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S U P P L Y C H A I N C A S E S T U D Y
Berri Limited
Advancing with e-business
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E-BUSINESS IN SUPPLY CHAINS
NOIE is the Australian Governments lead agency for information economy issues. One of its roles is to promote the effective
use of e-business and Information and Communications Technology (ICT) tools to transform the Australian economy through
higher productivity growth, structural adjustment and innovation. In this context,NOIE has developed a series of Supply
Chains Case Studies highlighting successful e-business applications which show how e-business can enhance trading
relationships.They demonstrate that e-business can generate shared benefits such as reducing costs,boosting efficiencies and
improving profitability when all parties involved in a supply chain cooperate in the development of their e-business strategies.
Overview
Electronic supply chain project undertaken by Berri
Limited to maintain world-class processes in an
industry that is becoming increasingly globalised, and
to meet the supply chain requirements of its major
retail customers.
Electronic transactions enabled by the project relate to
the supply of Berri products to distributors and
retailers, and to Berri inputs including packaging,
labels, warehousing, transportation and sugar.
Participants include Woolworths, Coles Myer, Foodland
Associated Limited, Metcash Trading, McDonalds,
7-Eleven, Fletchers Freighters, Westgate Logistics,
P & O Australia, Labelmakers Australia, and over
150 Berri distributors.
Benefits for Berri include reduced manual processing
costs in accounts payable, accounts receivable and
receipting, resources released to more strategic
activities, reduced duplication, errors and dispute
handling, greater centralisation, lower printing costs.All contribute to a more cost-competitive company and
a greater value proposition to customers.
Benefits achieved for customers and distributors
include reduced manual processing costs, paperwork
and clerical overheads, reduced errors, improved
planning and forecasting accuracy, more efficient
receiving and inventory management, ability to
electronically match orders and invoices, improved
information flows relating to sales and performance.
Radio frequency (RF) data capture and barcoding topromote real-time information flows. Plans to
significantly increase returns using wireless devices,
electronic signatures and more advanced collaborative
planning.
Berri Limited
Berri Ltd is Australias largest manufacturer of fruit juice
products and one of the nations leading beverage
producers. It is Australian owned, has annual revenues of
approximately $500 million and employs over 1,000 staff.
Berri is also the leading imported juice brand in a number
of overseas markets and its export trade spans twenty
countries in Asia and the Middle East.
Berris operations have been focussed on fruit juicesthroughout most of its history, but over the last decade it
has diversified into a range of other products including
drinks and cordials, iced milk, spring water, apricot nectar,
tomato and vegetable juices and herb and spice blends.
Key acquisitions have included Patra, Sunjuice, Suncoast
and Sunburst National Foods Juice.
Berri operates manufacturing plants across the country in
every state except Tasmania and the Northern Territory.
Its primary inputs are fruit and food products (Berri
processes approximately 150,000 tonnes of fruit in ayear) packaging and labels. Additionally, Berri leverages
external providers for transportation and warehousing
services. Its outputs are supplied through distributors and
directly to major retailers.
Global pressures
Berri began work on its supply chain projects at the
beginning of 2000. The major goal was to ensure that the
company maintained world-class processes in an industrythat is becoming increasingly globalised. In addition to
the competitive implications of globalisation, Berri was
watching the way in which US retailers were driving more
efficiency back through their supply chains and expected
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similarly pressures to build in Australia. It wanted to be
well positioned to adapt to new requirements from its
major customers, and to achieve strong loyalty and
customer retention.
The supply chain initiative has been one part of a broader
project, termed One Berridesigned to make the organisation
more efficient, centralise many operations and integrate the
acquired operations of Sunburst National Foods Juice.This has
meant working in an environment of extensive change, with
the supply chain project unfolding alongside activities such as
rationalising stock keeping units (SKUs),raw materials, labels
and caps.
At the beginning of the project Ross Bradley was hired into
Berri as the Information Services Director where he was made
responsible for developing the supply chain strategy,and for
upgrading Berris systems and processes to deliver to that
strategy. Bradley continues to extend Berris supply chain
capabilities today and was interviewed for this case study.
