Advancing with e-bus

8/14/2019 Advancing with e-bus

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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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Advancing with e-bus