Imperial Brands - ‘Building the structure of the future’: Supply chain innovation at Imperial Brands

‘BUILDING THE STRUCTURE OF THE FUTURE’: SUPPLY

‘BUILDING THE FUTURE’: INNOVATION

‘BUILDING THE STRUCTURE OF FUTURE’: SUPPLY CHAIN INNOVATION AT IMPERIAL BRANDS

Vasco Lemos, Head of Global Logistics at Imperial Brands on the company’s approach to revolutionising the supply chain during a time of significant change in the tobacco industry.

FORMED IN 1901, IMPERIAL BRANDS

IS THE WORLD'S FOURTH-LARGEST INTERNATIONAL TOBACCO COMPANY.

ver the past twenty years, the company has grown through the acquisition of some of the biggest players in the industry, including Golden Virginia, Drum and Rizla. But in such a competitive industry, consistent innovation is crucial for success.

Joining us today is Vasco Lemos, Head of Global Logistics at Imperial Brands, to discuss how the company is embracing new products and overhauling its supply chain strategy to drive change.

“It’s been a fascinating journey to see our transformation as a company,” says Vasco. “The market has shifted dramatically in recent years, as less and less people are smoking. Imperial Brands understood the need to change its business model, increasing investments in new generation products.

“There has been a huge change in our organisation, particularly

in our supply chain,” elaborates Vasco. “The commercial and manufacturing teams previously worked in silos, and the supply chain team was not involved at the core of the company strategical decisions. In order to keep our growth and become an agile, customer-centric company, Imperial is changing its culture, organisation, systems and processes. Following a transformation in the business vision, an end-to-end supply chain now plays a key role in being an agile organisation, focusing on operational excellence improvements through continuous optimisations and a performancebased behaviour culture.”

As Imperial Brands embarks on this new journey, the company is challenging existing business approaches to ensure mechanisms are in place to prepare for potential disruptions.

“We’ve taken a step back to make sure we have a full understanding

chain more efficient, but also more sustainable.

“By doing this, we have reduced the number of trucks on the road,” says Vasco. “This is incredible because we have committed to Net Zero emissions across our value chain by 2040. We’re trying to adapt quickly to improve our carbon footprint by making our behaviours more agile.

“SIGMOID HAS ALSO DEVELOPED AN AI TOOL WHICH IS DYNAMIC IN A WAY THAT WILL LOOK AT THE DATA AND ALLOW US TO PREDICT WHAT THE BEST SOLUTION IS DEPENDING ON TRENDS WITHIN THE MARKET”

of the end-to-end process,” says Vasco. “As an example in logistics, we started to review our shipment profile from factories to our warehouses. We began by setting and measuring a robust set of KPIs, this highlighted opportunities both in our truck fill utilisation (TFR%) as well in some of our processes which were highly manual.

“As a result, we implemented an end-to-end project pallet loading pattern review, which is now delivering a 10-15% cost reduction. This proves you can only manage what you can measure.”

Deploying this approach has not only made Imperial Brands’ supply

“To achieve this, we asked ourselves ‘Do we really understand our business from a supply chain perspective?’ So we started talks with Sigmoid Analytics (Sigmoid). We asked them to look at all our operations based in Germany, as this is our biggest market representing 20% of our total logistics costs. Sigmoid started a deep dive into all the elements –production, sourcing etc. They came up with a hypothesis on how we can work together with customers and be directional in our sales. We explained to our team that if we work in a different pattern, there will be a huge benefit to efficiency and sustainability within the company. We’re talking millions of euros in

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“YOU HAVE TO STAY DYNAMIC, WHILE HAVING A CLEAR VIEW OF WHERE YOU SEE THE BUSINESS GOING”

savings, just by changing a few processes that have been in place for years.

“Sigmoid has also developed an AI tool which is dynamic in a way that will look at the data and allow us to predict what the best solution is depending on trends within the market. These tools that we’ve implemented in Germany have been hugely successful and will likely be deployed in other regions across our supply chain network.”

Having a tool to help streamline this process has been particularly

beneficial within the FMCG sector, especially when considering the disruptions that have impacted supply chains globally over the past few years.

“To understand the supply chain is to understand the core systems behind operations,” says Vasco.

“You have to look at what the data is telling you, especially since we are in such a complex, dynamic environment. In the past five years we’ve had COVID-19, global conflicts and the Red Sea crisis. We’ve also had oil prices going up, inflation and volumes dropping. If we are

unable to be agile and react quickly to understand these trends, then we lose. And in order to be agile, you need to understand data quickly. That’s why we’re now investing in AI, data systems and these new technologies, to innovate as fast as we can.”

As the tobacco industry evolves, Vasco has a well-defined vision of the future for Imperial Brands.

“There’s a clear future strategy,” he says. “First, we need to focus on increasing the share of select markets, such as Germany and the UK where we are very strong. Second, we’re investing in newgeneration products, making these products an increasingly bigger part of our production, becoming more and more important to the company. Currently, we’re building the infrastructure to enable this new generation of products in a more agile way.

“It’s a very competitive environment, with a lot of uncertainty because new laws and regulations are always being introduced. So you have to stay dynamic, while having a clear view of where you see the business going.”

Learn more about Imperial Brands here.

ADDED VALUE

Recommended reading

“I recently read Start With Why: How Great Leaders Inspire Everyone to Take Action by Simon Sinek, which I found deeply inspiring,” says Vasco. “You can cleanly put his ideas in place in a company with a lot of moving parts. It’s helped me question our wider processes and better understand the bigger picture of the things we’re putting together.

“More personally, a book I’ve loved was Sapiens: A Brief History of Humankind by Yuval Noah Harari which is a book that’s marked me as a person.”

Challenging yourself

“I try to practise Brazilian Jiu-Jitsu every day that I’m not injured,” says Vasco. “I’ve done it for many years, and I strongly encourage everyone to do some kind of activity or sport. Staying active will bring your head to a different level and help you be able to take care of yourself and challenge yourself in a new way. Jiu-Jitsu is all about challenging yourself and staying calm in difficult situations.”

Connect with Vasco

www.imperialbrandsplc.com