Tetra Pak products are virtually everywhere. Since the early 1950s, the company’s coated cardboard packages have influenced food storage and delivery practices worldwide. Today, you’ll find Tetra Pak products in nearly every household and some 10,000 filling machines in operation at Tetra Pak customers – typically milk or other liquid food producers – around the globe. Fresh food products that have to be packaged quickly. “For us and our customers, it’s a disaster if the machines are standing still because they don’t have the right spare parts,” explains Klas Wimmerstedt, Director of Tetra Pak's Parts Supply Chain.
DHL serves Tetra Pak customers throughout Asia from the Shanghai warehouse.
Supply chain restructured
Ensuring that the required spare parts are at the agreed place at the specified time is no small job. Altogether, about 70,000 different part numbers need to be stocked at all times and distributed as quickly as possible to keep machines around the world running. “On average, we deliver a spare part to a machine at a customer every 20 seconds, 24/7,” says Mr Wimmerstedt. Like many companies, Tetra Pak found its supply chain challenged by booming growth in China. So in 2008, it begun restructuring its supply chain, making a location in China the focal point for the Asia Pacific region, and DHL its third-party logistics provider.
DHL entered the Chinese market in 1980 and is the only express provider there licensed to store both bonded goods (items that are not taxed until they are shipped,) and non-bonded goods (items sourced in China and destined for export) in the same facility. According to Sean Wall, Senior Vice President, Network Operations and Aviation, DHL Express Asia Pacific, that reduces costs and streamlines processes for Tetra Pak. Now, instead of Tetra Pak supplying a number of small warehouses in the Asia Pacific region from Europe, DHL ships directly to customers from the Shanghai facility. “This gives us a unique advantage in terms of the bonded goods,” says Mr Wimmerstedt. “Shipments move directly to the customer. The paperwork for duties and taxes is done later on, which is great both in terms of speed and price.”
Making the move to centralise the supply chain in China required high degrees of trust and flexibility on both sides. “There were a lot of unknowns. We were trying things we had never done before and worked it out as we went along,” says Mr Wall. “Tetra Pak had to put their faith in our customs-clearance expertise and trust that we could deliver.” The concept was drafted and the implementation planned as a team effort – which included First Choice workshops. The trust put in DHL paid off. Now, Shanghai is Tetra Pak’s best performing distribution centre in the world and its largest in terms of end-customer deliveries. In December 2012, one-third of all Tetra Pak replacement part shipments were delivered to customers by DHL Express Asia Pacific.
Special service satisfies customers
It is an example of successful customer collaboration that led to a custom-tailored solution. Boris Tranberg, Global Customer Manager for Tetra Pak at DHL Customer Solutions & Innovation, knows that other companies are keeping a close eye on the collaboration as the centre of gravity for world manufacturing shifts towards China. “It is an interesting business model for many customers – but you need guts to make the decision that Tetra Pak has made.” Mr Wimmerstedt admits he was initially worried about the transition to the new distribution structure but now he is more than happy with the result. “We are very demanding – but we also appreciate it when things move in the right direction. Together, we’ve been able to push the limits of performance. All in the interest of our customers.”