Heineken, the independent brewer of one of the world’s leading portfolios of beer brands, boasts 165 breweries , 85,000 employees, and more than 250 beer brands across 178 countries. In 2012, the company achieved a turnover of 18.4 billion euros and a net profit of 2.9 billion euros. An important part of this success, according to Heineken CFO Rene Hooft Graafland, is the way the brewer has designed its supply chain. Please continue to read below or visit the Article Source.
Supply chain drives international growth at Heineken
With 165 breweries, 85,000 employees and more than 250 beer brands in 178 countries, Heineken is one of the largest breweries in the world. The company reported a turnover of 18.4 billion euros and a net profit of 2.9 billion euros. An important reason for this success is the way the brewery has organized its supply chain, according to Heineken CFO René Hooft Graafland.
The Heineken executive said so in a recent interview with Management Scope, in which he explained the power of the brand. According to Hooft Graafland, the secret of the success is: “Half of our costs are related to the supply chain. Seen from this angle, we belong in the heavy industry category. Beer has a relatively low value and relatively high transport costs. This is why we can’t work with three breweries for the whole of Europe. In that case, the profits from the economies of scale would be compensated by higher transport costs. Therefore, most breweries produce for the countries in which they are located.”
Make people responsible
Despite the fact the countries are responsible for their own production costs, the supply chain is managed across the countries, including in Europe. “All sourcing decisions are made centrally. Optimization is realized in the countries themselves through a benchmark provided by our brewery comparison system. We know how productivity and cost relate for all 165 breweries. This benchmark changes every year because of new best practices. One can improve significantly by making people responsible for the performance. In this way, we can improve productivity and lower supply chain costs.”
Best practices in the supply chain
Similar to its competitors Anheuser-Busch InBev, SABMiller, and Carlsberg, Heineken has done a number of acquisitions in recent years. In 2012 it acquired Femsa in Mexico, which subsequently increased its profits. In the interview in Management Scope, Hooft Graafland said, “We perform better than the former owner, because we have best practices in various fields. Think of the supply chain or the way we look at brand portfolios. In addition, we have a pool of international managers that have seen more than one country. The current managing director in Mexico has worked for us Burundi, France, and Egypt.”
At a recent Dinalog event, Heineken stated it had realized a successful pilot with a visibility solution provided by Eyefreight. This resulted in more insight into stock locations, transport, and delivery times. This enables Heineken to stock in a smarter way, improve the load factor, and reduce the number of miles, according to Ken Fleming, CEO at Eyefreight.
Beer bottles got a standard look
Two years ago, Heineken already announced it had been able to successfully reduce costs for among others transport, raw materials, personnel, and energy, which account for 52 percent of all costs. To lower these costs, Heineken decided to shut down 47 breweries in Europe. In addition, 270 managers who managed the supply chain were laid off. Also, beer bottles received a more standardized size and water consumption was reduced by 30 percent. Energy use was reduced by 18 percent.