A visit to Kellogg’s Logistics & Distribution Centre
Improving your business using Wigs and Drums!
By 2019, the UK Grocery Market will be worth over £203 billion and will look vastly different to how it does today. The growth in convenience shopping and rapidly changing purchasing patterns mean that companies that manufacture Fast Moving Consumer Goods (FMCG), need to be agile and flexible in order to survive. Logistics and distribution in this world is not for the faint-hearted, and in a world where fluctuation of demand is the norm, Kellogg’s have adopted a range of business improvement tools to allow them to respond and achieve over 99% on time delivery.
We recently visited the Kellogg’s Distribution centre at Merlin Park in Manchester. This site is one of the customer facing warehouses that receives product manufactured in Kellogg’s European manufacturing sites, who produce a diverse range of cereal and snack products. Every day on this site 60,000 cases are picked, 3,000 pallets arrive and a further 3,000 depart. Kellogg’s globally has over 31,000 employees, 350 of which are on the three Manchester distributions sites – it is a large company with a local feel.
On our recent visit, Paul Blears (Logistics & Distribution Manager UK & Europe) and Ian Walsh (Logistics Manager for XPO Logistics) shared these great insights and ideas on how they remain calm within a storm of changing demands.
Wildly Important Goals (WIGs)
On a company visit I always aim to pinpoint that one key piece of learning that is transferable to any company, which is probably why the WIGs idea resonates so well. This is one of the tools Blears and his team uses to drive engagement and encourage continuous improvement – outside of the day to day operations. Blears asks each of his reports to come up with just one WIG a year. The WIG needs to be something that is:
- Wildly important to them personally; and
- Will add value to Kellogg’s;
The key here is the goal is one that is owned and initiated by the team member and not by the management – the other key if it isn’t obvious is it is just ‘one’. I believe this is why it works. Everyone can focus on just one thing, right? and it makes review and reporting simpler and easier, and engagement is therefore higher. This is cascaded by down to everyone in the division, and supports one of the Kellogg core values of Simplicity.
Create a Drum Beat
To stabilise the environment and manage variability, Blears talked of creating a ‘Drum Beat’ which allows them to maintain confidence in the schedule. This is achieved through a series of five minute meetings at set points in the day. These happen daily, 364 days a year without fail, providing short interval controls needed to stay on target and stay ahead of any potential issues in supply and demand. The 5 minute meetings are taken from the ‘Agile’ toolbox and focus on reviewing recent performance, current and future states. This simple act of a regular call in meeting provides stability and consistency.
Plan for Change
Another concept championed by the team at Kellogg’s is the concept of Plan for Change. This isn’t about wasted effort, it’s about wasted frustration. By planning for change the team plan for scenarios and outcomes based on historical data but are not constrained or paralysed when the forecast doesn’t match that expected. Forecasting in FMCG can be a dark art – there are so many variables and with the growth of social media and its impact on spending patterns a random tweet or like of a product can create enormous fluctuations in demand, so the concept of planning in the knowledge that the plan will change, allows them to manage this. This approach could be adopted by all manufacturing companies that suffer from frustrations in forecasting.
Make the outside world your inside world
This is about ensuring as a business they are in touch with what is happening in the global community – from a social, economic and technological perspective. Great advice in a changing world. Kellogg’s are part of an FMCG consortia ‘Five to Drive’ looking at new solutions to improve delivery and reduce costs, Blears truly believes that the distribution model in the future will look substantially different to that of today.
Doing Good
People no longer work for salaries alone, and it helps both recruitment and retention that Kellogg’s have an outstanding legacy of altruism. In 1930 W K Kellogg founded the W. K. Kellogg Foundation to administer his $45 million in personal assets to various charities. In 1944, W. K. Kellogg also gave away 21,400 shares of company stock to a fund set up to assist veteran employees. “Dollars have never been known to produce character, and character will never be produced by money,” he once said “I’ll invest my money in people.” The foundation continues today and is one of the largest charitable foundations in the USA. To guide current and future trustees and staff, he said, “Use the money as you please so long as it promotes the health, happiness and well-being of children. The charity remains a substantial shareholder in the Kellogg Company.
Embracing Change
As you would expect in a warehouse of this scale, operators utilise state of the art voice picking technology to improve both pick rates and accuracy. We also saw evidence of a continuous improvement activity that led to the standardised cubing of pallets, improving warehouse utilisation and space management.
Kellogg’s and XPO have responded to changing market demands and brought the co-pack operation (a necessary value enabler to the business back to the site and it is managed within the warehouse operation by a flexible team, cross functional and organisational team. Variability and seasonality in co-pack is exceptionally high so flexibility in resource is a real enabler here. Whilst co-packing sends shivers down the spine of anyone obsessed with lean and right first time it does meet a market demand and is surprisingly more common than you would think.
Big Data & What’s Next
As with many other manufacturers, Big Data was raised as one of the single biggest challenges facing the organisation. Managing and providing meaningful metrics from multiple software platforms is clearly a common challenge. Kellogg’s are currently focused on combining ERP, CRM, Voice Technology and transport logistic software to create a platform that can give a snapshot of meaningful information instantly. Kellogg’s are close to a solution which they hope will allow them to correlate and sift information quickly to improve decision making in a wider scope with far fewer ‘analysis hours’ required
With a day focused on managing uncertainties it was great to finish with some sage advice about the future. Blears believes that whilst experience is a long time gained and easily lost, you must continue to focus on innovation and revolution in order to grow – in this new world, it’s key to be brave and bold, whilst maintaining the sensibilities of meeting high customer expectations, day in, day out.
Our thanks go to Paul Blears of Kellogg’s and Ian Walsh of XPO Logistics for openly sharing their ideas and insights with others.
For information on upcoming visits please go to our website www.onsiteinsights.org