s our openness with suppliers that gives them some comfort within the relationship.” But to make it work, Hickleton says the company is ‘forensic’ about transparency. supplychainreview.com.au
“Through open book costings with suppliers we witness all of their input costs to source a product and get it into our network,” he says. “We understand there is volatility in agriculture products and commodity pricing and suppliers talk to us about that.” “In the early days they were nervous about how transparent we wanted them to be. But we’ve been able to convince them transparency works in both our favours, and that we are genuine.” In addition, Hickleton says Bakers Delight makes a point of meeting face-to-face with as many suppliers possible. “We get as far back into the chain as we can,” he says. “We go out on to the farms and plantations where they can be identified, such as Kununurra and Birregurra. If we can’t talk to them directly, we ask our traders and suppliers to let them know they are supplying into Bakers Delight.” And that strong leadership culture filters down from management. Hickleton says company executives, right down to founders Roger and Lesley Gillespie, are inclusive when it comes to the decisions about the business. “We are very aware we are servicing 600 small food retail outlets,” Hickleton says. “There are many variations, impacts and trading conditions they face on a day-to-day, week-to-week basis. So our general
Bakers Delight now has a milling distributor supplying 30 ingredients and a pantry distributor supplying 100 ingredients
management team are all actively involved in our business and very hands-on through operations and marketing.” Behind the scenes, the supply chain team will keep quietly beavering away. “But it’s a constant work in progress,” Hickleton asserts. “It’s an evolution of efficiency over three or four different departments. We have got a far more efficient supply chain now than what we did five or six years ago and I imagine in five or six years’ time we’ll have a better one again.”
13 York Street, South Melbourne, Victoria, Australia, 3205 P +61 3 9326 7422 F +61 3 9326 7588 E [email protected]
W microlistics.com.au
ISIS Warehouse Management Systems • World-class • Affordable • Robust • Australian owned
Making complex supply chains simple
• Currently delivering ROI to over 100 sites across four continents
• Practical user-interface
• Fits seamlessly with existing business or financial applications
• Wholesale, Retail, 3PL, Multi Client, Multi Site and Multi User
• Innovative configurable functionality
• Real Time RF. RFID, Inbuilt Scan Packing functionality
• Client base includes multi-national and privately owned businesses
• Fully supported by a local team – 24/7.
• Suitable for all products, and any size warehouse
Today ISIS is the most cost-effective, sophisticated warehousing tool available to help dramatically reduce operating costs and deliver leading world-class functionality.
We understand the challenges of warehouse management - and we built the solution. supplychainreview.com.au
August 2012
15
