Euro Pool System: reshaping fresh food chain one tray at a time
Introduction
Most of us are well aware of the three major players聽in fresh food industry: producers (e.g. Dole), logistics service providers (e.g. US Foods) and supermarkets (e.g. Kroger). However, some often overlooked market participants are key enablers of supply chain and create value in this competitive marketplace.
Euro Pool System (EPS) is Europe鈥檚 largest logistics service provider for returnable and reusable packaging managing over 700m movements p.a. [1]. It serves producers, distributors and leading retailers from 45 state-of-the-art service centres and headquarters in Rijswijk, the Netherlands. EPS stands out as an example of creating value by combining differentiated business model with deeply aligned operations.
Business Model
Tradition packaging solutions of fresh food are often a聽non-core, ‘headache’ operation for retailers:
- Disposable cardboard packages are purchased in bulk and managed by producers and retailers
- Retailer owned pools of plastic trays are often poorly managed and aren’t standardized due to lack of expertise or in-house resources to聽ensure efficient tray movement and required聽hygiene standards for fresh food (e.g. fruit & veg, fish, meats)
EPS improves fresh food supply chain by offering an alternative to these packaging methods by efficiently managing logistics chain for聽own rigid plastic trays, used for packaging, handling, transport as well as in-store displays.
Green foldable tray:
EPS generates revenue by charging retailers for added-value services that in return improves productivity and reduces retailer鈥檚 resources required in聽logistics.聽 New retailers are contracted by references and case studies showing cost savings and improved supply chain performance.
Operating model
Company acts as a logistics partner to retailers and provides solution to non-core aspect of food chain. Its service centers are strategically located near retailer鈥檚 major distribution centers (DCs), where company often also manages retailer鈥檚 warehousing equipment and waste materials. State-of-the art service centres perform a number of highly automated processes including collection, sorting, cleaning, inspecting and storing crates for next pick-up. This is supported by advanced systems and trained staff responsible for tracking, inventory planning, order fulfilment, invoicing and deposit processing.
Overview of聽EPS operations:
How it works
The initial user (e.g. producer) in the supply chain orders the trays on ‘My E-web’ portal and pays a deposit to EPS. Producer then picks up trays from nearest service centre to fill it with fresh food before transporting further to retailer鈥檚 DC. Once filled trays are handed over, producer re-charges the deposit to next participant in the supply-chain (e.g. delivery provider).聽When used trays are returned to EPS service centre by retailer, deposit is returned and all trays are swiftly processed before returning to circulation.聽Each tray has a unique identifier code which enable tracking. In combination with deposit system, system聽creates accountability and ensures short rotation聽cycles improving overall efficiency of the chain.
Graphic overview: flow of trays
Power of alignment between business and operating model
EPS strategy of value-add partner to retailers makes it increasingly entrenched in customers鈥� operations [2]. Company’s聽business model聽is supported by streamlined operations which improve efficiency across supply chain and create tangible benefits to customers:
- Improved service and logistics efficiency: 100% availability of clean trays, online order system and automated order picking warehouses due to standardized packaging
- Reduced produce waste: rigid packaging prevents damage to food items
- Reduced container loss: millions of CO2 kg are saved as聽EPS鈥� trays are reusable, 100% recyclable and have 10 year life. Cardboard boxes need to be recycled/ disposed each time and traditional plastic trays often get lost or damaged as items are not聽accounted for
- Improved transportation fleet:聽foldable trays are compact to transport when empty saving 86% of space compared to standard聽trays [3]
Company鈥檚 large service centre network, investments in technology and unique logistics capability in specialised food chain drive sustainable competitive advantage. Moreover, established relationships with blue-chip retailers and reputation for critical highest hygiene & safety standards further strengthen EPS position in the market. While a number of players have emerged聽to benefit from shift towards outsourced tray management,聽smaller local competitors (e.g. Svenska Returnsystem, Transbox) lack regional scale and expertise required by largest supermarket chains [4].
Performance
鈥淓uro Pool System has become a bridge to logistic knowledge. Company has proven experience with automatic order pickers for fresh products.鈥�
Logistic Director of the Eroski-group, Spain
By combining differentiated product and unmatched efficiency in operations, company has experienced rapid growth. Started in 1992 by three cooperative auction organizations in Benelux, company is now present in 13 countries and holds over 40% market share in Europe. Application of 聽trays has expanded from fresh fruit & veg to fish, meat, bakery and various convenience products.
Company reported聽revenues of $270m in 2013 [5] and is expected to continue strong growth despite weak macro in Europe. As more retailers realize cost and service benefits of outsourcing the food handling聽process, EPS is well positioned for聽growth due to its latest Integrated Service Centre Concept for end-to-end management of retailer’s supply chain [6].
Sources:
摆1闭听丑迟迟辫://飞飞飞.别耻谤辞辫辞辞濒蝉测蝉迟别尘.肠辞尘/别苍/础产辞耻迟-耻蝉/贵补肠迟蝉-补苍诲-蹿颈驳耻谤别蝉
[2] http://www.europoolsystem.com/UploadBestanden/Strategy-I.pdf
摆3闭听丑迟迟辫://飞飞飞.别耻谤辞辫辞辞濒蝉测蝉迟别尘.肠辞尘/鲍辫濒辞补诲叠别蝉迟补苍诲别苍/12-2012-础谤迟颈肠濒别-颈苍-贰耻谤辞辫别补苍-叠耻蝉颈苍别蝉蝉-闯辞耻谤苍补濒.辫诲蹿
摆4闭听丑迟迟辫://飞飞飞.肠颈尘肠辞谤辫.蹿颈/础谤迟颈肠濒别/罢丑别冲辫濒补蝉迟颈肠冲肠谤补迟别冲颈蝉冲驳辞颈苍驳冲蝉迟谤辞苍驳
摆5闭听丑迟迟辫://飞飞飞.濒辫谤.别耻/狈颈别耻飞蝉/罢辞辞苍/228
[6] http://www.europoolsystem.com/UploadBestanden/Euro-Pool-System-Leaflet-Integrated-service-centre-UK.pdf
Fascinating look behind the scenes at the logistics in the grocery industry! Great example of how a third party was able to solve a problem and monetize it when the other participants had not been motivated to find a solution. I love how the trays fold flat to save space when en route back to the center. The concept of moving the deposit around was also a very interesting part of the business model to encourage collaboration and ownership by every participant. Is this service limited to Europe or are there similar concepts in the US as well? My hunch would be that this is of even greater value to the large format stores which are popular in the US, versus the smaller corner stores that seem to be more prevalent in Europe. It would seem that small stores are less equipped to deal with the storage of these large crates.
Thanks Meghan! This business model was so great, they rejected a competitive offer from a private equity buyer that was attracted by their growth, margins and defensibly of the concept.. I’m not overly familiar with US market but believe cardboard boxes are more prevalent over here and plastic trays aren’t as penetrated as they are in Europe (for instance, ).
Agree this mostly makes sense for chains as you need volume to justify investment (think Tesco in UK, Carrefour in France). US is a market with great potential in that sense, especially in more populated areas. Corner shops are indeed common in Europe but they mom&pop shops typically source their products at cash & carry stores (think of it was warehouse for small business owners pick up products themselves). You’re absolutely right that they couldn’t feasibly manage handling the trays. I could see, however, smaller regional chains pooling their logistics to benefit from scale and improve efficiency with EPS. The proposition is rather compelling!