Pernod Ricard / the Absolut Company

SUCCESS STORY PERNOD RICARD / THE ABSOLUT COMPANY

TenderEasy enabled Pernod Ricard to modernize their procurement operations and optimize freight spend. The tool is now used to ﬁnd more sustainable transportation solutions in support of the Group’s sustainability goals.

ABOUT PERNOD RICARD

Pernod Ricard is the No.2 worldwide producer The Group remains true to its three founding of wines and spirits with consolidated sales of values: entrepreneurial spirit, mutual trust, and €8,448 million in FY20. The group holds one of a strong sense of ethics, as illustrated by their the most prestigious and comprehensive brand 2030 Sustainability and Responsibility roadmap portfolios in the industry, including: Absolut Vodka, “Good times from a good place” directly Ricard pastis, Ballantine’s, Chivas Regal, Royal Salute, supporting the United Nations Sustainable The Glenlivet Scotch whiskies, Jameson Irish whiskey, Development Goals (SDGs). Martell cognac, Havana Club rum, Beefeater gin, Malibu liqueur, Mumm and Perrier-Jouët The roadmap is based on four pillars: Nurturing champagnes, as well Jacob’s Creek, Brancott Terroir (the land), Valuing People, Circular Making Estate, Campo Viejo, and Kenwood wines. and Responsible Hosting – addressing all aspects of the business and its value chain from ‘grain to glass’. The Group’s decentralized organization empowers its 19,000 employees to be true As they look to create a more sustainable business, on-the-ground ambassadors of its vision of Pernod Ricard is taking a holistic approach which “Creators of Conviviality.” includes steps to reduce overall water use and CO2 emissions by 50% by 2030.

AN ALPEGA SUCCESS STORY ©Alpega 2 SUMMARY

s a global brand with a vast portfolio, Pernod Ricard has an obligation A to nurture every part of its supply chain and is committed to address both environmental and social responsibility.

Each brand within this decentralized organization plays its part in supporting Pernod Ricard’s sustainable journey. That means identifying ways, from process to technology, to advance the Group’s goals.

They did just that by ﬁrst modernizing its freight procurement process with TenderEasy, Alpega’s freight procurement solution; and then leveraging it within the Absolut brand to align the business with sustainability eﬀorts.

“We’ve realized about a 50%-time savings. But it’s not just the time savings. The quality of the information we get, and the quality of the information we give back, is so much better. It’s improving the way we do procurement.”

Petra Åkerblom / Senior Customer Service & Logistics Manager The Absolut Company, Part of Pernod Ricard

AN ALPEGA SUCCESS STORY ©Alpega 3 IMPROVING THE GLOBAL FREIGHT PROCUREMENT PROCESS

he freight procurement process at French distiller Pernod Ricard was challenged with many common T issues…time consuming processes and poor data quality. Prior to working with TenderEasy, all RFQs and annual transport tenders were performed with no system to assist in data gathering, analysis and evaluation apart from Excel – a cumbersome, manual method that cost the company time and money.

Pernod Ricard does big procurements with a multitude “We felt that our way of working wasn't very of carriers participating. A Freight Council was modern”, explains Åkerblom. “And the time it established comprised of a core team to handle the would take was a nightmare to be honest.” freight procurement of finished goods for the whole Pernod Ricard group. Prior to TenderEasy, keeping track Petra was introduced to TenderEasy in 2016, and it of everything was a challenge in Excel. Data integrity completely changed the way the Group manages its was always in question, despite efforts to assure the freight procurement – from gathering data to analysis quality of the data through locked cells or columns, as and evaluation to providing feedback. someone would always manage to bypass safeguards within the document. And it was extremely time-consuming to go through the Excel file over and “We tried it out, and oh my God, over to find anomalies or data inaccuracies. it’s so much better.”

Petra Åkerblom leads the logistics customer service team The top priority for their RFQ process is quality, and is responsible for freight procurement for Absolut and to conduct the selection process in an equitable and Malibu. She is also a core member of the company’s and fair way. TenderEasy supports this with qualitative Freight Board Council and handles all the freight data, and the ability to perform analysis across a procurement negotiations for the Group’s brands, and number of data aspects. then provides her recommendations to the Council.

