Agriculture

Case Studies

Warburtons

Managing Processes to Maintain Quality, Consistency, and a Superior Product

The client, Warburtons

  • Established in 1876 and remains a family firm headquartered in Bolton, England with twelve bakery locations around the UK
  • UK's largest independent manufacturer of bakery products: produces over 3 million loaves per week and sells some under private labels
  • Price points are as much as five times those of economy priced loaves, but products' taste and freshness drive the brand loyalty behind strong annual sales (CAD$851 million in 2006, according to The Grocer) and steady expansion of market share.

Business decision point
Warburtons commenced development of a supply chain to facilitate the export of over 200,000 tonnes of IP Canadian Western Red Spring wheat (CWRS) after a steady reduction in overall quality had started to become apparent.

  • Previous sourcing occurred through Canada's regular supply structure, which focused on wheat homogeneity and volume.
    • wheat pooled from thousands of producers
    • a narrow range of grades that did not necessary reflect end-customer requirements.
  • Storage and shipping practices could vary by producer, elevator, transport operator or loading terminal. Lack of traceability along the chain meant inability to apportion responsibility for any defect in product quality that occurred between on-farm production and delivery to the final customer.
  • Producers based growing practices on decisions that exhibited little or no correlation to end market or processor demands.
    • Their predominant focus was on yield, ease of handling, or external characteristics such as colour.
    • Motivation was lacking to monitor for internal traits that differentiate wheat for users: for example, enzyme level (indicated by falling number), or optimum protein rather than maximum or average protein.

Unmet needs

  • Greater segregation of wheat variety
  • Grading that reflects specific customer needs - and therefore specific markets for farmers to pursue (producer opportunity)
  • An information and handling system for matching inputs to those needed to produce the targeted end quality

Goals

  • Supply: encourage farmers to grow the desired varieties of wheat
  • Demand: ensure that the flour received at Warburtons' UK bakeries would meet exacting quality standards so that final products would continue to enjoy brisk retail sales.

Solution
Warburtons needed to devise an Identity Preserved system—not only guaranteeing the use of certified wheat seed but also instituting and monitoring correct processes for handling, logistics and quality monitoring. Initiating a supply chain supported by superior information systems would place Warburtons and its strategic partners in the driver's seat moving forward, not sorting through cargo to see how to manage what had already been produced.

Facilitating the capturing and sharing of information to create added value for the Canadian supply system was the responsibility of Cengea Solutions, Inc.'s Cengea Agriculture software solution.

Results
From an initial pilot of 30,000 tonnes, the Warburtons' supply chain has expanded to over 200,000 tonnes annually, sourced from a total of approximately Canadian 700 producers. Warburtons expresses commitment to the program by guaranteeing to purchase, for a premium price, wheat grown on contract to meet the necessary quality standards. Suppliers are aware that failure to meet Warburtons' performance and behavioral expectations will result in an immediate withdrawal of their contracts.

Warburtons consciously chose a Cengea solution to facilitate the open exchange of information on supply chain participants' performance and market demands. Warburtons realized that proactive operation of the supply chain would depend on this information flow. As well, the knowledge gained from sharing information could sustain the chain over the long term. It provides incentives for each player to follow processes and procedures necessary to producing consistent quality wheat, then flour, and eventually bread at Warburtons' exacting standards. Both producers and buyers would be managing the determinants of quality more effectively than in the past.

Benefits
Financial results stemming from the Warburton supply chain are readily identifiable. Warburtons' share of the UK market expanded by 18.5 percent in one year, more than twice the industry average for premium bakery products. The supply chains provide Warburtons with wheat that fits within tight quality parameters, enabling the company to operate its bakeries more efficiently and innovate to better effect than it otherwise could.

For producers, the benefits include an opportunity to secure premiums above those otherwise attainable. They can also reduce costs through understanding their processes more effectively, since the system allows them to compare the input of different resources with the combined output of chosen processes. Financial benefits extend to elevators and other members of the chain, too.

The advantages extend beyond financial benefits achieved only within the chain. For example, producers have begun applying lessons learned from their involvement in the Warburtons operation to other supply practices, reducing their exposure to risk even further by assuring sales on the open market as well as on contract. To illustrate: while the UK average for wheat that meets milling quality is less than 50 percent, Warburtons producers regularly achieve over 75 percent, even in difficult growing seasons.

Sources: Warburtons Family Bakery (www.warburtons.co.uk) and George Morris Centre (www.georgemorris.org)