Working in isolation could kill the supply chain – it’s time to share more
11 June 2018
Sharing might not come naturally in the competitive retail landscape, but it will be critical for the future of all companies in the supply chain
It is no surprise that consumer behaviour continually changes due to new technology and cultural shifts. For example, the advent of the supermarket trolley and home refrigeration changed retail from “little and often” specialist store shopping along the high street to the big, weekly, out of town supermarket shop.
Today, digital connectivity is exploding choice for consumers, while also making them much savvier and more demanding (“I want my products delivered to my doorstep in the next hour in exactly the size I need and in exactly the condition I want!”). But the consumers of the future are also leading much busier lives, growing older and more price-conscious, living more in cities, and becoming more environmentally demanding.
This means that shoppers are no longer focusing purely on online purchasing but are also turning to stores that offer better pricing with increasingly better-quality products and easier access. Which, ironically, is helping to drive the trend back to shopping “little and often”, through the omni channel. Indeed, over the next five years discount and convenience stores are predicted to grow by £17billion, compared to online’s £5.6billion according to Retail Landscape predictions 2017. And more action on sustainability is becoming a must-have even in discount stores, with companies such as Lidl building it into their brand.
These rapidly changing demands are creating tidal pressures that are being felt by each company along the supply chain – from producer to retailer. Everyone who has a role to play in producing items purchased online or in store is required to be more responsive, sustainable, agile and innovative. Indeed, the very notion of what constitutes an efficient supply chain is being challenged by this new consumer behaviour – “lean” is no longer enough.
Naturally, each company turns to their own processes to find ways of adapting, be that in their production, packaging or transportation lines. But by trying to optimise just their part of their individual supply chain, companies are merely pushing costs upstream or elsewhere in the supply chain. And focusing only on one area of a business or the supply chain doesn’t solve the challenges of the omni-channel world we are now operating in.
If companies continue in this siloed approach, it could be the straw that breaks the camel’s back for the whole supply chain.
The 2015 ECR-UK report on reducing wasted miles concluded that collaboration across the whole supply chain was “critical”, but although collaboration has been a buzzword in the industry for some years now, very little has actually happened.
The biggest barrier to this collaboration is trust. And this is difficult to establish in an economically competitive landscape. The answer is to identify areas for collaboration where everyone can benefit mutually, and to find neutral partners who can build trust among previously competitive companies.
We know that collaboration works, because we’ve been sharing our pallets through supply chains for over 60 years, moving more products, to more people, in more places than anyone else. We have a unique integration and visibility across the end-to-end supply chain, with insight into customer flows from over 14 million shipments in 224,000 lanes across Europe annually.
And, crucially, we aren’t in competition with manufacturers, distributors or retailers in the supply chain. Being impartial, we can help the industry move from an unsustainable linear isolated model to a more circular, collaborative one. From manufacturing and distribution, logistics and transportation to in-store sales and promotions, we work together across the supply chain to design omni-channel solutions.
We have shown our customers that by collaborating and integrating with others they can gain real synergies, efficiencies, added value and reduction in waste. We’re already facilitating collaboration with over 130 businesses, saving everyone money and time and lowering CO2 emissions. But sharing data, schedules and truck space with your competitors means overturning embedded attitudes built up over generations.
Satisfying the consumer of the future will take a real change in mindset from our industry, and it’s a challenge that we ignore at our peril. In this omni-channel world it’s no longer a zero-sum game. By cooperating to serve all our customers better, we all win – helping us all move more with less. This is the supply chain revolution that is needed.
By Helen Lane, Vice-President, Northern Europe, CHEP EMEA: The Consumer of the Future