August 17, 2015 Industry news
David Hix, Director of Supply Chain for Nestlé UK and Ireland, who recently joined the Supervisory Board of GS1 UK, discusses the ongoing challenges the retail industry faces and the new channel realities it needs to come to terms with.
1. What are your expectations from joining the GS1 UK Supervisory Board? What role does GS1 UK play in supporting Nestlé UK and the retail industry?
Nestlé UK have a longstanding relationship with GS1 for over 20 years. The work of GS1 is of huge importance and increasing relevance to what we do at Nestlé UK. We aim to achieve efficient and responsive supply chains, and deliver quality products to customers on time.
When I lived in Australia for 3 ½ years, I was heavily involved with GS1 and also served on their Supervisory Board. I got a huge amount out of that experience, both from a personal and business perspective. I’d like to think I was able to positively contribute to the ongoing successful work of GS1 Australia – I am keen to do that here too.
2. What are the top issues the retail industry faces today, and what are your objectives as Nestlé UK in particular?
I’m still amazed that the major retailers in the UK are not using Global Data Synchronisation (GDS). In Australia all three key retailers are on it and it works extremely well. Given the cost pressures that both we and the traditional retail customers are under – there’s a huge efficiency waste elimination opportunity by using GDS.
At Nestlé UK we are key participants in the work that is done for the GDS initiative. It is an important issue for the industry going forward in order to provide better data for consumers in retail outlets. We are currently participating in a Foodservice initiative to that effect but with the delay of one of the leading grocery retailers, this is now on hold.
The whole area of e-commerce is booming and therefore there’s an increasing need and a growing demand for us, as suppliers, to share larger amounts of data around our products with our customers and consumers – I believe GS1 standards have a key role to play.
3. We hear about how brands are directly targeting the consumer – rather than through grocers – resulting in the fast development of e-commerce. How has Nestlé’s e-commerce strategy evolved?
At Nestlé UK, if we identify something that adds value to the consumer, we will certainly pursue it. We split e-commerce into three categories. The first is our own brand.com. The two best examples are the Nespresso business which targets the consumer directly and our NESCAFÉ Dolce Gusto coffee capsules. Perhaps going forward, there’ll be other premium product offerings to support a brand.com stand-alone solution. We do explore potential offerings in this area, but they’d likely have to be premium product offerings. They’d have to have a compelling reason why the consumer would choose to buy just that one product from a bespoke website, rather than as a part of a broader shopping basket from a mainstream supplier.
The second one is the traditional retailers. Content management is key in how we win with them in the online arena, as a lot has to do with data exchange and search optimisation – both areas that GS1 standards have a vital role to play. The third one is the pure players, like Ocado and Amazon. We are currently working with both on optimisation opportunities.
4. These days, you and other manufacturers create many product variants, which can create issues in the supply chain when it comes to identification. How do you think GS1 standards can help?
GS1 standards can help by setting clear rules for the use of GTINs (Global Trade Item Numbers) to identify product variants. And there is a focus on the next generation barcode, where we can incorporate more data directly into a barcode. And although it is a bit of a slow burner, it is very important for our sector to stay close to that development, as it requires a good degree of investment to make it happen.
5. As part of your role on GS1 Australia’s Supervisory Board, what initiatives were you involved with in particular?
One main issue in Australia was the huge services component to the business and how they were established. In many meetings we talked about membership fees and how the money generated was invested in additional services. We saw our role as trying to fully represent our members and ensure their fees were being directed in appropriate ways.
An important service that GS1 Australia is invested in is the GoScan app – where you can scan a product’s barcode and be directed to a site with all its extended labelling information. We spent a lot of time talking about how we can help companies get on board more easily and accelerate the process so the investment in the app is beneficial to them.
Lastly, GS1 Australia is very well established in the CPG-FMCG industry. There were a lot of discussions on Board level about how to expand this success into other sectors and what help or advice we could provide our members.
6. Can you tell us a bit more about your role now at Nestlé UK?
I have accountability for Supply and Demand Planning, Procurement and Physical Logistics. Also, I manage the customer supply chain, i.e. the non-commercial interface with our customers around order-to-cash, collaboration around forecasting supply and demand planning, as well as any other areas that we, or our customers, want to explore. Finally, I have a small team for the continuous improvement of projects and capabilities, which we deploy across the business as and when required.
7. From your perspective, if you were to give us one steer as GS1 UK, what would be the single most important thing that we should focus on?
The biggest business priority is to come to terms with the new dynamic channel realities of e-commerce, traditional out-of-town retailers and discounters. E-commerce – whichever forecasts or predictions you look at – is set to get bigger and bigger. Finding the most efficient ways of servicing that channel is critical for us – and GS1.
Another priority is to work with the traditional retailers to help us jointly achieve efficiency and waste elimination. And lastly there are the discounters’ territories, who continue to grow and become more significant. We need to find an optimum Supply Chain service model for their unique ways of operating.
Our Supervisory Board
David was co-opted onto the Board in April and is standing for re-election in November 2015. The Supervisory Board is responsible for the governance of GS1 UK and the Board members perform a high level representational function. Meet the board here