Sourcing Packaging Globally Boxes Up Savings
Hungry to reduce food packaging costs, Church's Chicken flies the domestic coop and finds an economic supplier on the other side of the world.
Church's Chicken takes a strategic approach to supply chain management with a bottom-line goal of finding the lowest possible cost and most efficient way to get products to franchisees. When Church's found an area of opportunity for cost savings in sourcing paperboard for food boxes, it collaborated with Huhtamaki, a global food packaging specialist, to source the paperboard used in producing the restaurant's boxes and cartons. Huhtamaki was able to produce the paperboard more cost effectively than domestic companies, and help Church's reduce associated paperboard costs by four to five percent.
At quick-service restaurants, it's not always easy to find the perfect recipe for serving quality products at affordable prices. These restaurants meet a need for a pleasant dining experience with good food at a low price point, often in neighborhoods that may be struggling economically. For Church's Chicken, keeping its promise of delicious, high-quality fried chicken—right here, right now— is paramount.
Founded in 1952 in San Antonio, Texas, Church's is one of the world's largest quick-service restaurant chicken chains. The menu focuses on fried chicken, honey-butter biscuits made from scratch, and classic home-style sides. Church's, along with its sister brand Texas Chicken, operates more than 1,650 locations in 27 countries and international territories with system-wide annual sales totaling more than $1 billion.
Christopher Ward, senior vice president of global supply chain for Church's, leads the company's supply chain, purchasing, distribution, and logistics teams. All these functional areas impact what Ward views as a key responsibility of his team: to help franchisees meet fulfillment challenges so they can focus instead on driving sales, pleasing customers, and building the brand.
Ward and his team regularly examine Church's entire supply chain network, not only to ensure that the system is on track, but also to identify areas of opportunity. "We look at what we're currently doing, plan the work, and work the plan," says Ward.
To find the most effective way to get products to the restaurants at the lowest cost, Ward and his team work closely and collaboratively with distributors and suppliers.
At Church's, Ward leads supplier diversity programs and strives to understand the way distributors and suppliers operate. He then works with them to find ways to operate the business more effectively, which, in turn, helps Church's save money and improve products.
Ward spends a lot of time with suppliers, but not with the sole intention of repeatedly asking them to reduce prices. Rather, he works to establish true partnerships.
Cost Savings Opportunities
A recent network analysis revealed an area of opportunity for cost savings in sourcing paperboard used to manufacture food boxes. The solution Ward found to producing more economical boxes came as a result of what he calls "literally thinking outside the box.
"We started looking not just domestically, but at the entire world as a source for products we need for our restaurants," he says.
Taking a world view led Ward to Huhtamaki, a global company with a network of 74 manufacturing units, 24 sales offices, and a presence in 34 countries. Huhtamaki helps quick-service restaurants with their paper and plastic product needs, and specializes in food and drink packaging. The company produces the paperboard Church's needs at a more cost-effective price than domestic suppliers.
Church's did not make the decision to source paperboard globally without a great deal of due diligence. Church's assembled a cross-functional team to analyze the advantages and disadvantages of using Huhtamaki as a paperboard product supplier. Ward also visited its manufacturing facility in Sweden and saw firsthand the company's state-of-the-art equipment and technology.
How is it possible for a product manufactured across the world to be more cost effective than one sourced locally? Huhtamaki attributes its success to its network of manufacturing units in three distinctive technologies—paper, plastic, and molded fiber. Its diverse product offering provides the breadth necessary to cost-effectively serve companies such as Church's, according to Scott Stuckenschneider, vice president of supply chain for Huhtamaki.
In fact, Huhtamaki views its global operation as a competitive benefit to the company and the customers it serves.
"We see opportunities everywhere in the food and drink markets, just as our customers do," says Stuckenschneider. "And we are well placed to help act on those opportunities. Our broad global reach is matched by our established presence and experience in many markets—particularly those that are fast growing."
Assuring Quality and Low Cost
While cost is an important factor in selecting a vendor, quality is equally critical. "At Church's, we work closely with our partners to assure quality and that mitigates risk," says Ward. "We tested the Huhtamaki products extensively before rolling them out to our entire system."
Huhtamaki is able to deliver market-leading products because of its own rigor and commitment to quality. "We have strict requirements related to inbound raw materials," says Stuckenschneider. "Customers expect we will provide good product stewardship, and meet quality standards not just some of the time, but all of the time."
Global shipping can become complex, but robust sourcing and logistics practices can simplify operations. For example, Huhtamaki uses a transportation management system for increased visibility and decision support, working through its third-party logistics provider Transplace.
Although Huhtamaki outsources some logistics functions, Stuckenschneider and his team are involved in selecting modes and carriers. Church's transportation process encompasses a range of modes—from ocean freight for inbound raw materials to full truckload, less-than-truckload, and intermodal for other products. When choosing transportation, Huhtamaki evaluates all modes in all lanes.
Stuckenschneider makes it a priority to have contingency plans in place so that regardless of any glitch in the process, either locally or globally, Church's maintains supply chain continuity. "We have the capacity to source contingency raw materials from a wide range of suppliers for our customers," says Stuckenschneider.
Since sourcing paperboard packaging through Huhtamaki, Church's expects to reduce its paperboard costs by four to five percent, a significant savings considering it spends more than $10 million annually with Huhtamaki.
For Huhtamaki, working with Church's Chicken has been a positive experience as well. "It is always great to work with companies that think strategically," says Stuckenschneider. "Church's is constantly looking for ways to improve its entire supply chain, and is not afraid to make the necessary changes to achieve those improvements."