Chain reaction

FROM THE MM&D JULY/AUGUST 2011 PRINT EDITION: Nestlé Waters Canada’s facilities in Hope, British Columbia and Puslinch, Ontario were singled out earlier this year by parent company Nestlé Waters North America when both were recognized with awards for supply chain of the year, logistics excellence and quality excellence.

The two bottling sites and the company’s distribution facilities in Hope, Puslinch, Chilliwack, BC, and Laval, Quebec provide bottled water to a network of more than 145 retailers across Canada. The company has introduced a number of innovations into its supply chain to continue to meet consumer and customer demands, and to produce an environmentally friendly product. In fact, the company has diverted 67 percent of its bottles across Canada from landfill sites.

Canadian Food Chain spoke with David Thorpe, director of supply chain for Nestlé Waters Canada, to discuss those innovations and the inside workings of the company’s supply chain and logistics.

Canadian Food Chain: Have there been recent developments in your supply chain?

David Thorpe: We prefer to only handle product once to prevent damage, so we’ll put it right onto a truck and go directly to our customers. About 30 to 35 percent of the time we’re able to do that. It’s called direct line load, and we’ve been doing it for four or five years. You’ve got to be flexible to supply customers this way. And you’ve got to have excellent quality systems. You’re not putting product on hold, doing additional inspections or waiting for testing. It’s a very competitive market out there so it’s critical to create an efficient model and reduce costs.

The idea came from one of our smaller factories in North America that didn’t have a lot of space to store products. The staff needed to come up with some creative ways to deal with their customers. And it does save a lot of time and money.

CFC: What other innovations have you been working on?

Thorpe: We continue to work on lightweighting and reducing the amount of plastic in our products. We used to make a half-litre bottle that was close to 20g of plastic. Now it’s down to 9.1g, the lightest bottle in the industry today. We also introduced recycled PET  (rPET) packaging last year in our Montclair brand. The 500ml bottle is 100 percent rPET and the others are 50 percent rPET.

CFC: Has your supply chain changed over the years?

Thorpe: Twenty years ago the industry was about large-format, five-gallon and one-gallon bottles. Then in the early- to mid-’90s people began looking for alternatives. That’s when the business changed the most. And when companies like Walmart and Costco really boomed they changed the supply chain landscape. These companies wanted to be as efficient as possible, so they wanted to get the most products on a trailer. They challenged us from a supply chain standpoint and they’ve helped grow the business to where it is today. From a supply chain standpoint, packaging is what has changed the most with lightweighting and the challenges that come along with that.

CFC: How have your customers changed in terms of supply chain needs?

Thorpe: Traditionally we would take our product and ship it to a warehouse or distribution centre for our customers. Now they want us to go directly to their stores, which saves them money and time.

Our customers don’t have to carry as much inventory and we can ship directly to two or three stores on one truck. That’s called the direct ship model (about 80 percent of the volume in 500ml bottles is direct ship). We do that with Costco, Walmart and Metro.

That’s a major change, which started four or five years ago. Our customers wanted this. It also evolved from promotions. Instead of sending product to a warehouse where the retailers might lose a day or two, we send it right to their store.

CFC: What challenges do you face?

Thorpe: Keeping up with our customers. With lightweighting it’s more challenging to get the product to our customers in one piece. We’ve had to adapt the way we load the trucks. There’s the constant challenge to be better, lightweight, low cost.

You need to listen to your customers—they’ll tell you what they want. Five or six years ago who would have thought we’d be in a recycled PET container? But when our customers said, “We want a recycled container,” we had to get there quickly.

CFC: How did you adapt to transporting lighter-weight bottles?

Thorpe: In the way we make the bottles. We looked at what’s called top load, the ability of that bottle to hold weight. So the way you distribute the plastic throughout the bottle has to be exact.

When you have a heavier bottle, it’s much easier to distribute plastic throughout and get it to hold up. It’s easy to ship. As you lightweight it, you have to be exact as to how you distribute that plastic. Your margin for error becomes very narrow. So you get smarter, and more precise.

It starts with the design, where you put the ribs. There’s a lot of thought behind our Eco-Shape bottle [introduced in 2007]. It took years to finalize it. That bottle looks great and is also functional—and it has to survive the entire supply chain.