Supplier councils can help wholesalers cut costs

One of the most important innovations in the FWD in recent years has been the formation of supplier councils, who meet with senior wholesalers on a regular basis, and report to the ‘main’ FWD council. There are currently four such councils and all are doing valuable work on behalf of the sector.

In a sector that depends heavily on both consumer and small business confidence, it is inevitable that the uncertainties generated by the Brexit vote are going to make life very tough for the foreseeable future. Under those circumstances, the work of the ‘process’ supplier council on supply chain efficiencies is going to be ever-more important - when both sales and profit are challenged, the elimination of unnecessary cost is crucial.

Recent experience of wholesalers unfortunately seems to indicate some suppliers are beginning to take shortcuts in this area that introduce further cost down the line. In particular, we have noticed an increasing tendency for suppliers to pre-invoice goods before delivery is made and accepted, meaning there is a significantly increased chance of invoice errors, whether that is from mis-picking, damages or unacceptable substitutions.

A more ambitious attempt to reduce supply chain costs, despite the best efforts of the FWD Council, has so far frustratingly failed to bear fruit. Technology and the internet is supposed to democratise access to and use of information. In our sector there is a golden opportunity to do this with non-competitive co-operation on a database of product attributes, such as barcodes and dimensions ingredients. This would take huge cost out of the system for suppliers who would have one database to update with changes, rather than dealing with the individual requirements of hundreds of customers. Ideally a not-for-profit industry body in this area already would take up this major opportunity, but sadly those people best placed to do so have so far failed to accept the challenge because of internal politics of cost allocation rather than grasping the opportunity. Wholesalers want to work co-operatively on this issue, but there is a real mismatch between the cost savings that would be massively on the supplier side, and the only proposal so far, which lumps virtually all the cost of the scheme on to wholesalers (whose savings are negligible) rather than spreading it across the supplier base where the benefits are felt.

Independent research by the supplier council has shown this inefficiency is one of the most significant wasted costs in the industry. Some creative, joined-up thinking could reap major benefits in eliminating them - to everyone’s benefit.

Steve Parfett is chairman of AG Parfett & Sons