Global Logistics Case Study, Bisham Logistics

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Client: The Tetley Group

The Project:
To implement a complete change in the terms of buying raw tea from delivered destination to ex tea estate. Thereby controlling all freight moves, obtaining full transparency in the supply chain, reducing costs and improving efficiency.

The Tetley Group purchases over 100 different types of tea from over 2000 different tea estates in 20 different countries. When this is combined with herbs, flavours and packaging materials, very large volumes of raw materials are shipped to manufacturing plants in the UK, India and USA. Additionally large volumes of finished product are exported to N.America and Europe. Over 80 different port combinations are involved and over 30 different carriers and forwarders were used. Much of the raw materials were purchased on a delivered basis. Tetley wished to take control of their global supply chain, to improve product and information visibility, reduce costs and develop relationships with a reduced number of key service providers.

We were asked to assist them in this major project. The first step was to map out the present situation and obtain an accurate picture of the logistics spend. To achieve this we developed a cost-to-serve model covering annual volumes, broken down by all origin/destinations, terms of purchase, carriers used and freight rates. We then divided the world into 5 key regions for a staged project rollout. The next step was to enter into negotiations with all the main suppliers in a region to change the terms of purchase. From this point we prepared an Invitation to Tender, which was given to 18 different shipping lines and 2 global forwarders in a series of face to face meetings. The ITT was constructed in such a way to enable suppliers to quote on any number of regions, thereby allowing Tetley to gauge the benefits or otherwise of global versus regional service providers.

· The design of a clear and universally agreed financial model, accurately showing detailed logistics spend
· Successful re-negotiation of raw tea purchasing terms
· Full understanding of shipping costs and services by Tetley
· A decision to appoint a limited number of regional shipping lines on annual contract terms · A saving in overall shipping costs of 12%
· Detailed carrier performance measures are in place
· Tetley have now got full visibility and transparency of product and information flows
· Tetley are now developing their own in-house expertise in global freight management
· Work has commenced on working with some key carriers on e-business offerings
· An understanding by Tetley on the benefits of an integrated supply chain – the choice of carriers impacts destination ports and warehouse location
· A change in UK warehouse locations