A good base system
Initial work concentrated on defining a three to five year
vision and careful planning of the required business process
re-engineering. Before attempting to re-engineer processes
with trading partners, however, Berri decided that it should
first upgrade its internal systems to provide a solid
foundation. According to Bradley this was an important
success factor as it built flexibility to meet the evolving
requirements of larger customers, and facilitated the
progressive addition of more sophisticated technology
building blocks over time.
Implementation began with an installation of financial
software from J D Edwards. This was followed by the steady
addition of more sophisticated software modules, a process
that continues today. Berri implemented logistics,
distribution and advanced pricing modules and, over the last
12 months, rolled out manufacturing planning, execution,
scheduling and supply chain planning components.
Berri has supplemented this with radio frequency (RF)based data capture to promote real time information flows
within the organisation, and with barcoding capabilities to
meet the supply chain requirements of major retail
customers. Microsofts Biztalk was selected as the
integration platform for business-to-business messaging
between Berri and its various trading partners.
Most of the work on this project has been undertaken in-
house. External consultants were used, but on the strict
principle that capabilities were transferred in-house so
that, on their departure, Berri remained self-sufficient.
Distributors provide early returnsA consistent theme in the Berri project has been focussing
on trading partners that will provide quicker, earlier
returns. Bradley articulates the key questions to be asked as
Where can we get the highest return? and How much
influence do we have with the trading partner?.
Berris many distributors represented on obvious early
opportunity. Existing processes around taking orders,
confirming orders, invoicing and payments were largely
manual and represented a strong opportunity to free upresources through automation. Furthermore, because Berri
represented an important partner for these distributors,
most of which were smaller independent contractors,
the company could be confident of securing their attention
for an e-business project.
Berri has now implemented fully electronic trading
processes across over 150 distributors and agents based
on a simple dialup connection and batch transfer of
documents that include purchase orders, pricing and
product information. Sales data is captured and collated bythe distributor during the day using portable computers
equipped with touchscreens, with invoices and orders
uploaded to Berri each evening in a batch synchronisation
process. Updated pricing and product information is
downloaded to the device at the same time and
commissions on sales can then be calculated automatically.
Bradley notes that these e-business processes are relatively
basic, reflecting technology available a few years ago.
The company is currently working on a next generation
solution to unlock much more benefit for both Berri and itsdistributors. The focus is on leveraging wireless technology
and making processes real time. Distributors will be
migrated to combination phone/Personal Digital Assitant
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handheld devices with general packet radio system (GPRS)
capabilities. Information will be transmitted to and from
those devices using 802.11 radio technology when the
distributor truck is at a Berri warehouse, and GPRS when it
is out of range.Berri will be able to send and receive order
information at any time during the day and send alerts to
distributors by email or SMS.When distributor trucks
restock at the loading dock of a Berri warehouse,stock and
shipment information will be updated in real time.
Notwithstanding the simplicity of the initial
implementation, it has delivered extensive benefits.
The amount of paperwork and clerical overheads on
Berris and the distributor side have been radically
reduced and processes made much more seamless,
reducing the opportunity for errors. For its part,
Berri has achieved greater internal efficiencies by
releasing resources previously tied up in manual
document handling and processing.
Meeting the requirements of larger
customers
Key customers for Berri include major retail, food and
grocery chains such as Woolworths Ltd, Coles Myer Ltd,
Foodland Associated Ltd, Metcash Trading Ltd, and
7-Eleven. When it comes to e-business, the major movers
driving change in the Australian market are Woolworths
and Coles Myer, and Berris strategy has focussed on being
able to accommodate their requirements as they becomemore sophisticated. Barcoding has been added to all Berri
ambient product cartons and pallets to enable them to
be scanned into retailer warehouses using standardised
industry coding. Trading documents such as purchase
orders and purchase order acknowledgements are
exchanged using Electronic Data Interchange (EDI)
technology over a value added network.
As the larger retailers move closer to vendor-managed
inventory there is considerable scope to improve the
efficiency of processes through richer electronic capabilities.As an example,Berri currently maintain staff onsite with the
major retailers to plan and process orders. Further value
should be achievable once more sophisticated collaborative
planning capabilities become operational.
