Frits Beukershead of physical distribution at El Aguila:
"We've got to get away from the idea that physical distribu
tion means only transport. In the same way that the printing
and distribution of an issue of Heineken International
Magazine is the final stage in an entire process for you as
editor, transport rounds off the process of physical distribu
tion. A lorry doesn't set off without a purpose. A lot of
planning goes into it beforehand. And that entire route - from
planning through to implementation - that's physical distribu
tion." Frits (known to the Spaniards as Federico) is head of
physical distribution at El Aguila in Madrid and his
enthusiasm for his work makes him a true ambassador of
physical distribution.
Physical
distribution is more
than transport alone.
Practice
Study
Figures
Keeping a close
watch onthe
market'
Annual plan
Organisation
"Department has
achieved a lot.
Future
"High job
motivation.
PAGE 6
HEINEKEN INTERNATIONAL MAGAZINE NR. 17
"It's all a matter of the right service
at the right cost"
The employees of the central department Physical Distribution in Madrid. From left to right Frits Beukers,
Carmen Beltrdn, Milagros Aragones, Pilar Escribano, Gerardo Martinez en Ignacio Caceres.
Physical distribution means
'controlling the flow of goods on the
basis of market data at minimum
cost and with maximum service'.
Quite a mouthful! The terms 'flow
of goods' and 'service' call for a
more detailed explanation. The
flow of goods refers to the transport
of the beer from the moment it
leaves the bottling line until the
moment when the consumer buys
it. Stocks (both finished products
and packaging materials) and trans
port costs play a dominant role in
the process of controlling the flow
of goods and represent a high cost
element for every business.
Service has not only to be
provided to customers. Service to
your own breweries is important as
well. Getting returnable packaging
materials back to the breweries in
good time means improved utilisa
tion of the production capacity.
Physical distribution is in fact the
link within the business which
guarantees that the right stocks are
available at the right time and in the
right place.
How is the theory of physical
distribution put into practice in an
operating company like El Aguila?
A thumbnail sketch of the
company's recent history is needed
to make the picture clearer.
When Heineken acquired a
minority stake in El Aguila in 1984
the business consisted of seven
breweries and two malting plants.
The breweries operated as
autonomous units, totally indepen
dently of each other. Every
brewery produced virtually the
whole of the El Aguila range and
had its own sales organisation. As
far as physical distribution was
concerned, responsibilities at each
brewery were mixed together with
other tasks; there was no clear
structure.
In 1986 three of the seven
breweries were closed down, and
consumer demand subsequently
had to be met using the capacity
available in the four remaining
breweries. To bring supply and
demand more into line with each
other the breweries were moder
nised, new buildings were put up
and specialisation was introduced
(for instance, producing one pack
form for the whole of Spain in one
single brewery). Partly because of
that specialisation the need arose
for centralised control over the flow
of goods: the essential task of physi
cal distribution.
Even before the closure of the
three breweries the department
had already started a study to
answer the questions: 'Which
customers are supplied by which
brewery and which customers by
which depot?'. The closedown of
the three production units made the
study even more interesting from a
physical distribution angle.
Computer calculations were also
made for what is known as 'large-
scale transport' (moving big
quantities of beer from the brewery
to depots, to other breweries or to
the wholesalers). The data related
to: the capacity of the relevant
brewery, the turnover rate of the
wholesaler or depot, the location,
and Spain's system of road links
with exact distances and driving
speeds. All this information was fed
into the computer. A special
computer program then revealed
the ideal pattern for large-scale
transport, what the professionals
refer to as 'primary transport'.
To make optimum use of the
possibilities offered by physical
distribution, it is absolutely neces
sary for the department to keep a
close watch on what's happening in
'the market'. Physical distribution
receives figures from the breweries
about production, stocks and
deliveries and gets information
from the commercial department
on, say, marketing campaigns.
With the aid of all this information
physical distribution works out how
much beer has to be delivered in a
certain region and on what date.
Just like any other department,
physical distribution has also
defined its targets in an annual
plan. An annual plan is basically a
description of the expectations of
the business for the year ahead. But
consumer demand hardly ever
stays in line with the expectations of
the business. Which is where
'micro-planning' comes in. This
allows production to be controlled
so that it is attuned to the demand
from consumers. Once a week
employees from the production
accounts department get together
with Ignacio Caceres and Pilar
Escribano of physical distribution
to make adjustments to the
planning.
Planning exercises like this
ensure that physical distribution is
closely involved in El Aguila's
commercial activities. It's therefore
no surprise to find that Mr.
Beukers' department forms an
integral part of the sales organisa
tion.
The physical distribution depart
ment works both centrally and 'on
location'. One small central unit,
housed in the Madrid head office,
keeps records of the flow of goods
and of transport movements and
concentrates on micro-planning. It
also handles import activities.
These jobs are in the capable hands
of Milagros Aaragones and
Carmen Beltran. The physical
distribution department also
comprises the despatch depart
ments at the four breweries. Each
despatch department receives
orders from the customers,
evaluates them and arranges for the
transport. A distribution manager
is also stationed at each brewery. In
Valencia this work is done by
Bernardo Choret. The manager in
Algete is Jezus Rodriguez, whilst
Zaragoza is the responsibility of
Candido Simon. The distribution
manager is not only in charge of
outgoing shipments but also has to
pay careful attention to the many
delivery addresses. The physical
distribution department currently
delivers beer to 280 locations in
Spain (237 wholesale businesses
and 43 depots).
Looking back on the past 2lh
years, Mr. Beukers says: "Despite
the fact that communication
between the breweries and the
head office is not entirely up to date
and the Spanish infrastructure
could do with some improvement, I
still think that our department has
achieved a lot. Thanks to better
planning, for example, driving
distances have been reduced from
360 to 335 kilometres per journey
and the loading capacity has been
strongly expanded. In 1986 each
lorry still only carried 110
hectolitres, but that has already
risen to 133 hectolitres this year.
What's more, the number of direct
deliveries to wholesalers has
increased sharply: from less than
20% in 1985 it's already moved up
to 50%. This has resulted in a
dramatic decline in stock levels in
the depots and has also brought a
major decrease in transport costs."
"Acceptance of this still young
department is growing both within
the El Aguila organisation and
amongst our customers. My
employees have cooperated
enthusiastically right from the very
start, in spite of the fact that they'd
never had anything to do with
physical distribution before. They
are busy following specialised train
ing courses and their job motiva
tion is high."
And yet a great deal of work still
has to be done. Tighter cost control
and an improved standard of
service are the principle points for
action in the years ahead. "I predict
that the battle to win the customer's
preference will be waged more and
more in the area of service; service
which has to be supplied by physical
distribution to the market. That's
what we have to prepare ourselves
for."
