What the Head of Logistics of Nestle is Thinking and Why are 3PL Contracts So Short?

Last week I had the honor of being invited to speak at the Supply Chain Canada conference, just outside Toronto in Mississauga.

I was asked to speak about the latest trends in 3PL selection criteria and contracting, and I based much of my presentation around a survey we had conducted on this topic last year.

One of the central themes I explored with the audience was why 3PL contract renewals tend to have a shorter contract length than brand new contracts, and with this in mind, what message does it send out to the 3PL with regard to any long term 3PL relationship, where real innovation and results could be realized, if the contract is only ever for 1 or 2 years.

When I asked the 3PLs in the room if any of them believed they had provided a real innovation to their clients, not one person put their hand up…..so I simply inferred that maybe the 3PL service is really then a simple commodity – that got the debate going ;0)

I also had the pleasure of listening to Robert Vallender, the Head of Logistics for Nestle. I know Robert is an engaging speaker as he had recently spoke at our 3rd Retail and Consumer Goods Supply Chain Summit in Dusseldorf, and he did not disappoint.

Here are a few brief takeaways from his presentation.

• Health Sciences is a big growth area for Nestle, ie. Selling the specific food, vitamins etc to help treat medical conditions such as Cancer.
• Nestle have 90,000 SKU’s, 7800 trucks, 15m sq ft of warehousing and 160,000 suppliers
• Nestle own 483 factories. New factory openings now have to approved by the Supply Chain dept.
• Nestle are working in a VUCA world (Volatility, Uncertain, Complex, Ambiguous)
• Volatility for example: There have been 16 instances in Europe where people with perfect fake documents from transportation companies have driven away the goods.
• According to Robert, the next best place for e-commerce is China and Japan
• There is a big opportunity for Natural Gas in Europe as well as North America, including the use of Methane Gas, which Eddie Stobart are using.