Linfox Logistics and Campbell Arnott's

Campbell Arnott’s (Biscuits and Snack Foods): Australian and New Zealand Logistics Network

In response to a rapidly changing retail sector Campbell Arnott’s outsourced approximately 80 per cent of its Australian logistics operations to Linfox in August 2004.

Linfox Logistics and Campbell Arnott's Linfox had the scale to absorb different volume and handling requirements for Campbell Arnott's.

Customer Overview

Campbell Arnott’s is one of Australia’s leading food companies, with products comprising a wide variety of sweet and savoury biscuits, salty snacks, soups, stock and juices. Campbell Arnott’s makes many of Australia’s favourite food brands. Its products are enjoyed by 97% of Australian households. In New Zealand, it holds a 30% share of the biscuit market and is strengthening its hold on the chocolate market. Tim Tam is its leading chocolate biscuit brand.

Campbell Arnott’s operates in all Australian states and territories and employs more than 4500 people. There are seven manufacturing sites located in Sydney (three), Melbourne, Shepparton, Brisbane, and Adelaide.

The Situation

Major retailers Woolworths and Coles Myer examined all aspects of their operations with the objective of reducing costs, improving service to their customers and enhancing their competitive position in the market place. Transport and warehouse costs, inventory levels, in-store operations and on-shelf availability, were all addressed. Retailers were seeking to reduce the costs of he primary freight transport leg from manufacturers’ distribution centres to their own Distribution Centres (DCs).

Retailers took greater control of transport task, ensuring their own vehicles or their own contracted vehicles were used for shipments under the Factory Gate Pricing methodology. The Arnott’s biscuit division was one of the bastions of in-house logistics in the Fast Moving Consumer Goods (FMCG) sector, running its own network of manufacturing sites and warehouses built around the direct to store delivery model. Its distinctive red vehicles, and before then, the horse drawn carts, had been delivering to store for the past 140 years.

The Challenge

Campbell Arnott’s identified the need to enhance its supply chain capability in line with the growing demands of major retailers’ supply chain strategies. Its existing network provided a challenge in terms of transitioning to a central warehouse delivery model. The company recognised the need for a partner with specialist logistics expertise who could support the changes and capital investment required to cement its position as the industry’s supplier of choice.

Why Linfox?

Campbell Arnott’s chose Linfox because we have the scale to absorb different volume and handling requirements. Linfox has the resources to manage and keep the whole network operating at the same time. Linfox is renowned for being able to build a strong co-operative culture.

The Linfox Solution

Linfox and Campbell Arnott’s developed a contract that stepped through the major changes in stages, recognising that to achieve all of the requirements in one step was not possible. The three main stages of change were:

Phase 1

Linfox to take on responsibility for Campbell Arnott’s existing biscuits and snack foods warehouse and fleet operations in a major outsourcing project.

Phase 2

Linfox supported the transition of operations away from direct store delivery operation to a central warehouse operation.

Phase 3

The development of new purpose built DCs, changes to the inventory holding policies and major fleet changes. Referred to as the ‘new world model’:

  • The DCs range in size is from 5,000m2 to 35,000m2, with a total network capacity of approximately 80,000m2.
  • Linfox WMS and SAP freight management solutions to be introduced into the new facilities.
  • All biscuit warehouses offer temperature controlled environments for quality chocolate storage.
  • The level of complexity includes automated storage and retrieval systems (ASRS), cranes, production in feed conveyors, pallet conveyors, robot palletising and automated wrapping/SSCC labelling technology.

The Results

Phase 1

Linfox assumed control of the Direct Store Delivery (DSD) vehicle fleet and management of DCs in NSW, Queensland, South Australia, Victoria (Snacks) and Western Australia over an eight week period. The transition was completed on budget and ahead of schedule. The NSW biscuit portion now processes 60,000 cases a day, compared to a peak of 40,000 cases previously.

Phase 2

Operational processes were modified to support both DSD and central warehousing deliveries, resulting in change in order profile and fleet needs.

Phase 3

The new state-of-the-art DCs have been designed with the first DC already commissioned.