Supply chain technology is also being leveraged with
petrol and convenience store customers such as 7-Eleven.
Here the focus is on doing as much order processing as
possible at the point of sale.When vans arrive at 7-Eleven
stores they make deliveries and process individual orders
depending on local demand and stock levels. The orders
are then uploaded electronically to Berri where they are
collated and sent to 7-Eleven via EDI. 7-Elevens SAP system
is then able to electronically create and match purchase
orders against invoices and can process payments. Onceagain the principle benefit is dramatically reduced manual
processing costs for both parties. Berri expects more
benefits to unfold as electronic signatures for proof of
delivery are properly exploited.
Multiple supplier initiatives
On the supply side of its business Berri is working on
business-to-business integration across a variety of
partners. Visy Ltd was an early candidate because it was
acknowledged as being a particularly advanced e-business
practitioner within the packaging industry.Bradley refers
to Visy as a model partner, acknowledging that it has
provided Berri with a benchmark for electronic business
processes that can be applied to other trading partners.
Berri is operating electronically with Visy through the
entire order-to-pay cycle using EDI technology (see
VisyFlow A supply Chain Case Studyfor more
information on the Visy project) with the ultimate goal
of moving to vendor managed inventory.
Berri is working on similar closed looporder-to-pay
electronic trading processes with suppliers of transport
and warehousing services such as Fletchers Freighters
Pty Ltd,Westgate Logistics and P & O Australia, and with
its major supplier of labels, Labelmakers Australia Pty Ltd.
Labelmakers have put barcoding on all their label rolls to
enable RF receipting as they arrive in Berris warehouse,
improving accuracy and, once again, saving considerable
time and labour. More sophisticated planning
capabilities currently being added into the JD Edwards
system will ultimately give Berri the ability to share
master production schedule information with suppliers.
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Where Next
The total return on projects associated with One Berri
initiative is estimated at over $3 Million as at mid-2003.
Primary savings are identified as coming from increased
efficiency and reduced manual processing, but substantial
direct savings have been generated in a variety of other
areas, an example being $250,000 saved by reductions in
pre-printed stationery costs alone.These savings translate
directly into cost-competitiveness in an increasingly
globalised industry.
Despite what has been achieved so far, significant
potential remains to build upon the existing supply
chain work and produce far greater returns on
investment for the company. Electronic proof of delivery
is an important opportunity yet to be fully exploited,
and Berri is working on centralising and streamlining its
accounts payable functions, reducing duplication and
time-intensive dispute handling. Rollout of the new
wireless solution to distributors will move them frombatch to real time processes and increase benefits, and
Berri is also keen to supply distributors with more
business intelligence and performance information.
The company has not yet begun to implement electronic
processes with many of its suppliers. Fruit growers, for
example, are not expected to become a focus for another
12 months. Although the ultimate objective will be to have
all suppliers providing electronic invoices, it is understood
that this can only happen gradually due to the varied
technology capabilities across this supplier base.
Bradley nominates creating a clear vision for what the
company ultimately wants to achieve with supply chain
processes as a key success factor,along with accepting
that execution against this vision must be a staged,
incremental process.He describes the company as being
in a journey with the ultimate aim of pushing ourselves
out beyond the productivity curve for our industry.
Websites
National Office for the Information Economy (NOIE)
the Australian Governments lead agency for
information economy issues: www.noie.gov.au
An Australian Guide to Doing Business Online
information and resources about e-business for small
businesses in Australia: www.e-businessguide.gov.au
Information Technology Online Program encouragescollaborative industry based e-business projects:
www.noie.gov.au/itol
Guide to successful e-business collaboration:
www.noie.gov.au/publications/NOIE/ITOL_CS/
guide/index.htm
Disclaimer
The information in this publication was provided by
third parties.The Commonwealth has not verified the
information, and will not accept any responsibility for
any loss or damage suffered by any person arising
from the information itself or reliance on the
information.This publication should not be taken as
endorsement by the Commonwealth of any person,
organisation, company, product or service.
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