MANAGING AND ANALYZING EXTENSIVE DATA SETS

The TenderEasy solution places the responsibility of Time is no longer spent on data checking, as there is no data quality on the carriers themselves, ensuring all risk of tampering. Time is also saved on specific data submitted bids are aligned and comparable. Pernod analysis. The tool allows for granular evaluation of Ricard was then able to run analytics, create scenarios, information such as transit times, or information with find incorrect bids and share feedback with carriers – parameters (‘show me transit times between 10 and 20’; a process that used to take months. TenderEasy enabled or ‘show me transit times and price’). Pernod Ricard to provide carriers with feedback within three days of closing the bid round and prepare for With TenderEasy, data analysis across a multitude of final steps of negotiations. scenarios takes only a few seconds. Pernod Ricard can choose the information they want to evaluate and be “When you’re doing a big tender, and assured its quality. Data integrity is no longer a variable compare different carriers, you need to within their freight procurement process. make sure you compare them equally. That’s what TenderEasy helps me do.”

AN ALPEGA SUCCESS STORY ©Alpega FINDING ADVANTAGES SCALING CARRIER ACROSS THE GROUP COMMUNICATIONS

Pernod Ricard is a decentralized company, and prior to When Pernod Ricard facilitates short sea tenders establishing the Freight Council, each of the brand (domestic EU - truck, rail or ocean), they have a lot of companies handled their own procurements. The purpose forwarders, truck companies, and 80+ carriers of the freight council is to identify and leverage synergies participating. Prior to TenderEasy, they couldn’t provide across the group i.e. if Absolut uses one carrier for going each one with detailed feedback on quoted lanes because to Australia, and another brand uses the same carrier of the time-consuming nature of doing so in Excel. Now going from Australia to UK, then they can use the same they can. TenderEasy helped streamline how Pernod containers. Now, the Freight Council handles the freight Ricard communicates with all its carriers. procurement. “I think the carriers see Pernod Ricard as more “Our role [freight council] is to ﬁnd the professional. Today, we can give detailed best solutions for the Group, both from a feedback on every lane that they quoted on. brand company point of view and a market And we do it instantly.” company point of view - making sure that no brand company or receiving companies end TenderEasy has also helped Pernod Ricard identify and up with too many carriers,” said Åkerblom. onboard new carriers. Prior to implementing the tool, “All doing so while looking at cost, CO2, they couldn’t invite everyone to participate in a tender because it would have been too diﬃcult to manage in transit times, etc. Our role is to try to do this Excel and time prohibitive. Now, they can run more bids in a more centralized way within this in less time and be more precise. And the tool makes it decentralized company.” easy to invite numerous carriers because it does the job for them – from invitation to comparison and analysis.

“With TenderEasy, we ﬁnished our freight tendering process three weeks earlier than usual, and we even performed three rounds instead of the two we usually have time for.”

GLOBAL SOURCING ACROSS MODES

Today, TenderEasy is used to source carriers for ocean, road, bulk containers, and for spot requests when it comes to air. Transportation needs can vary between brands. When it comes to shipping Absolut from Sweden, the need is for full containers or trucks.

When it comes to Malibu and its freight going out of Spain, the need is also for LTL (less-than-truckload) because the volumes are smaller. In the future, TenderEasy will be used for LCL (less-than-container- load) tenders as well.

AN ALPEGA SUCCESS STORY ©Alpega SPOT BIDDING AS A CONTINGENCY PLAN

Sometimes, issues in production or demand forecasting pandemic, Pernod Ricard saw sales shift from restaurants arise. When something goes wrong or if demand is higher and clubs to the shops. For Absolut, they saw the demand than expected, that’s when TenderEasy’s spot request in bottle sizes change from large to small, covering a functionality is used to ensure product gets on the shelf. range of SKUs. And as some areas across their For Absolut, spot bidding is used only for air freight. distribution shut down or opened back up in response to Since these shipments are very heavy, price is really the pandemic, they experienced swings in volumes – important. TenderEasy is used to ensure they obtain a sometimes far less or far more than forecast. competitive price or a competitive lead time, depending on what’s most important for the shipment. It meant one week they could have 5 containers going to the UK, and the week after, 23. Keeping up with those “Our first priority is to get product on fluctuations and how it affects the carriers isn’t easy. the shelf. Because if it’s not on the shelf, Through a combination of securing multiple carriers for no one can buy it.” their biggest markets, and most importantly, their long term carrier relationships, Absolut was able to manage the fluctuations successfully. Their carriers really stepped Fluctuations in consumer buying behavior, and how that up to support them during this challenging time, impacts production and distribution, can also pose the demonstrating the true partnership of those relationships. need to pivot and respond. In the case of the Covid-19

