Heineken produces 20bn litres of beer each year © Heineken
Heineken produces 20bn litres of beer each year © Heineken

Heineken aims to cut costs and inventory

Will Green is news editor of Supply Management
22 September 2017

Heineken decided it needed to make a step change in how it organised demand and supply in the face of challenges including the rise of craft brewers.

Javier Gomes, program manager S&OP Core at Heineken, said the company embarked on a project to cut inventory and costs and boost revenues to deal with a rapidly changing business environment and increased pressure from competitors.

Speaking at the Gartner Supply Chain Executive Conference in London, Gomes said: “We are facing a rapidly changing business environment. Consumers are becoming more demanding. They want something different from ordinary lager beer. We see explosive growth of craft breweries. They are delivering very special beers and putting a lot of pressure on us in terms of flexibility.”

Gomes said Heineken had operations in 70 countries with 165 breweries, malteries and cider plants producing 20bn litres of beer a year.

He said each country was responsible for sales and processing and the S&OP [sales and operations planning] project involved trying to standardise processes over different territories, while allowing for different levels of maturity.

The targets of the project are to cut inventory by 10-15%, obsolescence costs by 10-30%, logistics costs by around 1% and increase revenue by 0.25-1%.

“It’s all demand planning and supply planning, a lot of, ‘What are we going to supply, when, where, to whom and how much?’ Supply planning is how to deliver those things in the right way with the appropriate level of risk,” said Gomes.

Operating countries are working in different ways on demand and supply planning and the company wanted to standardise, he said.

Pilots will finish soon in China and Hungary, chosen because of their diverse markets, and S&OP is due to be rolled out from 2018 across 30 countries.

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