Roundtable Series: Supply Chain Tactics for Winning in Europe

Meet our customers, the SME supply chain experts:

• Doug Clark is Co-Founder and Director at Jenier World of Teas, a wholesale Supplier of 400 loose leaf teas or biodegradable tea bags.
• Nic Fordham is Head of Operations at Southwestern Distillery, home of the World’s Best Gin TARQUINSGIN.com | 
• Sam Gilks is a Supply Chain Consultant at Young Foodies, which offers services to FMCG challenger brands.
• Denis Kelleher is CEO of Good Culture Kombucha – world’s leading distributor of freshly fermented organic kombucha ingredients.
• Thomas Robson-Kanu is Co-Founder and CEO of The Tumeric Co. with 35g of fresh raw turmeric root in each each shot.

Tackling supply chain challenges together

With these roundtables we look to bring SME supply chain professionals together in order to share learnings from the last 24 months and fast-track best practice. Larger businesses have the budget and in-house know-how to tackle these challenges, but SMEs do not, so collaboration is king if we are to survive and thrive. For this supply chain roundtable we we're lucky enough to have supply chain expertise from four UK drinks manufacturers to chew over the changes they’ve made, and are going to make, to their supply chain. We were joined by Doug Clark from Jenier World of Teas, Nik Fordham from Southwestern Distillery and Thomas Robson-Kanu from The Turmeric Company. And last but not least we had the invaluable insights of supply chain consultant Sam Gilks from Young Foodies.

Highlights from the roundtable: 8 tips and insights for success in Europe

Over the last 18 months at Unleashed we’ve seen first-hand many of our customers setting up operations and warehouses closer to their European customers in order to sidestep the additional paperwork, bureaucracy, and charges they and their customers face. It’s one of many strategies UK businesses are deploying in order to find success in Europe. Here is some of the additional advice that came out of our supply chain roundtable.

1.Choose your partners wisely (and play to your strengths)

Nik Fordham from Southwestern Distillery says he and his staff have a skills base in distilling and manufacturing in the UK. So when they first moved into Europe they chose partners who could deliver a full solution for exporting into the EU, and save them a steep learning curve. “We are not professionals in customs and excise,” says Nick. “So we chose to go that way. For me, it was all about, deal with the things you can and you’re expert in – and leave the other professionals to do their bit. That’s what you pay them for. “You can always bring it in-house and reduce the cost on a timely basis.”

2. Be prepared to use hybrid distribution models

Southwestern uses two different distribution models to reach different markets. For southern Europe and Ireland they signed a distribution agreement with a firm that handles importing and logistics in those regions. But to reach other European markets they’ve set up their own warehouse in Amsterdam. “We’ve got additional costs of warehousing, storage, each time a bottle is picked or a case is picked, there's a cost on to it – [and you’ve got to consider] how it’s packed” says Nik. “But it is a key market for us, not just for the gin brands, but also for rum as well, and the other new products in the portfolio.”

3. Remember: it's hard for everyone – so capitalise on that

Southwestern Distillery freely admit that maintaining a presence in Europe as the UK exited the EU was a major challenge – but, says Nik, that also represents an opportunity for those prepared to do the hard yards. “For me it’s [more important to] make sure you’re evident and visible in those markets where others are having challenges.”

4. Offset rising costs through supply chain efficiencies

Southwestern's cost per pallet has gone from £80 to £250, which Nik says, takes quite a significant bite out of their margins on smaller deliveries. Their work-around has been to move away from smaller deliveries over long distances. Instead, they’ve set up an additional warehouse to get closer to closer to their European customers, which lets them make the costlier international shipments in bulk. “We’ve also looked at how we can reduce costs in other ways – again, looking at our supply chain, looking at our distribution. And Labour's been quite a challenge: recruiting, maintaining, but also making sure that you’ve got an efficient workforce.”

• Read more: How to increase labour productivity: 13 practical tips

5.Automate where you can

Doug Clark, Director at Jenier World of Teas, says that with both their international shipping and local shipping in the UK, automating processes has been critical– both in terms of removing complexity, and countering the impact of higher labour costs. “We have a number of disparate applications all talking to each other, and my thought would be to go to an ERP,” says Doug. "But the costs are extremely high, and it takes a long, long time to implement it.” “So what we’ve done is we’ve honed our skills in terms of better understanding of the issues – doing some brainstorming around the issues. What are the issues here? What are the problems? And we’ve been able to improve our internal processes in relation to the applications that we use, and make them more refined.” Picking up on the automation theme, Sam Gilks, Supply Chain Consultant with Young Foodies, goes a step further: “For me it’s about network design. If you’re not in Europe yet and you‘re thinking about going there, it’s a full-scale audit network design piece to understand every single piece of the puzzle and say, 'Does your strategy map back to your business goals?'”

6. Managing a European base comes with challenges

As a strategy for minimizing freight costs, starting a warehouse in Europe makes sense for UK exporters. But, both Nik and Thomas point out, that takes significant time and attention. Factors to consider here will include: Greater holding costs: Are you prepared to absorb the hit to cashflow that comes from holding greater volumes of stock? Packaging, branding and delivery: If you decide to take responsibility for the last mile of delivery you’ll want to have an eagle eye on how your brand is represented – both in terms of packaging and branding, as well as the quality and timeliness of the delivery experience. Similarly, your labeling system may need to be flexible enough to reflect your different destinations and jurisdictions.

7.Keep a weather eye on legislation change

Another important consideration for firms exporting to the EU, is keeping track of upcoming law changes that can affect them. As Sam Gilks of Young Foodies points out, EU requirements around issues like having an EU or NI address on packaging can pose a problem, especially if you’re caught out by a change. Thomas Robson-Kanu, CEO of The Tumeric Co, agrees. His advice? Spend ample time on understanding compliance. "Invest early in terms of that legal infrastructure – understand what’s required, the regulations going into that country, the tax implications, the distribution, logistics – all in a single bunch. "I know a lot of companies who have internationalised – but they all wish they had invested more in terms of understanding the regulatory and legal infrastructure.”

8. Certain ingredients will give you headaches

A note from Sam Gilkes of Young Foodies – remember that some ingredients and products are inherently harder to move across borders – and the reverse is also true. “Obviously, if you’re moving alcohol and animal products into Europe, it’s more difficult than if you’re moving other types of products. And vice-versa – if you’re bringing in a vegan product from Europe, it’s a lot, lot easier than if you’re bringing in an animal product.” Thanks to our customers for sharing their learnings and insights. We hope you found them useful. This is the third in the Unleashed Supply Chain Resilience Roundtable Series. In episode 1 Unleashed customers discuss  Supply Chain Resilience and Mitigating Risk, and in episode 2 we explore Scaling in a Compromised Supply Chain.