UNCOVERING NEW SOLUTIONS

The collaborative nature of TenderEasy, combined The ease with which they can look at and compare price, with its breadth and depth of functionality, has proven transit times, routing, the number of transshipment ports, valuable in building better relationships with carriers. The and other criteria or a combination thereof, has given tool’s ability to provide carriers with detailed feedback them visibility to new solutions – something they didn’t allows both parties to have much better discussions around have before when using Excel. negotiations. And it’s helped Pernod Ricard ﬁnd better solutions because the tool has made it easy to do so.

“It has really improved the way we ﬁnd new solutions and improved the supply chain around the product.”

AN ALPEGA SUCCESS STORY ©Alpega LEVERAGING TECHNOLOGY TO ADVANCE SUSTAINABILITY

ernod Ricard and Absolut are at the forefront of corporate sustainability. Pernod Ricard is the only P organization in the beverage sector to have been recognized as a UN Global Compact LEAD company, and Absolut is widely recognized for its supply chain transparency and sustainability. Their “one source” production philosophy means that every aspect of their production journey, from seed to bottle, takes place in and around the small village of Åhus, Sweden.

To go one step further, Absolut is now leveraging the “You have to start somewhere. Even if TenderEasy platform within their transportation HVO is not the answer to all the sustainability procurement process to support the company’s demands, it’s a step in the right direction. And sustainability goals. In 2009, the Absolut Company set a target to reduce CO2 emissions by half from the that’s how we need to start. We need to start transports from production to the warehouse by the doing something. Even if it’s a small step.” year 2020. In 2019, when looking at trucks for finished goods distributed from Åhus to three different locations Absolut created separate lines within the RFQ in within Sweden, they decided to source carriers that use TenderEasy where they demanded carriers only quote fossil-free fuel – specifically HVO fuel (Hydrotreated on the line if they could provide specific HVO data. As Vegetable Oils). HVO fuel is compatible with diesel there are different HVOs, they had the requirements engines and machinery, is made from sustainable raw written out in TenderEasy i.e. only HVO that doesn’t materials, and is commonly referred to as renewable contain PDAF (Palmy Fatty Acid Distillate), a bi-product diesel. It offers up to 90% reduction in greenhouse from palm oil production or palm oil should be used, etc. emissions as compared to regular diesel or biodiesel. Other criteria aligned with their sustainability goals was also defined and collected from carriers during the bidding process, such as CO2 emissions data and the use of EuroClass 6 engines, which run cleaner.

COMPARING SOLUTIONS

The Freight Council wanted to understand the difference container tenders, they will start to evaluate the routes in cost and CO2 when looking at these new solutions. So, and transit times that each and every shipping lane across Absolut incorporated two different lines in the RFQ for their ocean transportation providers take, service levels, carriers to quote both a normal truck and an HVO truck the number of transshipment ports (intermediate for comparison. The flexibility the TenderEasy platform destinations) on each route, and the difference in CO2 provides allows Absolut to specify exactly what they levels. They can capture and compare this information want, and then evaluate and select carriers that meet within TenderEasy and use it to uncover new solutions for their sustainability objectives. specific shipping destinations. For example, when looking at different options to Shanghai, the transit time for one “There are a lot of things we can do. If you’re carrier with two transshipments ports may be 49 days. looking at trucks, just start by going up a level in Another carrier may have fewer transshipment ports or a engines. That will help. Small steps.” shorter transit time, and therefore, maybe the CO2 will be lower. They can then intentionally choose the carrier that will provide better environmental impact in the long run. For future tenders, they will look at how far carriers can reach on one full tank of HVO from Åhus and require better fuel on those transports. “It will be really interesting to use TenderEasy to look at new parameters and identify new, more They may also start to look at NOx (Nitrogen Oxides), sustainable solutions.” Sox (Sulfur Oxides), and other air pollutants. For future

