Background
As the UK entered lockdown as a result of the Covid-19 pandemic, panic buying of essential items including tea caused a massive spike in demand. With demand for products doubling in some instances, many companies struggled to keep up with supply, but Tata Consumer Products Ltd (TCPL), the parent of the Tetley tea brand in the UK, Eight O Clock Coffee in the USA and Tata Tea in India, managed to keep products on shelves and customers supplied with the tea they needed.
Innovation
To ensure that it could maintain supplies of tea Tetley’s UK factory in Teesside increased production by more than 40%. Their ability to adapt and respond to the unprecedented level demand owed much to their supply chain strategy on which WMG, University of Warwick had been working with them to enhance since 2015.
Process of innovation
Professor Jan Godsell from WMG led the team that analysed Tetley’s sales and stock data to create a demand profile. Professor Jan Godsell explains: “We identified an optimal level of utilisation that would keep TCL competitive and allow spare capacity to deal with fluctuations in demand. John Burdett, Global Operations Director for Tata Consumer Products Ltd, then used these recommendations to help set-up the supply chain strategy, which was rigorously tested during the COVID-19 pandemic as the demand for tea soared.
“It was both an exhilarating time and a frightening time. Because of the buffer management approach we had in place, we were able to deliver 35% surge capacity to supply our customers and consumers and keep the UK drinking tea. This meant we could react extremely quickly to the rapidly moving market conditions and gain competitive advantage.”
TCPL demonstrated how having a flexible supply chain can be used to react quickly to the market and enhance market performance, being able to respond to increased demand and maintain supplies of tea resulted in Tetley gaining market share during the Covid-19 panic buying period.
Through two Innovate UK grants, WMG also helped to develop SupplyVue analytics software. SupplyVue can assess a business’s end-to-end supply chain including production scheduling, planning and inventory management to suggest ways to optimise the supply chain. TCPL made the bold move to deploy SupplyVue just as the COVID-19 pandemic was reaching its initial peak, helping them to reconfigure their tea supply to Canada. When there are increasing levels of volatility along the supply chain, a phenomenon known as the ‘bullwhip effect’ occurs and this took place during the pandemic. It occurs when orders received from a customer are rounded up to suit production constraints resulting in a mismatch in stock levels compared with what is actually required.
John comments: “The end to end visibility that we have as a result of SupplyVue means we’ve eliminated the bullwhip effect – we saw no increased stock levels as we recovered from the panic buying phase of pandemic. Enabled by insight through analytics, we’re now collaborating across the supply chain and are using the end-to-end visibility to get a smooth, even flow of products through to our customers.”
TCPL are now looking at rolling out the same optimisation model into other supply chains and unlocking more value.
Professor Godsell comments: “As humans, we are subject to myopic loss aversion. This is a bias that means we tend to fear loss more than gain. In supply chains, it means that the fear of losing a sale, leads to a change in the production schedule that can lead to overproduction. COVID-19 exacerbated this effect.
“SupplyVue provided full end-to-end supply chain visibility, and the confidence to trust the current plan. This enabled customer orders to be fulfilled at lowest possible supply chain cost and the unnecessary costs of overproduction and excess inventory to be avoided.”
Slingshot