Gerrit Buitenhuis (Sligro): ‘Our Logistics Challenge Is Quite Simple’

Buitenhuis - energetic, athletic, focused - has turned 59 in the past year. ‘My best before date is almost due,’ he says cheerfully. For eight years now he has overseen the logistics part of Sligro Food Group. ‘And still there is a lot of work to do.’ He feels in place. He has never reluctantly driven from his hometown of Kampen to Veghel, Sligro’s home base since the year it was founded in 1935. ‘If you go to work reluctantly, you should quit. Immediately. Fortunately, I have never had that feeling. My work is never boring. I am in a continuous process of change and improvement. That never stops.’

We are here in Veghel, at Sligro’s Central Distribution Center (CDC). This is where Sligro was once started by the Slippens family. Is Veghel a logical place for a CDC?
‘Super logical. (Buitenhuis walks over to his whiteboard and quickly draws a map of the Benelux). This is the Netherlands. And here we have Belgium. Sligro is here (dot on Drachten), we are here (dot on Deventer), here (Maastricht). ‘We are in Belgium’ (dot on Evergem), we are everywhere (more dots). And Veghel (big cross in the middle of the map) is very centrally located. It is almost impossible to be more central. We recently did a transportation gravity point study and it showed that in the ideal scenario we would have to move a little bit more to the northwest, (small cross towards the left and above Veghel), more towards Geldermalsen. But such a move does not pay off and moreover is simply unthinkable, it is like swearing in the church. Just as Albert Heijn belongs to the Zaan region, Sligro belongs to Veghel. We are in an excellent position here.’

How do you decide where you want to be with your branches?
‘When we added Heineken (Sligro has been conducting a large proportion of Heineken’s logistics activities since the end of 2017, ed.), we reviewed everything. Where are our customers, where are Heineken’s customers and how can we best serve them? That requires precision. If you position a distribution center ten kilometers or so wrongly, it can be enormously costly. We did a transport study with an external partner. We used the results to structure our branches. They are now well spread across the map in such a way that they can support each other. If we do not have a product in one distribution center, we will have it elsewhere. Then we get it from there. That way we are always shuffling. The customer does not care whether they are supplied via location 1 or via location 2. For us, of course, it is a permanent puzzle that we can only do with the help of good data.
The art of logistics is to keep all your stock in one location for as long as possible. We want to have our little theater as well filled as possible. (Buitenhuis stands up and draws a theater room on his whiteboard in rough sketches). Look, this is our theater. We give a wonderful performance here on the stage. And there, in the auditorium, are our customers. However, the problem is that all our customers want to sit here (Buitenhuis draws figures on the front row). No one wants to sit here (crosses on the back rows). But does that mean we should keep building new theaters so that more customers can sit in the front row? Or should we entice people to sit in the back rows as well?’

For, define your customer....
‘We are in a fairly conservative market. The customer wants to be able to order late and receive delivery early. That is just the way it is. That is difficult to change. Our distribution centers are bulging in the middle of the night and are completely depleted with two or three shifts in the morning. Around 2 p.m., all the vehicles return and there is no more work. Of course, it would be appealing to us to spread this out more. We have to look for customers who also find it attractive to sit a little further back in our theater. We will have to consult with all parties to change that. There is still a challenge there.’

Can you give me an outline of your daily logistical challenge?
(Buitenhuis wipes his whiteboard clean and draws four new blocks). ‘Actually, it is quite simple. We have four goals. One: we want acceptable shelf availability in all our stores. Two: we want a good service rate in our delivery service centers. Three: we want to deliver everything on time. And four: we want a satisfied employee. And note: I mention the employee last, but for me everything starts with the employee and not necessarily with the customer (big arrow that puts ‘the employee’ in spot-1). To meet our four goals or KPIs, we need to do only three things well. (Buitenhuis draws three new blocks at the bottom of his whiteboard). One: place the correct order with our carefully selected suppliers. Two: process the suppliers’ order correctly within our locations. And three: deliver the stuff to our customers on time, complete and with a smile. At the end of the day, it is only three things to get right.’

It is ‘only’ four KPIs and ‘only’ three things you need to get right. Still, I suppose each of those KPIs has its own challenges....
‘Of course. But I always try to keep it as practical as possible, make things simple.’ Laughs: ‘Besides, that way I still manage to understand it myself. Above all, you should not make it more difficult than it is. And above all, you should not forget who is important in this story. And those are, for example, the people who assemble the orders for us every day. Try doing that every day. And go do that in our freezer cell. If our employees, our drivers, do not feel like it on a given day, the business process will not work at all. Besides, they are my direct contact with the customer. That is why I find it important to listen to our people. What do they like, what do they not like. Sometimes you cannot do anything about it, but sometimes you can adjust things, improve things.’

