Why is the supply chain so strategically important to AB InBev?

Why is the supply chain so strategically important to AB InBev?

Improving our ability to meet evolving customer and consumer needs is integral, and the supply chain plays a significant part in this. The role of our industry-leading supply chain organisation is to provide the wider business with profitable growth through the delivery of efficiencies and exciting consumers with superior quality beers and fast-track innovations. By innovating through discovery, development, and the scaling of technology, we can deliver fresh beer to markets worldwide while keeping sustainability a top priority.

Because of the nature of our business, the supply chain is at the centre of our operation. It involves the sourcing of perfect ingredients, the magic of brewing our great-tasting beers, the drum beat of packaging bottles or cans of beer, all the way to transporting them to the client or consumer.

Over the last few years, most production companies have experienced disruption in their supply chains. Delivering an agile and disruption-resistant supply chain is imperative and requires many components, such as experts throughout the operation, continuous improvement of technological solutions, automation to provide an operational network that is agile and adaptable enough, and real-time visibility of information and operations. Those organisations who are better prepared will be the ones weathering the storm better and enhancing their reputations as a reliable and trusted partner.

At the core of it all, we continue to strive for operational excellence through process and cost optimisation as we work towards the long-term plan of the wider business.

What do you consider to be the most important aspects of the supply chain process?

Day-to-day, we partner with retailers, bar owners, and wholesalers to bring our beers to consumers while supporting their business growth, striving to provide best-in-class service, as well as pursuing extraordinary execution of our brands on- and off-premise.

To ensure that we address customer and consumer pain points and have the ability to add value to our network significantly, we are always upgrading our supply chain process. We promote innovation and category leadership by constantly improving our operations to meet customer and consumer needs. We accomplish this by ensuring our supply chain is fully integrated throughout the whole value chain – it is an absolute prerequisite to succeed in this mission to meet customer needs.

We now more than ever recognize that our supply networks must stay nimble and flexible to respond rapidly in the event of a supply chain disruption — this includes thorough, extensive scenario planning. For instance, we have used it to prepare ourselves for any potential disruption in the natural gas supply.

Over the last two years, this due diligence has been critical, as has the development of new supply chains, the reactivation of old ones, and the exploration of alternative delivery methods.

In your own words, explain why forecasting is important. Please describe the forecasting methods with which you are most familiar.

Forecasting for us is an essential step of supply network planning, as it beats the drum for the entire value chain: from defining the required production volumes to planning future utilization of our breweries, sourcing the right ingredients and materials, and preparing right levels of inventories, warehousing and transport operations. All of this guarantees that we deliver the highest levels of service for our customers.

Historically, we have used time-series forecasting methods based on historical trends and seasonality with limited enrichment. More recently, we have been exploring causal models with machine learning for markets where we gathered enough visibility on the demand drivers, including promotions, events, holidays, etc.

We're currently implementing a major demand planning transformation, allowing for a more end-to-end approach – together with the right demand segmentation – enabled by a strong machine learning forecasting engine. We are always updating our models with recent historical data and supplementing our insights with what's going on in the market.

Which are some of the technological trends that excite you for the future of the logistics industry?

We're particularly excited by the potential of technology to improve the sustainability and footprint of our operations. From our brewing process to our logistics and more, we are innovating across our supply chain and ensuring that sustainability remains a top priority.

Since 2017, we have reduced emissions in logistics in Europe by 18.75%. Moreover, we have developed a roadmap that aims to be at net zero emission by 2040 across our entire value chain, including logistics, which would not be possible without exciting, new technological advancements.

" At the Core of it All, We Continue to Strive for Operational Excellence Through Process and Cost Optimisation as we Work Towards The Long-Term Plan of The Wider Business "

There are examples throughout Europe and globally where we have used innovations in technology to ensure our logistics operation is more sustainable. We have been able to decrease our carbon footprint while simultaneously improving operational efficiency thanks to our fully automated 80,000m2 warehouse in Magor. The site, located in South Wales, has robotic cranes that can pick inventory from pallets in under 60 seconds while operating over six floors and nine miles of racking.

Additionally, we have begun deploying short-haul E-Trucks across Europe to directly serve our on-trade customers, notably in Belgium, the Netherlands, and Germany, with the goal of reducing CO2 emissions by more than 500 tonnes annually. Since the beginning of 2022, every new short-haul truck we buy is a renewable fuel truck.

In our effort to run our whole fleet of long-haul trucks on clean energy, we are also investing in partnerships to scale HVO trucks (e.g., with our partners of EV Cargo in the UK) as well as piloting hydrogen and electric semi-trucks since these are the long-term technologies we believe in.

While technology has helped us cut emissions throughout the supply chain, it still needs to become more capable and affordable before it can be completely implemented at scale in our operations and across the whole network. While we aim to be leaders in this effort, we are also using biofuels as a bridging technology towards a net-zero means of transporting.

What kind of challenges are you currently facing?

One of the challenges we are facing is scaling the green technology we use across our supply chain. Technology develops at lightning speed, so it is imperative that large organisations drive the need for the newly developed technology and as a consequence, invest with us to make these advancements more scalable. By working in partnership with suppliers, NGOs, tech partners, governments & start-ups, we have the ability to positively improve decarbonisation legislation, build networks of fuelling/charging stations, and generate additional renewable electricity to help decarbonise the supply chain.

More recently, we have been impacted by the rising prices of commodities and inflation in general. The uncertainty of natural gas supply is a challenge where finding efficiencies in the supply chain plays a crucial role in helping offset commodity increases as well as preparing for the worst-case scenario of gas shortages.