Popular sweet-maker Haribo has reduced wastage and obsolete stock by 5% in less than two years after implementing new supply chain technology
, the European manufacturer of sweets including jelly babies, gum bears and liquorice, has 19 production sites and 10 distribution centres around the world. Employing around 6,000 people worldwide, it exports to over a hundred countries. Yet keeping up with demand for its much-loved sweets and becoming more of a global player also brings with it the pressures of managing an increasingly complex supply chain.
Over the past decade, Haribo France has structured and streamlined its supply chain by redefining the logistics set-up and putting in place a dedicated planning team. New forecasting technology recently implemented through specialist provider FuturMaster
has led to significant savings in stock losses and wastage and improvements in customer service levels.
Pick n Mix
According to research from Kantar, over half of people purchase sweets on the basis of an impulsive purchase and not knowing in advance what type to buy beforehand.
This, says Elsa Cros, a demand planning specialist at Haribo, makes sweets ideal for stocking plenty of different flavours and continually launching new lines and promotions to maximise market share.
Haribo is the market leader in France, where it’s the number one gums and jellies brand. In 2018, Haribo saw sales rise to €248m, meaning it controls over a third of the total market, valued at €705m according to independent figures from Nielsen.
Within the last year, five new Haribo stores have opened in the outskirts of Lyon, Paris and Cagnes sur Mer, in addition to existing stores in Paris, Marseille and Toulouse, as well as a museum of sweets at one of its factory sites in Uzes, France.
Planning new ranges, promotions and seasonality play an increasingly important role. The biggest selling periods for sweets are generally around Halloween and also during the February spring-break Carnival season - particularly celebrated across southern Europe and in Latin America.
Cros believes that launching new products is one of the best ways of driving sales in the sweets category. Out of the top twenty best-sellers in the sugar confectionary market, eleven were Haribo - whether new variety packs or new flavours. Its first foray into chocolate covered marshmallows has proven at this stage a successful and promising initiative. New reduced-sugar sweets have also been launched.
Nonetheless, planning new ranges and trying to forecast ahead the exact quantities of 800 varieties of products at different times of year (and delivering them as and when required to thousands of retailers) is not an easy task.
From its two distribution centres and factories in France, over 50,000 tonnes of sweets are manufactured a year and 18,000 deliveries are made to retailers around France, with 30,000 pallets destined for export.
“Taste and preferences vary from country to country and region by region, so we have to adapt to each accordingly,” says Cros. “For instance, Italians are very fond of liquorice, so the product mix needs to reflect this.”
Before implementing FuturMaster demand and promotion planning software in 2017, the complicated task of managing supply and demand was mainly manual, and, says Cros, extremely laborious.
“We used to spend a lot of time on manual data entry before, although not that regularly,” she said. “There’s much better integration today and more collaboration.”
Now, automated systems are in place to provide accurate forecasts and detailed production and promotional plans up to a year in advance. The introduction of a dedicated S&OP (sales and operations planning) programme also ensures that every department - from sales and marketing to production and finance - are regularly involved in exchanging information and sharing goals.
Scheduling production and making sure that the right ingredients and packaging materials are available whenever and wherever required is another important aspect of using the software.
Up to 3,700 trucks running regularly between the various factories and distribution centres Haribo manages across Europe helps facilitate this and keeps stock moving.
Since the deployment of the new technology, forecast accuracy has gone from a previous low of 60% up to 80% and service levels approached 99% in 2018. Within the last year or so, slow-moving stock and the amount of product obsolescence have been divided by three.
Sales are also up in 2018: 1.7% over the last year, compared to an average drop of 3.1% across the confectionery market, according to research data from Nielsen. In France, Haribo now controls 39% of the entire sweets category.
Next, Haribo plans to hone its sights on further improvements in the supply chain, including better planning of promotions and seasonal launches with retailers.
In FuturMaster’s latest version of promotion planning tools, new developments in artificial intelligence (AI) are making it easier to predict with greater accuracy what types of products consumers are most likely to want to buy. For instance, machine learning can be used for taking into account many other outside factors that might influence demand, such as monitoring the weather, or social media feeds.
AI can also help identify and alleviate problems of popular items selling-out, making the manufacturer more reactive, especially in case of new product launches and promotions.