Can you outline how you make transportation as efficient as possible, for example? What are the challenges there?
‘The crux is always the driver. One of the biggest challenges is around personnel. In the Netherlands we currently have a shortage of about 15,000 to 16,000 drivers. And the Dutch driver is also aging. It means we frequently turn to foreign drivers who often work on a temporary basis. Finding a good driver is a big challenge. On top of that, there is a trend in Dutch cities to only allow small cars into the city center. We like to go to the customer ‘as big as possible’, preferably with a large truck that fits 27 roll containers. But a city like Amsterdam does not want big trucks all over the city anymore. To that end, we have now purchased smaller trucks. But smaller trucks mean more trucks and therefore more drivers. And speaking of efficiency: if we can leave a customer in one minute faster, we have 1 million euros less costs over the whole year. So, we prefer a driver who knows the customer, the route and the unloading situation well.’

These have been turbulent times for Sligro. During the covid pandemic, the delivery service was heavily reduced. Then we had to deal with recovery, and then geopolitical crises such as the war in Ukraine. We face interest rate increases and inflation. How do you respond to that?
‘We used to talk about ‘flexibility’ and ‘being dynamic,’ but ‘agility’ has been added. That is an important concept these days. In response to the corona crisis, for example, we took a hard look at our workforce, especially the ratio of permanent to flexible. We adjusted that ratio. We now have slightly less ‘permanent.’ We also used the crisis to make a move in terms of sustainability. We want to keep driving into cities like Amsterdam, but electrically. That is a development we have to move towards anyway. We have given that an impetus by purchasing 50 new electric trucks.’

Looking at the past few years, it seems as though Sligro is evolving into a logistics service provider. You already mentioned being a transporter for Heineken. Sligro has also taken over some of the activities of carrier Simon Loos ... is the company moving more in the direction of logistics?
‘We are definitely not making a transition into a logistics service provider. Not. None. In fact, parties quite often ask us whether we would want to do their distribution. We do not want to do that. Heineken was a beneficial deal. Their customers and our customers largely overlap. They do the beer, we do the bitterballen. But no, it will stop there. We certainly do not have the ambition to become a logistics service provider for others. Nor do we have the ambition to start delivering to the front doors of private individuals.’

And if there is a request from government to arrange transportation to inner cities for third parties?
‘I would not per se find that an illogical question. If anyone has to drive, it would be us. We are, after all, the largest. But it requires extensive planning. Our cars driving into the inner cities are in fact already always full. Moreover, we have an extremely large assortment of more than 75,000 items. We supply almost everything. Would we have to drive for the competition? I still see hurdles there, although we will certainly not immediately reject such a request.’

When you look at your work week, what is the relationship between the short and long term, between today and tomorrow?
‘Without today, there is no tomorrow. Our management team realizes this very well. Our entire team consists of people who enjoy being in the business. It is not our style to devise complex scenarios or complicated strategic plans. We are very much engaged in today’s market. There is a substantial amount of work to be done this year and next, and that is the focus. But on the other hand, if you do not think about tomorrow, it could be over today. There is also that realization. So, while we deal with today, we keep an oblique eye on tomorrow. If I had to make an estimate, I would say: I spend 15 to 20 percent of my time thinking about tomorrow, the rest about today.’

In your profession, a decision you make today may not have an impact until the longer term. If you decide to build a new distribution center today, it will only have an impact a few years from now. How do you deal with that?
‘We are careful with our investments. We always carefully consider revenue expectations and customer growth expectations. On that basis we make decisions. We are especially cautious with large, irreversible measures. The steps we are taking towards the future are small in scale. At our delivery service in Amsterdam, we are now doing a small-scale mechanization for returnable packaging. The moment we have taken that step, and it meets expectations, we are going to see if we can introduce it at the next location as well. We will never do it all at once. And we will never take big risks with our Central Distribution Center. We will never invest 100 million there in a robot that we are not sure is going to move us forward.’

I find it intriguing that you are vigorously outspoken. You will ‘never’ make an investment of 100 million, you will ‘never’ do it all at once. Why is that?
‘There is not one party in the industry we are in that has done super-successful large-scale mechanization. It is quite simple: the margins in our business are not high. And the costs are rising. We now have additional costs again because of the attacks on ships in the Red Sea. Believe me, we will get supplies replenished. But it can probably only be done at a higher cost. We have to watch the cents. Moreover, I think that in a large-scale transition you can easily lose control. With small-scale mechanization, you have quick payback times. Continuous improvement - that is what it is all about. Continuous improvement, direct results. I feel very strongly about that.’

This interview was published in Management Scope 03 2024.