AN ALPEGA SUCCESS STORY ©Alpega CREATING SUSTAINABLE BEST PRACTICES

Today, Absolut has the lowest energy consumption per transport options in Sweden, she knew there would be a unit among the world’s largest distilleries, with their freight cost increase. Using TenderEasy helped ensure production facility in Åhus being CO2 negative. Eighty she would pay market price for the service level she percent of local deliveries are made with renewable fuels demanded. In the case of HVO solutions, she went to the as of 2020, and distribution from the plant in Åhus to the The Absolut Company Management Team to justify the warehouse is done via hybrid electric truck. cost increase, and they gave the go ahead. Her eﬀorts to implement sustainable practices within Absolut’s “I think the challenge today when it comes transportation and procurement were supported because to sustainability, is that a lot of companies are sustainability is one of the company’s top-down strategic talking about it, but they’re not willing to pay initiatives. for it. And I think that’s a diﬀerence for the “If I demand an HVO solution, I want to pay company I work with. Because sustainability the market price for that,” said Åkerblom. is one of our top priorities.” “Cost is of course a factor for Absolut, but it When it comes to freight, security and sustainability are has to be weighed and compared with other top of mind. As Petra used TenderEasy to explore HVO criteria important to the company.”

COLLABORATION WITH PARTNERS

Pernod Ricard works hard on relationships with Using TenderEasy has only strengthened those carrier carriers. They are valued and treated as partners – relationships the company has worked so hard at building fairly and honestly – and they solve things together. – allowing for honest, data-driven feedback. Pernod Collaboration is everything. Ricard's suppliers seem to agree. According to Åkerblom, feedback on the tool has been 100% positive. “They are part of the chain. It doesn’t matter how good we are at producing “Suppliers appreciate that they can get spirits, or even the best vodka in the world. feedback quickly. This gives them ample It doesn’t matter how good we are at time and possibility to prepare for live marketing. If we don’t get it out on the negotiations, enabling the quality of the shelf, it will not sell. So, they [carriers] discussions to be raised signiﬁcantly. are a really important part of us.” This is very much appreciated.”

Absolut tries to ship as much as possible through the port of Åhus, Sweden, which is about 200 meters from the warehouse. Today, about 90% of the containers go out from Åhus. As it’s not a hub, there aren’t many imports going into that port. Therefore, all the containers need to be empty positioned upon arrival.

“Considering we are in Åhus, we are really depending on the shipping lines getting the containers there. And we are fortunate enough to have shipping lines that are walking the extra mile for us. We have carriers that really are supporting us.”

TenderEasy has had a substantial positive impact on Pernod Ricard’s freight procurement. "I love TenderEasy. It really made my life, as a procurement professional, so much easier." – Petra Åkerblom

FOR ÅKERBLOM, THERE WERE FIVE MAIN BENEFITS:

/ Data Integrity: ensuring data quality is essential to their procurement operations / Analysis: the ability to view and analyze the data in a multiple of ways, and give concrete feedback to carriers / Opportunity: identifying new solutions across the supply chain / Flexibility: leveraging the platform to support sustainability eﬀorts, and the ability to implement their own criteria within the bid process / Eﬃciency: improving time, quality, and elevating the procurement process to a professional level on par with the Group’s brand

Sustainability & Responsibility is an integral part of what Pernod Ricard does every day and it’s at the heart of their “Creators of Conviviality” tagline. It translates to every part of the business, and manifests in ways like giving away alcohol for the production of hand sanitizer during the pandemic, to hosting Carrier Appreciation Days that acknowledge the importance of carrier partnerships to their success, to using freight procurement technology in innovative ways that align with the company’s strategic initiatives.

“Being convivial is part of our DNA and a part of our values. We always try to be very fair, honest, open-minded, and welcoming. We treat everybody with respect. We try to be the best customer and the hosts ever. It’s about valuing people. That’s convivial. Mutual trust, integrity and happy.” Lorem ipsum

The Alpega Group is a global logistics software company providing end-to-end cloud-based transportation management solutions (TMS). Alpega enables shippers, carriers and logistics service providers the ability to collaboratively manage all transportation workﬂows for increased visibility, capacity and reduced freight spend.

Alpega is present in 80 countries worldwide and employs over 650 people with 31 diﬀerent nationalities. Our user community, with over 200,000 members, connects online every day to manage critical transportation processes.

Alpega North America, Inc.

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