Case Study: Home & Catering Suppliers

Project Vuselela
Home & Catering Suppliers
Context
Home and Catering Suppliers (Pty) Ltd,
(HCS), distributes an extensive range of
house-ware, catering and cleaning/
gardening equipment and electronics
(business has been sold) across Southern
Africa in excess of 40 years.

Case Study Synopsis

Largest distributor of
catering and house-ware
major brands in SA

HCS faced with unsustainable business model as a

result of a changing market landscape

HCS faces a number of

key supply chain challenges

HCS at a crossroads:
either re-engineer or
wind up

HCS initiates Project

Vuselela to re-engineer
the supply chain

Project Vuselela delivers

exceptional project results that positively
transform HCS

HCS transcends on a path

of business stability and
growth

As the largest Southern African distributor

of the locally manufactured Consol glassware brand and in addition an extensive
range of imported glass, HCS is the largest
distributor of drinking glasses in Africa.
HCS is a product distributor of some of
South Africas famous brands such as
Consol, Luigi Bormioli, Tramontina,
Marinex, Nadir, Chef Works and even distributes brands like Bicycle Playing Cards.
HCS has an extensive reach to many diverse sections of the Southern African
market(s), namely Retail, Catering, Cash &
Carry, Tourism and Promotional Gifts. HCS
has in excess of 450 customers and
2,500 delivery points.

HCS Key Challenges

As a result of the competitive and
changing FMCG market landscape HCS
was faced with the following harsh
business challenges:
1.

Unsustainable HCS operating

business model at the time;

2.

Unsustainable operating
costs levels reducing the
businesss overall profitability;

3.

Excessive order fulfilment

times with only 60% of orders being dispatched on the
same day as a result of warehouse design and inefficient
warehouse processes

4.

Unacceptable levels (in excess of 20% of revenue)

inventory shrinkage and
credit notes

5.

Staff skill sets, low productivity and accountability levels with incorrect fulfilment of
orders; strike rate of 65%,
This implies that only 65% of
the orders dispatched were
complete (in full)

6.

Un-optimal inventory mix

and low levels of stock
accuracy (23-26%) resulting
in 60% of the sales order
being incomplete and/or
incorrect when shipped to the
customer.

HCS at a Cross-Road
HCS being in a Fast Moving Consumer Goods
(FMCG) industry was faced with a changing
market landscape in addition to a highly
competitive environment and low margins.
The impact of this had resulted in HCS over a
short period to run in the RED. As a result of
the changed market landscape, HCSs unsustainable business model and ongoing financial loss position; HCS shareholders and management were faced with a tough decision
as to whether to wind down the business or re
-engineer the business for profitability and
sustainability. Through a series of tough decisions but a broad innovative company vision,
HCS shareholders and management pursued
the re-engineering vision. Last Mile Innovations (LMI) as the Supply Chain Solutions Specialist was selected as the preferred partner
in assisting to re-engineer HCS to its former
glory.

7.

Lack of effective security

procedures to control loss of
product due to shrinkage
which accounted for in excess
of 12% of revenue on a
monthly basis.

HCS at a cross-roads ?

Aligning the Supply Chain

components

Case Study: Home & Catering Suppliers

Page 2

Project Vuselela
HCS Re-Engineering Project

The key 10 successes and Return on Project Investment (ROPI) achieved, which the project team is extremely proud of included:

The primary objective of Project Vuselela was to stabilise HCS business operations, deploy quick-wins to
address the Supply Chain challenges and ultimately
deploy sustainable solutions, that positions HCS into a
favourable financial position with growth scalability.

1.

Sustainable Gross Profit (GP) margins

were achieved through the re-engineered HCS
business model and product lines.

2.

Order Strike Rate improved by 32.7% to an

average of 98.5%. Furthermore, Order fulfilment (order release, pick, pack) times improved by 60%.

3.

HCS Re-pack output improved by a multiple

of 3.5 as a result of deployment of production
line engineering concepts within an FMCG
business. This output resulted in improved
turnover and contributed significantly to the
above strike rate.

4.

Picking efficiency improvement by greater

than 50% as a result of innovative reengineered warehouse design and process
efficiencies. The re-design included optimal
rack and inventory positioning for optimal
order picking.

5.

Inventory accuracy improvement by 67%.

This was achieved through the establishment
of an inventory team and deployment of
workable inventory processes.

6.

Order accuracy improved by 43% with a

staff reduction of 23%, within the area. This
was as a result of deployment of a streamlined and efficient order processing system.

7.

A drastic reduction of 80% of credit notes

and returns as a result of the order accuracy
and change in order fulfilment processes.

8.

Drastically improved distribution flow and

cost optimisation that resulted in a significant
contribution to HCSs bottom-line.

9.

Improvement in staff morale to achieve the

above outputs. This was achieved through
definition of HCS specific Polices, Processes
and Procedures and continual staff training.

10.

Effective staff performance measurement

and monitoring ensured re-alignment of staff
to ensure best person for the job.

Key project objectives included:

The

primary

focus

of

the

Supply Chain ReEngineering

Project is to fix
the business and
align the business
to

the

new

competitive
landscape as per
David Smith the
Financial Director
at the time, now
Managing Director
(MD)

1. To redefine the HCS business

and operating model through a
complete re-engineer project to
include all areas of the supply
chain from product re-engineer to
inbound and outbound logistics
2. To aim to reach a favourable
operating business through Logistics re-engineering that includes
optimisation of warehouse design Supply Chain Reprocess(es) and procedure(s), staff. Engineering

Project Methodology & Approach

HCS and LMI formulated a joint project team with
LMIs accelerated design and delivery approach to
address the immediate challenges.
LMIs structured yet agile project Supply Chain
Methodology was deployed to address HCSs challenges through progressive decision making on
supply chain optimisation as well as ensuring the application of best practice.
Furthermore, HCS executive management active project involvement with responsive project decision
making and project prioritisation, blended with LMIs
unique accelerated project delivery method was geared
to ensure an effective re-engineering project approach.

Project Vuselela A Success

The design and implementation of the planned and prioritised corrective actions to remedy HCSs supply
chain challenges proved successful; with HCSs bottom-line having drastically improved. As the project
was aptly titled Vuselela a word that means Revival
in Zulu, Home & Catering Supplies is now a revived business entity.