Our strategy

Performance
summary 2020

R74 million procurement
R302 million in manufacturing savings
R98 million in logistics savings
New capex approval process initiated
5% reduction in consumer and customer complaints
25% reduction in marketplace incidents, with zero public recalls

Fuelling growth through customer service excellence

We made further progress this year in embedding a customer service mindset across the business and began the implementation of the Centralised Customer Service Centre. We have continued to invest in manufacturing sites and have engaged with key customers on collaborative forecasting and joint business planning.

We maintained a strong focus on product quality and consumer safety, implementing a detailed quality strategy to ensure that we have robust integrated management systems, qualified people and a strong quality culture embedded across the organisation. We further strengthened our internal and external audit and assessment processes, conducting quarterly self-assessments against the Global Food Safety Initiative (GFSI) requirements and achieving external certification for all our manufacturing facilities againstglobally recognised food safety standards such as FSSC 22000 and HACCP. All our warehouse facilities were audited by an international certification body, in preparation for certification in FY21. Tiger Brands joined the European Hygiene Engineering and Design Group (EHEDG) and will use their guidelines as the manufacturing hygiene standards across our operations. On food quality, we maintained an improving trend, ending the fiscal year with zero public recalls, a 25% reduction in market-place incidents and another 5% reduction in consumer and customer complaints.

Be efficient

A cost-conscious and effective supply chain

To enable profitable growth through an effective supply chain, we have specific commitments to drive efficiency, maximise product availability, and deliver customer service excellence.

Unlocking costs and cash

Delivering sustained cost savings is critical to the success of our business strategy. This year we have introduced a step-change in how we engage the business on cost savings with the aim of ensuring a more systemic and widespread approach to unlocking savings and efficiencies across the business, and to enhance the quantity and quality of projects that are being identified and tracked. We have changed the governance structure, introduced clear steps from identification to realisation of savings, improved transparency, and driven stronger levels of accountability to ensure appropriate ownership of expenses. To help us identify cost savings and efficiencies, and to create a further pipeline of opportunities across the business units, we have set up revenue management capability in the business. We are looking to improve our SKU rationalisation by developing an accurate product costing model through the roll out of activity-based costing.

Through these various measures, we secured R474 million in savings across our supply chain in FY20. We have committed to delivering R470 million in savings and efficiencies across our supply chain in 2021.

Site optimisation supported by strategic investments

We initiated a new capex approval process this year, introducing a capital review committee that ensures appropriate ownership and accountability of the business case and introduced revised delegations of authority with the aim of expediting approvals and improving overall project delivery. During the year, various significant investments were approved aimed at increasing capacity, enhancing efficiency and realising innovation opportunities. One of our most significant projects was the R208 million capital investment in a brand new, state-of-the-art oat mill in Maitland, Cape Town. The mill includes several innovative features that have improved production efficiencies and significantly increased output, while reducing the operation's carbon footprint. As part of our commitment to enhancing livelihoods by providing opportunities for inclusive economic participation, a significant portion of the spend was allocated to local suppliers through civil engineering, building construction and engineering installations, and 120 people were employed in the construction of the new mill.

We have identified 15 "game changer" projects over the next several years – with capital expenditure of ~R1,5 billion per annum – focusing on capacity in categories with a sustained increase in demand, enhancing efficiencies, maintaining compliance, and replacing ageing plant. These projects include a new bakery and mill, upgraded pasta extrusion and packing lines and new lines in beverages, the installation of standby generators, solar PV systems and steam boilers, and various digitalisation and automation projects.

In the near term, several opportunities across the supply chain have been identified that will drive improved efficiencies and cost savings. We will prioritise the improvement of overall equipment effectiveness (OEE) through best practice application by focusing, among others, on key lines and processes, line capability studies and maintenance practices. These efforts will be driven by monthly steering groups. In addition, we will enhance controls and implement a tracker and review process to monitor materials usage. Although significant inroads have been made with regards to procurement and continuous improvement initiatives over the years, the next phase will require cross functional collaboration to accelerate the delivery of a robust savings pipeline.

Delivering digital transformation

Delivering digital optimisation and providing integrated IT and information solutions is critical to realising our vision of developing an effective, best-in-class supply chain. During the year, several automation projects were completed, including the latest form fill and seal technology at Davita, in-line PET blow moulding equipment at Beverages, and online labelling technology at the Groceries plant.

We have approved an IT strategy aimed at harnessing artificial intelligence, real time data, IoT (Internet of Things) and big data analytics to enable more informed data-driven decisions, deliver operational efficiencies, boost productivity, and ensure compliance. A detailed digital roadmap has been developed to assist in delivering improvements in stock availability and inventory modelling, ensure better traceability across the supply chain, enhance forecast accuracy, and improve customer collaboration.