Executive Briefings

Hub Group Taps into Guinness Supply Chain

The most successful supply-chain partnerships often begin slowly.

Eight years ago, Hub Group Inc. started out handling just one product line of the Guinness Import Co. - shipments of Moosehead beer from Canada into the U.S. But as Guinness's American sales grew, so did Hub's share of the business.

Today, Lombard, Ill.-based Hub is responsible for nearly all of the volumes imported by Guinness into the U.S. That means not only the famous Guinness brand itself but other popular imports, including England's Bass Ale, the Czech Republic's Pilsner Urquell, and Jamaica's Red Stripe. In fact, the importer has become so diversified that it recently changed its name to the Guinness-Bass Import Co.

Hub's duties on behalf of Guinness are wide-ranging. It takes control of most imported product from the time it clears U.S. Customs, then arranges for final delivery to distributors throughout the country. Hub also negotiates rates with carriers and monitors their performance. And it provides tracking and tracing for all shipments to destination, including the ocean leg of the journey.

Hub, Guinness and the shipper's U.S. customs broker are linked electronically via a common, proprietary database, according to Nick Piscitelli, director of national accounts for Hub's eastern region. Orders are monitored from the moment they are placed at the overseas brewery. Updates are entered into the system with each change in a shipment's status.

The database also serves as an important tool for measuring performance, said Colin Funnell, vice president of operations in the U.S. headquarters of Guinness-Bass in Stamford, Conn. The shipper can keep close tabs, not only on Hub's performance, but on that of the customs broker and ocean carrier as well. Hub submits detailed report cards to Guinness on a monthly basis.

Guinness measures service in three major areas: the time it takes for the customs broker to make import loads available to domestic carriers, the correlation between published transit times and actual delivery dates, and overall customer satisfaction. The responsibility for that last factor lies squarely with Hub -regardless of who might be responsible for a service failure.

"If you don't have the fundamentals and good information, it's very hard to build high levels of trust."
- Colin Funnell of Guinness-Bass Import

Funnell said Guinness strives not to segment the supply chain by singling out parties for blame. "Our customer sees all complaints as Hub's performance." Guinness, he said, prefers to pose this question to Hub: "What are you as a supply-chain partner doing to make sure a service failure doesn't happen?"

Hub, in turn, places strict requirements on the carriers whom it hires to move Guinness's product. To qualify, a trucker must demonstrate adequate profitability, size, capacity, insurance, and safety record. And with more than 5,000 preapproved carriers in the Hub database, the competition for business can be intense.

Funnell said Hub's service record has been consistently good. On-time delivery performance to distributors hovers in the 95- to 100-percent range. "They're definitely the most reliable part of our supply chain - more so than ocean carriers and our own production sites," he said.

The Guinness import supply chain consists of six breweries, with production levels varying widely according to brand. Often the importer must find ways of combining small lots in full containers in order to keep transport costs down - yet avoid overwhelming a customer with beer.
Last year, Guinness moved more than 22 million cases of beer from 17 U.S. entry ports to some 430 distributors around the country. For Hub, that translated into 13,000 full containers of product - or about 1,100 shipments a month. "It's quite a tangled web at the end of the day," said Funnell.

Hub recently lost about 15 percent of Guinness's North American business when the importer opened a U.S. distribution center in the Northeast. The contract was awarded to a provider with direct trucking and warehousing experience. Funnell said Guinness is studying the possibility of adding up to five more distribution facilities in order to enhance product freshness and deal better with small shipments.

With the pilot project deemed a success, Hub intends to resubmit its bid for managing any new domestic warehouses for Guinness. "We're going after it aggressively," Piscatelli says.

Imminent restructuring of the Guinness distribution network notwithstanding, both sides appear committed to their ongoing partnership. Funnell calls the sharing of business goals crucial to the success of any venture. "There's got to be enough value that you can confidently challenge the status quo and move forward," he said.

Information about ongoing operations must be freely shared as well. "If you don't have the fundamentals and good information," said Funnell, "it's very hard to build high levels of trust."

Hub and Guinness meet regularly at multiple levels of the organization, particularly customer service, to iron out potential problems. Piscatelli said the level of communication between the two companies has improved markedly over the past 16 months, ensuring that snags are far and few between.

"Only twice in two years have I had to get involved in motivating Hub to improve a day-to-day issue," Funnell said. "That's pretty unusual."

