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Distribution - getting a product from one place to another -
sounds simple enough. However, when you add in 3,000 to 8,000
miles of ocean, multiple brands, multiple size packages, multiple
configurations of those packages, a whole range of government-
mandated labeling requirements, different types of the same
product for different states, and a need for freshness that is
important to consumers, then it becomes very complex indeed.
A final level of complexity is added when you factor in the need to
do all this in cost-competitive and time-sensitive manner in order
to service the product needs of 425 independent beer suppliers.
That was distribution as practiced by Heineken USA. Nowadays, a
new concept has been developed for moving Heineken beer from
The Netherlands to the U.S. to keep feeding a growing market for
the brands in America.
Several years ago, the first step in this process took place.
The Heineken Operations Planning System, revolutionized the way
distributors ordered from Heineken USA. HOPS, the industry's first
Internet-based ordering system, reduced those lead times from
twelve to six weeks and took the district managers out of the
order taking business. Now an employee at each distributorship
logs on to their own private site, reviews the forecasts provided
and orders the needed product for the next month within five
minutes. The next step came in conjunction with the
establishment of Star Chain, a joint effort of Heineken
Netherlands, Heineken Export and Heineken USA. It was designed
to fully integrate and streamline the entire process of beer
making and its distribution.
A major change for Heineken USA was in the way beer destined
for the U.S. would be staged. In the past, beer was produced to
order and was staged and made up into individual distributor
orders in The Netherlands. This caused the mixing of brands,
packages and package configurations within containers. It also
minimized the ability to use heavy containers, a more efficient
way of transporting beer by sea. With the demand points, beer is
produced based on forecast. The new system would establish
demand points, full service distribution centers, which would:
monitor customs clearance and dray containers
handle product storage; order processing, loading, picking,
staging and scheduling of domestic deliveries
execute distributor deliveries, set delivery schedules, and
coordinate outbound shipments
FIFO pier and inventory management, reporting, order tracing,
claims, and repack material management
be stocked weekly, to minimize out-of-stocks for distributors.
The establishment of the Demand Centers would occur in
conjunction with not only Star Chain, but also the rollout of HOPS
3.0, the third iteration of Heineken USA's order planning system.
The major enhancement of this new system would be to establish
weekly ordering and depletion reports, in order to have a better
view of the business, market-by-market. The ten demand centers,
all located near major ports, will enhance our U.S. distribution by:
improving the physical flow of product, through container
maximization, more product per pallet, and single sku
containers, allowing for fewer ocean shipments
improve distributor order-lead times and inventory levels
transportation and distribution
overall better customer service to distributors.
The demand centers will not only help Heineken USA and its
distributors, but the brewery as well. Instead of having 425
different order points, they'll have only ten, one from each
demand center. The reduction of containers has already taken
place. Heineken USA will ship nearly fifteen percent fewer
containers while achieving double digit volume growth. That's
efficiency!
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