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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WPITSouth West Wales Food Distribution Pilot
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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WPITSouth West Wales Food Distribution Pilot
2. Area Covered
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WPITSouth West Wales Food Distribution Pilot
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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WPITSouth West Wales Food Distribution Pilot
Some organisations provide pre-prepared sandwiches, some prepare sandwiches on-site and some do not provide any type of sandwich
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WPITSouth West Wales Food Distribution Pilot
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