The most successful supply-chain partnerships often begin slowly.

Eight years ago, Hub Group Inc. started out handling just one product line of the Guinness Import Co. - shipments of Moosehead beer from Canada into the U.S. But as Guinness's American sales grew, so did Hub's share of the business.

Today, Lombard, Ill.-based Hub is responsible for nearly all of the volumes imported by Guinness into the U.S. That means not only the famous Guinness brand itself but other popular imports, including England's Bass Ale, the Czech Republic's Pilsner Urquell, and Jamaica's Red Stripe. In fact, the importer has become so diversified that it recently changed its name to the Guinness-Bass Import Co.

Hub's duties on behalf of Guinness are wide-ranging. It takes control of most imported product from the time it clears U.S. Customs, then arranges for final delivery to distributors throughout the country. Hub also negotiates rates with carriers and monitors their performance. And it provides tracking and tracing for all shipments to destination, including the ocean leg of the journey.

Hub, Guinness and the shipper's U.S. customs broker are linked electronically via a common, proprietary database, according to Nick Piscitelli, director of national accounts for Hub's eastern region. Orders are monitored from the moment they are placed at the overseas brewery. Updates are entered into the system with each change in a shipment's status.

The database also serves as an important tool for measuring performance, said Colin Funnell, vice president of operations in the U.S. headquarters of Guinness-Bass in Stamford, Conn. The shipper can keep close tabs, not only on Hub's performance, but on that of the customs broker and ocean carrier as well. Hub submits detailed report cards to Guinness on a monthly basis.

Guinness measures service in three major areas: the time it takes for the customs broker to make import loads available to domestic carriers, the correlation between published transit times and actual delivery dates, and overall customer satisfaction. The responsibility for that last factor lies squarely with Hub -regardless of who might be responsible for a service failure.

"If you don't have the fundamentals and good information, it's very hard to build high levels of trust."
- Colin Funnell of Guinness-Bass Import

Funnell said Guinness strives not to segment the supply chain by singling out parties for blame. "Our customer sees all complaints as Hub's performance." Guinness, he said, prefers to pose this question to Hub: "What are you as a supply-chain partner doing to make sure a service failure doesn't happen?"

Hub, in turn, places strict requirements on the carriers whom it hires to move Guinness's product. To qualify, a trucker must demonstrate adequate profitability, size, capacity, insurance, and safety record. And with more than 5,000 preapproved carriers in the Hub database, the competition for business can be intense.

Funnell said Hub's service record has been consistently good. On-time delivery performance to distributors hovers in the 95- to 100-percent range. "They're definitely the most reliable part of our supply chain - more so than ocean carriers and our own production sites," he said.

The Guinness import supply chain consists of six breweries, with production levels varying widely according to brand. Often the importer must find ways of combining small lots in full containers in order to keep transport costs down - yet avoid overwhelming a customer with beer.
Last year, Guinness moved more than 22 million cases of beer from 17 U.S. entry ports to some 430 distributors around the country. For Hub, that translated into 13,000 full containers of product - or about 1,100 shipments a month. "It's quite a tangled web at the end of the day," said Funnell.

Hub recently lost about 15 percent of Guinness's North American business when the importer opened a U.S. distribution center in the Northeast. The contract was awarded to a provider with direct trucking and warehousing experience. Funnell said Guinness is studying the possibility of adding up to five more distribution facilities in order to enhance product freshness and deal better with small shipments.

With the pilot project deemed a success, Hub intends to resubmit its bid for managing any new domestic warehouses for Guinness. "We're going after it aggressively," Piscatelli says.

Imminent restructuring of the Guinness distribution network notwithstanding, both sides appear committed to their ongoing partnership. Funnell calls the sharing of business goals crucial to the success of any venture. "There's got to be enough value that you can confidently challenge the status quo and move forward," he said.

Information about ongoing operations must be freely shared as well. "If you don't have the fundamentals and good information," said Funnell, "it's very hard to build high levels of trust."

Hub and Guinness meet regularly at multiple levels of the organization, particularly customer service, to iron out potential problems. Piscatelli said the level of communication between the two companies has improved markedly over the past 16 months, ensuring that snags are far and few between.

"Only twice in two years have I had to get involved in motivating Hub to improve a day-to-day issue," Funnell said. "That's pretty unusual."