The growth in air travel has created a huge global business, providing the catering support needed to sustain the thousands of passengers who are airborne every day of the year. Research has shown that in-flight refreshment and meals are seen as an essential part of the passengers experience. For the airlines, the standards and quality of catering provided are crucial to their reputation and brand identity. Expectations are high and gaining frequent flyer loyalty requires strong brand association and consistency, irrespective of the point of departure.
You can taste the product and enjoy the cabin service but the operations involved in stocking the aircraft are invisible. This of course, is how it should be. If the catering supply chain is working efficiently, the cabin crew shouldnt even have to think about the process. It all just happens. At each point of departure, the local catering organisation has available the correct amount of food, drink and clean linen for the next stage of the flight.
So how can this availability be achieved efficiently and without overstocking support warehouses throughout the world?
Fourth Party Logistics
The answer according to James Cameron, IT director for Pourshins, lies in technology and the expertise of a specialist business process outsourcer (BPO). Pourshins supports a wide range of international airlines, caterers, suppliers and product brokers by providing a comprehensive range of services, generally described as fourth party logistics (4PL).
The full scope of 4PL covers inventory management, inventory and equipment ownership. Services include optimised supply chain and business solutions, using web-based technology for sophisticated forecasting, product orders, management and delivery. Pourshins leadership in this sector is backed by the claim that it is the only BPO catering logistics business to publish verifiable service statistics.
Central to the companys operations is the Ross Systems iRenaissance business management system which was procured in 1999 as part of a Millennium upgrade project. With licenses for up to 40 users the system is based at the companys headquarters in West Drayton, Middlesex. Pourshins subsidiaries in the USA and the Netherlands can access to the system by Internet via virtual private network connections. Currently the business is running on the original version of the software which dates from the initial implementation. Plans are in-hand however to upgrade to the latest release by early 2005.
The company has changed dramatically in the five years since iRenaissance was installed, explains James Cameron. We have moved offices, we have moved facilities, and we have brought in new warehouses. Our mode of operations has changed for greater flexibility and to make better use of working capital.
We have stock, but do not actually own warehouses; these are all operated on a contract basis. Currently Pourshins has six warehouses; three in the USA and three in Europe. Contract transport services are also used for distribution and the company has moved out of manufacturing to focus its operations exclusively on logistics support. Key customers for the UK are typically airlines based either in North America, the Middle East or Asia; all serving European destinations. The companys US division provides a similar service covering US destinations.
Food quality and service is of paramount importance to the airlines. Menus are planned in detail to ensure variety and to make passengers feel at home. Airlines therefore control a significant amount of the provisioning. Product is sourced from national suppliers and forwarded to Pourshins for onward distribution to the caterers, who will then cook and prepare the meals for loading onto the flights.
Forecasting the stock volumes geared to flight schedules is key to the Pourshins service. Forward planning is a continual process. The company undertakes currency management programmes, buying stock at fixed rates and billing at fixed rates.
Processes have been designed to ensure that every caterer within a particular airlines European network is billed the same price for buying stock irrespective of their geographical location. Distribution charges are negotiated with the airlines and this element is billed separately.
Explains James Cameron: Split billing is a specific characteristic of our business. Effectively we are invoicing both to the caterers and the airlines, part of the costs associated with a single consignment. Another unusual aspect is that we need to track the sales that we make, beyond the customer, to our customers customers because that is really what drives the demand in a lot of our deals. And in some cases, we do this for the caterers themselves.
Essentially for each airline there is a range of nominated products that the airline will have instructed the caterers to obtain from Pourshins. Conversely the caterer is buying from Pourshins under direction from their customer, which is the airline. However it is the caterers who are actually placing the orders on a day to day basis although the final customer is the airline. In most cases it is ultimately the airlines who have the power to decide what they are buying, and who supplies it, so this makes our relationships more complicated than in most conventional businesses.
Accurate forecasts ensure that the caterers buy the correct quantities of food and are never overstocked. Airline food is very cyclical. Most airlines change their menus at preset intervals, to ensure variety for their regular passengers. Pourshins must be able to track this all the way throughout the supply chain, to ensure that all the stock is used by the end of each cycle.
Pourshins iRenaissance systems cover the finance ledgers, inventory control, sales order processing and purchase order processing. Although the company does not undertake any manufacturing operations this module is used to support forecasting. Material forecasts are updated three or four times a month.
Electronic links are used to read flight schedules. As new customers are introduced, the IT team develop the systems required to integrate iRenaissance with the airlines computer systems
James Cameron rates iRenaissance on various counts. It has stood the test of time because it is based on sound technology that seems to be able to cope with change. With Gembase it has a good engine and its functionality, specifically for the food industry, is excellent.
A deciding factor on its selection was its roots in shelf life. This was more than just last in first out. When you are forward planning, it is making sure that you are always compliant with use-by-dates, fresh supplies are ordered and it is not possible to ship material that is going to be out of date. Features such as lot traceability are also very important to Pourshins customers.
Another important aspect is that data is organised and stored in a way thats intuitive to access when creating reports. Pourshins produces a lot of customised reports to meet its particular business requirements, he adds.
In addition to operational requirements another challenge for the Pourshins IT department has been the continuing development of the business. A new US operation, Pourshins Inc, has been set up in Dallas covering catering services and airports across North America. The company has also made some acquisitions in the UK, such as Executive Lounge Services plc. The administration for all of these operations has now been transferred into iRenaissance.
Looking back over the five years since the Pourshins implementation went live, James Cameron notes that the company has continued to grow despite the events of 9/11 and its impact on the air travel industry. Sales have now recovered to over 50 Million turnover and the number of transactions on the system has grown significantly.
In conclusion James Cameron pays tribute to the support provided by Ross Systems saying: The thing that has most impressed me about Ross is the fast response we have received to questions or issues that we have raised through the web-based support facility. Having dealt with some ERP vendors in the past, where response may take months, our experience with Ross is different. If we do not get a reply in the same day, we are very surprised. And If we do not get a fix written within week we are also very surprised, as often it comes on the same day!
Occasionally you might ask a question and they do not have an easy answer and it may take a while, which is understandable. On occasions where we have been doing upgrades and run into problems at weekends or out of normal office hours, we have always been able to obtain a response from an appropriate Ross specialist from either the USA or the UK."