At a time when retailers are facing pressures from customers, governments and the elements, focusing in on specific solutions to solve big problems and make business-wide improvement is a top priority. Within the supply chain there are several fixes that can be made to set up greater efficiency and a business fit for the future. Supplying the nation with food. This is the most critical of functions, but one that comes with layer upon layer of complexity. In many ways, the supply chain of supermarkets and independent merchants is similar to those of any other retailer. Suppliers are spread around the country and the globe; driven by customer demand for local, independent products, retailers must work with small, local farmers as well as with large multi-national suppliers.
However, two key factors exist that make the food supply chain more complex. The first is that every product, albeit to varying degrees, is a time bomb. From the second it’s picked, caught or made, it has a finite lifespan. Seasonal trends can have a similar impact on fashion or FMCG supply chains, but at least last season’s coats
can go on the sale rack. Out of date milk cannot be dealt with in the same way, so it needs to be available to the customer as quickly as possible. The result is a far more expansive supply chain network that becomes difficult to manage efficiently.
The second factor is regulatory compliance. With the Food Standards Agency demanding compliance down to the finest detail, farmers, manufacturers and retailers must have very strict tracking and conditions monitoring processes in place.Stopping the rot – getting produce to the customer on time
The clock starts ticking the second a pea is picked, a potato pulled or a fish netted.
The customer demands the freshest food, which means getting produce from farmer to retailer to customer within ever decreasing time frames.
The age-old advice ‘more haste, less speed’ could not be more appropriate. Greater speed of delivery does not come from simply trying to do things faster, instead it comes from being more agile through the supply chain. Farmers need to be able to get goods into the supply chain right away, which requires easy to use labelling, scanning and shipping devices to ensure that products are accurately logged and enter the supply chain quickly and efficiently.
It’s then the responsibility of the retailer to create the best transport route to the store shelf. This can only be achieved with visibility of the whole retail estate, an understanding of stores’ and customers’ requirements and the ability to make quick decisions on what produce goes where.
Matching store or customer need with stock availability is a fundamental skill of
good retailing, but having to make those decisions in time frames of minutes, or hours at most, is one of the defining characteristics that makes the food supply chain different to others.
Retailers have responded to these demands and put in place multiple distribution centres close to source. This ensures that produce is fresh when it hits the shelves, but also creates a new challenge: managing it. To achieve this, it’s essential for operations managers to have clear visibility of all products, all the time. Without that, they will only have part of the picture and that is where things can be overlooked.Fresh food, rubber stamped
One of the reasons that the ability to monitor across all of these sites from a single interface is important is for regulatory compliance. Goods must be tracked from farm to customer to ensure quality of produce on the shelves. This puts responsibility on farmers and manufacturers to time stamp and label all goods appropriately, but also means that the more visibility retailers have of the transit of these goods, the better. This means knowing exactly where products are, when and for how long – including
when they’re in the back of a refrigerated vehicle, in a warehouse or on a shelf.
The reason that this is growing in importance from a commercial standpoint is that retailers including Sainsbury’s are committing to print the source of their produce on every packet.Online shopping highlights supply chain weaknesses
The retail environment is one of the most rapidly changing markets that there is. On the one hand, there are government initiatives to revamp the high street. However, one of the big change factors that will affect the supply chain in 2012 and shine a light on any inefficiencies is the continued growth of online shopping and home delivery.
Recent research from the Institute of Grocery Distribution (IGD) predicts that the value of online food shopping will surge to £11.2 billion by 2016, from £5.9 billion in 2011.
Many food home delivery services are going through major transition as critical mass approaches – consolidating picking into dedicated distribution centres away from low volume store based operations. However, while this enthusiasm to address these new challenges is important, recent high profile failures highlight the risks of investing in too much costly fixed, inflexible automation. To achieve the goals of a multi-channel enterprise, fitness and agility are higher priority than optimisation to solve today’s problems in such a fast moving sector.
Some the characteristics of fitness in the supply chain include being able to cross stock over between different distribution lines, as well as adjusting supply chain processes in real-time to adapt to changing circumstances and requirements.Fighting fit
There are several key considerations for the food supply chain that will ensure that this multi-channel challenge is met and overcome with a profitable outcome.
The first is to have a single order management system. If this can’t be easily achieved, which may be the case for the majority of companies, an integration technology that can at least aggregate information from multiple systems to give a single view of each channel is essential. Without this, the supply chain will slow down and the capability to ship the most appropriate stock does not exist.
Unifying processes throughout the supply chain to get visibility of the entire estate and greater manageability of processes is essential. As many deliveries – for example for bread and milk – have to go direct to store from the manufacturer, co-ordinating the entire delivery cycle requires the integration of a whole web of manufacturers,
delivery vehicles and stores’ own stock management systems.2012 fitness plan
With every New Year new challenges have to be met. This year, fitness in the supply chain will be critical, because retailers and manufacturers face the real possibility of being left behind. The only way to keep up with demand and competition alike is by getting fitter and more agile, so you can adapt to changing conditions.
Craig Sears-Black is UK MD at Manhattan Associates. Manhattan Associates continues to deliver on its 20-year heritage of providing global supply chain excellence to more than 1200 customers worldwide that consider supply chain optimisation core to their strategic market leadership. The company’s supply chain innovations include: Manhattan SCOPE and Manhattan SCALE.
For more information, please visit: www.manh.com