Devising a simpler, more effective transport network for Vion Food Group

Summary

When Vion Food Group, one of the largest European meat producers, grew through mergers and acquisitions, an unwieldy transport network developed to keep its perishable product flowing. The company’s difficulties are endemic to many organizations that have experienced substantial growth and whose interconnected transport systems developed intuitively, often improvised in the heat of the moment.

Knowing there had to be a better way, Vion joined forces with NTT DATA to set a course for the future with a robust, flexible and optimized transport network.

Reducing transport network complexity

Vion Food Group produces meat products and plant-based alternatives in 29 locations spanning the Netherlands, Germany and Belgium. The company has undergone multiple mergers, acquisitions, divestments, plant consolidations and new startups. While it has centralized many of its core functions, management of transport and logistics remains largely decentralized.

Vion doesn’t equally split transport management, organization and responsibility (centralized vs. decentralized). It uses multiple deployment models to manage its fleet locally and centrally, which is a source of needless complexity and lowered visibility.

The company also uses multiple transport modes. NTT DATA identified a large base of external carriers at Vion, but management is per site.

Logistics Excellence Project objectives

Vion engaged NTT DATA to identify improvement opportunities and determine changes to transport operations, systems, processes, organization, mode mix and carrier relationship management¬ for near-term and long-term cost and service improvements. The results guided the layout of a roadmap toward improved transport strategies to deliver enhanced cost savings and the agility, flexibility and network visibility Vion needed to improve its customer service levels. The effort was dubbed the "Logistics Excellence Project."

NTT DATA conducted in-depth analyses to:

• Determine the ideal logistics management and organization structure: centralized versus decentralized activities, responsibility split
• Identify the benefits of implementing a Transport Management System (TMS). Choose the most efficient fleet deployment models: own fleet vs. outsourced vs. 4PL
• Optimize logistics flows, costs and payments

Implemented solutions

NTT DATA conducted a thorough assessment of the Vion transport function. The current-state transport evaluation included a maturity appraisal of the vital transport functions involving procurement, planning, training, freight paying and reporting.

A gap analysis between current and desired states defined the scope of the effort. The overall project required the definition of the end-to-end Vion transport network. NTT DATA used a benchmarking exercise to evaluate the transport network improvements that could form the basis of the future state transport transformation.

Finally, the team defined a change roadmap to propel and sustain the project over the time horizon of the implementation.

Bountiful improvement opportunities revolutionized transport efficiency

The teams identified close to 10% savings per year in transport costs. The team secured savings across four primary domains: technology, analytics, sourcing and planning.

The team recommended one transport management system to enable the required real-time transport data visibility to support decision-making, automate processes where practical and boost further optimization.

Improved analytics and data accuracy (driven by transport technology) showed significant cost avoidance potential by eliminating rush orders, incorrect service levels and high safety margins but also enabling the right transport costs to be allocated to customers through supply chain segmentation.

The team extended the scope of the Strategic Sourcing department to exploit economies of scale, harmonize contracts, optimize the carrier portfolio and standardize carrier performance management, optimize route guide compliance and enable synergies through centralized planning for selected routes.

The team also recommended a centralized transport organization with improved collaboration and logistics awareness across the entire Vion organization. These efforts contribute to the ongoing delivery of maximum savings and support the growth of a valuable in-house transport management capability.

Driving transport savings and efficiency

• 10% annual transport cost savings
• Avoids cost potential by eliminating rush orders, incorrect service levels and high safety margins
• Enables data visibility to support decision-making, automate processes and boost optimization
• Improves collaboration and logistics awareness