Nestlé PepsiCo project

One of the first success stories about logistics collaboration between 2 competing manufacturers

Creation of a horizontal collaboration community

for Fresh & chilled food distribution

between Nestlé & PepsiCo

 

The project concerns the creation and management of a horizontal collaboration community for fresh & chilled retail distribution between 2 Fast Moving Consumer Goods shippers (Nestlé & PepsiCo), a logistics service provider (STEF) and 2 neutral facilitators or trustees (BABM and TRI-VIZOR).

This project has already won the 1st Prize of the Jury for Best European Horizontal Collaboration project at the final conference of the “Collaborative Concepts for Co-modality (CO³)” research consortium, and the Supply Chain Award-prize of the Audience 2014.

 

In this project, Nestlé and PepsiCo have bundled the warehousing, co-packing and outbound distribution of their fresh and chilled food products to retail customers in Belgium and Luxembourg. STEF was selected by Nestlé and PepsiCo as joint logistics service provider. BABM acted as initiator and commissioned TRI-VIZOR as neutral trustee and ‘legal firewall’ to ensure the anti-trust compliance and neutrality of the horizontal collaboration between the 2 competing manufacturers. By proactively consolidating, balancing and synchronizing the part loads of Nestlé and PepsiCo into Full Truck Loads, the community is generating important cost savings and CO2 reductions.

 

The collaboration is creating as well improvements in total logistic costs and better service levels for the retail customers. The total synergy gains are divided through a fair gain sharing mechanism, allowing additional fresh & chilled manufacturers to easily join the community in the near future.

 

Context:

Manufacturers of fast moving consumer goods (FMCG) typically have logistics flows of Less than Full Truck Loads (LTL) to their main customers, mostly retail distribution centers. As a lot of competing FMCG manufacturers have the same retail distribution centers as common ship-to addresses, horizontal collaboration seems like an interesting option for these manufacturers. In recent history, many attempts at horizontal collaboration have been made by many different companies, but due to the absence of a standard legal framework and fear of antitrust laws, these projects could not provide stable long-term solutions. This resulted in an increased demand in the market to establish a standard legal and operational framework for horizontal collaboration.

 

The project:

This project started in the beginning of 2010 when a number of BABM members identified the need for increased collaboration in fresh and chilled distribution and hired TRI-VIZOR as neutral trustee to further support this process. The operational go-live of the collaborative network between Nestlé and PepsiCo took place in the second quarter of 2012. The next steps were taken with support from CO3.

 

A very important aspect of this horizontal collaboration was how to cope with anti-trust laws. As Nestlé and PepsiCo are competitors, antitrust compliance was crucial and e.g. detailed cost or delivery information could not be shared amongst both parties. The information was therefore only shared with the BABM (legal trustee) and TRI-VIZOR (logistics trustee). The process was closely monitored by a specialized external lawyer and by the legal departments of both PepsiCo and Nestlé.

 

In its temperature controlled warehouse in Saintes (Brussels), STEF is currently handling 220 SKU’s and 21.000 tons of combined volume for the Nestlé-PepsiCo community.  112 customers are being delivered of which 20% are common ship-to addresses. These shared customers make up more than 90% of the total delivery volume, creating a lot of transport and logistics synergies.

 

Future steps:

In order to create even more potential synergies, the next step will be to transform the current partnership into an open access cluster for fresh and chilled warehousing and distribution, for which compatible shippers will be invited to join.

 

Once such a collaborative cluster has been successfully established, the intention is to create a ‘snowball effect’ by attracting new shippers and volumes. This is to the advantage of both the shippers and the LSP.

 

Contact info and further questions:

 

Nestlé (www.nestle.be):

Nestlé is a leading Nutrition, Health and Wellness company. Nestlé is known for the numerous food brands in its portfolio, covering almost every food and beverage category. Some examples are: Nespresso, Nescafé, Perrier, Herta, Maggi, Purina, etc. Nestlé has a worldwide turnover of CHF 91.6 billion in 2014, of which 28% in Europe, is active in 197 countries and has 442 plants. Nestlé in Belgium has a turnover of more than EUR 450 million and is active in retail with more than 40 brands.

Press contact: Catherine Mentior – Tel.: + 32 (0)2 529 56 78 – catherine.mentior@be.nestle.com

 

PepsiCo (www.pepsico.be):

PepsiCo is one of the world’s leading food and beverage companies with a worldwide turnover of more than 66 billion USD, is active more than 200 countries and has a global portfolio of diverse brands (in Belgium: Lays, Pepsi, Tropicana, Smiths, Doritos, Mountain Dew, Gatorade, Looza,…). PepsiCo is the market leader in crisps, savoury snacks and chilled juices. The headquarters of PepsiCo BeLux are located in Zaventem. The production sites of PepsiCo BeLux are located in Zeebrugge and Veurne.

Press contact: Kathleen De Grove – Tel. : +32 (0)2 714 05 69 - kathleen-de.grove@pepsico.com

 

STEF (www.stef.com):

STEF is the European specialist in cold logistics for all temperature sensitive and agro food products. Our mission is to safely bridge the gap between manufacturers and retailers. The group masters and brings together transport, logistics and IT skills for all temperature-controlled deliveries (from -25°C to +18°C). STEF is active in 7 European countries (Belgium, France, Italy, the Netherlands, Portugal, Spain, Switzerland) and in Tunisia. The group employs 15,500 staff and operates with specialized assets: 235 platforms and warehouses and more than 4,000 HGVs, half of which are company-owned. STEF's annual turnover for 2013 stood at €2.6 billion.

Press contact: Catherine Marie – Tel.: + 33 (0)1 40 74 29 64 – catherine.marie@stef.com

 

TRI-VIZOR (www.trivizor.com):

TRI-VIZOR is a Belgian company specialized in logistics horizontal collaboration. It operates as neutral matchmaker, trustee and orchestrator for collaborative logistics and transport communities. In this project, under the impulse of BABM, TRI-VIZOR brought Nestlé, PepsiCo and STEF around the table, calculated their potential logistics synergy, facilitated the network integration process and helped the companies and their staff to overcome various operational and mental barriers. After the implementation of the collaboration, TRI-VIZOR continued to monitor and support the collaborative community through periodic follow-up and gain sharing audits.

Press contact: Sven Verstrepen – Tel. +32 (0) 498 51 81 67 – sven.verstrepen@trivizor.com

 

BABM (www.babm.be): BABM is the Belgilux Association of Branded products Manufacturers. BABM represents FMCG branded products in the BeLux area on a number of key issues. The mission of BABM is to build the optimal climate for A-brands to deliver value and choice to consumers, through constant innovation and free and fair competition. BABM supports its members by providing information, networking and stakeholder contacts. Some key figures: 43 members producing and distributing FMCG branded products in the BeLux area / BABM members’ turnover amounts to € 5.8 billion /BABM members account for 36,900 direct and indirect jobs.

Press contact: Katrijn Roeland - Tel 32 (0) 2 737 71 06 - katrijn.roeland@babm.be

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