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Energy & Resources

Supply Management Expertise in Dynamic Markets

Innovating Supply Management Process to Enhance Optimization

From dealing with extreme climatic conditions, to a complex supply chain, one of the biggest challenges operating in the remote far eastern Russia region is not only getting all supplies transported during the short delivery window but ensuring the quality of the products upon arrival meet Sodexo’s high standards to best serve the residents onsite.

Since 2010, Sodexo has been providing foodservices, cleaning, technical maintenance and accommodation services for Kinross’s remote mining sites located in the Chukotka region of Russia as well as their regional headquarters in Magadan. Our dedicated team understands the importance Kinross places on operational excellence and takes an active role in the supply management process to ensure process and cost optimization.

Working side by side with Kinross, our procurement and logistics experts in Russia established an innovative approach to the supply chain design that has significantly increased savings, improved efficiency and enhanced consumer satisfaction.

The supply chain process to remote sites is very complex. It involves many stakeholders making it challenging to get the right product at the right place, right time and at the right cost. At Sodexo, we do not settle for status quo.

Our teams continue to further develop of our procurement capabilities and enhance our supply chains to exceed our clients’ expectations and drive added-value.

Strategic Sourcing to Improve Product Quality

The total delivery time for goods is over 7 months spanning over 11,500 km, which raises the shelf-life requirements for goods to 24 months. The local challenge is most product categories are restricted to 6-12-month span under Russian regulations. So, we innovated our sourcing approach and partnered directly with suppliers to tailor make goods with a 24-month shelf life, in particular for protein foods as it is a key category in our procurement needs.

Not only did we focus on a longer shelf life – but also insisted on improved quality and excellent Health, Safety & Environmental (HSE) compliance in operations. In selectively building our supplier network, we were able to provide better quality goods with a significant reduction in risk for potential foodborne diseases. Moreover, we were able to source 65% of the goods locally compared to the previous average of only 35%.

Ensuring Excellence Along the 11,500 KM Journey

Another key challenge in operating on the remote locations is ensuring consistent product quality along the long delivery route under extreme climatic conditions. The only option to replace defective products once onsite is by air shipment at an exorbitant price. Our solution evaded this costly risk by implementing a new product testing process to ensure quality before being shipped. Then taking a step further, we installed sensors in the refrigerator containers with real-time monitors to prevent cargo losses and in parallel retain product quality as well as shelf life.

Optimizing Delivery Route to Drive Savings

As Kinross was incurring significant logistics costs in shipping empty containers to our distribution centers, we worked closely with Kinross to optimize the logistics network to increase savings for both Kinross and Sodexo.

First off, we reorganized the distribution process to directly deliver some goods to the seaport to avoid the empty container shipment costs– a $100K cost savings. We also optimized the cost of goods delivered by buying directly from the manufacturers at a negotiated volume discount and transporting them by heavy vehicle at a lower price. This reduced the cost of goods delivered by 6.5% per ton.

Download the full case study

April 19, 2019

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