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News 05


Kellogg’s targets supply chain in cost saving plan


Supply chain optimisation is at the heart of a four year plan by Kellogg’s to save up to $475million a year by 2018. The company estimates that by the end of 2017,ProjectKwill


First under-stocked Christmas for years


Retailers have slashed Christmas stockholdings to avoid the deep discounting of previous years when a combination of over ordering and depressed consumer spending left too much surplus stock on the shelves and they had to slash prices to shift it, according to KPMG’s retail head David McCorquodale. This will be the most under stocked Christmas in recent years, he said, warning that it could mean less extensive sale racks at the more successful shops, and a shortage of sizes in the more popular fashion ranges. McCorquodale said: “Retailers


in the fashion world tell me they are carrying three to four per cent less stock in comparison to this time last year. This might sounds like a small percentage, but this reduction will save these retailers millions in wasted margin.” This was the result of the fact


that merchandising departments, working in association with those responsible for targeted promotions, have been given a greater influence than buying departments tomanage stock levels andmargins. “This improvedmanagement


of stockmeans themost successful retailers on the high street won’t need to discount as extensively or as deeply this year, so it’s likely shoppers will only find real bargains at the less successful players, whose ranges aren’t as good or who have over ordered.” McCorquodale also pointed


out that the dwindling availability of credit insurance has seen retailers finance the purchase of stock themselves, which has increased pressure to hold as little stock as possible. It has also had an impact on the relationship between supplier andretailerastheywork together to manage supply lines.


Swann is newoperations director for Debenhams


Debenhams has promoted Peter Swann from director of information systems to the new role of operations director, where he will be responsible for logistics and imports in addition to his current responsibilities for IT and systems. Debenhams now has 240


stores across 28 countries and is the tenth biggest UK online retailer by traffic volume. Chief executiveMichael Sharp


said: “As we continue to evolve our business into a truemulti- channel international organisation, achieving operational excellence has become increasingly important. I amtherefore delighted that


Supply Chain Standard December 2013


Peter has agreed to take on the new role of operations director.” Swan will join the company’s executive committee led by Sharp and consisting of Simon Herrick, chief financial officer; Suzanne Harlow, group trading director;Mike Goring, retail director; Richard Cristofoli, marketing director; and Nikki Zamblera, HR director. SwannjoinedDebenhamsin


2012, having previously been group IT director atWH Smith for eight years. Prior to this role, he washeadofsystems for Smiths News. He has also previously worked atMarks & Spencer for ten years.


US Air Force in ground-breaker


TheUS Air Force has signed a ground-breaking supply chain dealwith Boeing that it says will streamline contracting, save money and speed up execution by as much as tenmonths. The public-private partnership


between theUS Air Force Sustainment Centre and Boeing is thefirst of itskindand allows the three Air Force logistics complexes that are under the AFSC to execute implementation agreements with Boeing, reducing administrative costs and increasing efficiency. “Boeingisproud to lead the


way for industry by developing a new, more efficient and affordable way to do business,” said Scott Strode, vice president and general manager of


Maintenance,Modifications& Upgrades for BoeingDefence, Space&Security. In the past, each complex,


Oklahoma City Air Logistics Complex,Ogden Air Logistics Complex andWarner Robins Air Logistics Complex,would enter into an individual partnering agreementwith Boeing, a process that took 12 to 16 months to complete. “The new partnering


agreementwillmake our supply chainmore agile sowe can deliver maximummission readiness to our customers,” said Ken Shaw, vice president of Supply ChainManagement for BoeingDefence, Space&Security. The agreement covers products and services.


reduce the company's globalworkforce by about seven per cent. It said optimisation of supply chain infrastructurewould include actions designed to increase efficiency and improvemargins, including the consolidation of facilities and the elimination of excess capacity. Inaddition, it said:“GlobalBusiness Serviceswill create increased


productivity throughout the organisation… And a new global focus on categorieswill include the continuation of a process designed to create a regional, category-basedmodel.” The company anticipates that the programme will result in total cumulative,pre-tax charges of between $1.2bn and $1.4bn;and its non-cash costs are expected to be between $275m and $325m.Cash savings are expected to reach an annual run-rate of between $425m and $475m in2018. "We are excited by the potential and opportunitieswe see for


growth in the categories inwhichwe operate," said JohnBryant, KelloggCompany's president and chief executive officer. "As a result,we are making the difficult decisions necessary to


address structural cost-saving opportunitieswhich will enable us to increase investment in our coremarkets and in opportunities for future growth.These actions will set a foundation for our Sustainable Growth operating principle." KelloggCompany reported a flat third quarter 2013net sales at


$3.7 billion.Quarterly operating profit was $504m,a decrease of 1.7 per cent.Underlying internal operating profit rose by 0.6 per cent.


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