Glencore Grain NZ is part of Glencore International, one of the largest commodity traders globally and New Zealand’s leading importer of grains and meals. The company’s operations see products imported then transported around the country to various distribution centres, each of which was operated by a different service provider.
Regal provided Glencore with a one stop shop for the management of its nationwide distribution network. This included 250,000 tonnes of storage capacity and the processing of 850,000 tonnes of product through its stores each year.
The number of different service providers managing Glencore’s distribution centres meant the company was receiving inconsistent levels of service. This included limited opening hours, long waiting times to get loaded, long loading times, and periods when processing (screening) could not keep up with demand.
In addition there was inconsistent pricing, complicated multilevel invoicing and varying product quality. Storage was also an issue. In one key distribution hub, Glencore relied on a combination of incumbent owned and other substandard storage spread across the city.
We’ve had improvement from day one which was noted by many customers"
Regal became Glencore’s nationwide service provider for store management. This meant Glencore had one primary point of contact. Regal’s Shipping and Storage Coordinator is supported by the owners, the entire Regal management team, and by multiple store managers, all of whom have regular operational and strategic meetings.
Todd Ormandy, merchandising manager for Glencore Grain NZ says Glencore had worked with Regal in the Waikato through to Northland areas for 15 years and were keen to streamline this service and replicate it around the country. “Regal’s full service offering fit into how we were working strategically, and the better service they’re offering has enabled us to be more strategic,” explains Todd.
Brett McHardie, joint owner and managing director of Regal Group, outlines the other benefits this model provided Glencore:
“As the sole operator we could ensure consistent service throughout all stores and provide greater flexibility with opening hours when required to meet demand. Significant investment in machinery, specifically loaders and screening equipment, allowed for improved store throughput and improved / consistent product quality across all stores,” Brett says.
The pricing model was also simplified.
“Historic pricing was complicated with partial payment made for various handling charges, from shipping discharge through to collection by the end user. The revised model saw one fee charged when the product was discharged from ship to store.
“One invoice covered all cartage, store handling, and processing. This included all miscellaneous charges associated with the stores, which although small in amount, caused significant processing hassle,” says Brett.
Taking on the management of all stores required a significant short-term injection of personnel from existing stores as well as from the management team. “Regal worked closely with various vendors until suitable short-term facilities could be secured,” explains Brett. “Two new facilities, one in the North Island and one in the South Island, were then planned for by Glencore. Regal were called in to assist with these projects, playing a key role in the planning and design of these facilities, including modelling various design options to ensure maximum capacity for every lease dollar.”
One provider meant greater operational transparency. “Better knowledge of the full picture allowed better sharing of knowledge and expertise, which resulted in better utilisation of resources and more favourable long-term results,” says Brett.
The extended store opening hours saw an increase in sales in various locations of up to 15%, while larger loaders resulted in reduced loading times from 40 minutes down to 10 minutes. This, in conjunction, with extended opening hours, reduced waiting times by half. Larger screening equipment resulted in significant increases in production and no lack of supply.
Glencore also benefited from better pricing. “There has been a significant reduction in invoices and processing time and invoice queries have all but been eliminated. There is no longer a delay or queries regarding getting the small stuff done,” says Brett. “We just do it as it is all built into the one price.”
Furthermore, no capacity limitations have been experienced. “The short-term solution allowed for the planned exit from previous service providers’ own stores, whilst improving the calibre of facility from which customers’ product was processed and collected,” explains Brett.
“The long-term solutions came on line within the expected timeframes, at quoted lease rates and with expected capacity. The South Island store has all product for this area under one roof and an exit from multiple substandard leases.”
Todd Ormandy says Regal has simplified the paper trail and made life a lot easier. “They have also driven a number of initiatives, helped us on occasion with store layout and design and pushed some key ideas,” he says. “The IT systems they have implemented and the live data system they have driven have helped our inventory and real-time analysis of stocks, as well as tracking of vessel discharge.”
Throughout it all, a priority for Regal was to make the transition as smooth as possible to ensure minimal disruption to customers. “We’ve had improvement from day one which was noted by many customers,” Brett says.
Regal’s national service offering to Glencore is an example of the Group’s complete vertically integrated logistical solutions model in action.