Driving cost savings for Europe’s favorite confectionary brands
Not everyone can compete with European ingenuity when it comes to candy. While the global market for confectionary is dominated by international companies like Mars/Wrigley and Nestlé, local players like Leaf International, which merged with Cloetta in 2011, have consistently held their footprint. The company’s brands are popular across several European countries. Venco liquorice, launched since 1878, is nearly synonymous with Dutchness; and Red Band, created in 1928, brings joy to candy lovers across the continent - from Poland to Spain.
Innovating in a traditional market
The confectionary market has a long history and typically moves at a slow pace. But industry leaders like Leaf are always on the lookout for improvements. The company wanted to gain a more comprehensive overview of its supply chain network using analytics. They asked ORTEC Consulting to assist with the project.
Our team used applied mathematics to investigate what kind of opportunities could be obtained by merging Distribution Centers (DCs) across the network. At the time, Leaf had three DCs in the Benelux and one in Germany. The logistics processes for three of these DCs were outsourced to Logistics Service Providers (LSPs), so we also put these under the microscope.
Uncovering cost savings with analytics
"The products for the German market were being transported from the factory in Turnhout (Belgium) to a co-packer in Mol (Belgium), where they were packed in displays. By transporting them directly from Turnhout to Germany, and moving the packing of the displays closer to the customer, we merged two flows into one, eliminating unnecessary transportation and costs." said Marc Toussaint, Leaf Logistics Director (ad interim)
Our calculations showed that Leaf would benefit by merging two goods flows. One of the Distribution Centrum in Belgium could be “skipped,” allowing the packaging activities for the German display market to be performed closer to the client. We also advised them to select another Logistics Service Provider in Germany in order to drive cost savings. Our team built a custom Network Optimization solution which was implemented to oversee these improvements.
“We also hope to gain more insight and a better overview internationally by working with ORTEC Consulting. Regardless of whether this results in cost savings, there will still be benefits, which are highly valuable for companies, simply because it forces them to evaluate their logistics flow.” added Marc Toussaint
A boost for the bottom line
Thanks to ORTEC’s analytics expertise, Leaf International was able to reduce its total costs by at least 8%, driving 10% reductions in transportation costs and an estimated 5% in inventory costs. The selection of a new Logistics Service Provider in Germany alone resulted in a 6% reduction in distribution costs.
Less time is now spent on loading and unloading goods. Products are available on the market sooner, and less miles traveled contributed to reduce the company’s carbon emissions. All in all, a great win for a company looking to gain more insights into their logistics network.
