Rises in raw material, fuel and commodity costs have created a perfect storm for retailers, small producers and even big brands.
While costs have risen pushed up by VAT, corn, fuel and even fruit juice price rises the malaise in the wider economy has made retailers unwilling or unable to pass on hikes in price. This has created huge downward pressure on the supply chain, with every player, from retailer to farmer, faced with the same conundrum; how to do more with less?
One answer lies in logistics, often seen as the 'operational' (and not strategic) side of businesses. Despite this misunderstanding of the value of logistics management, many more food companies (and even large brands) are revisiting this area of their business and getting impressive results from better supply chain management.
More businesses in the retail sector are realising that better logistics can improve flexibility, reduce product delivery times, improve availability and reduce costs. Additionally, a strategic supply chain can help those in the retail chain by considering potential material shortages and mitigating against them.
A coherent supply chain strategy must actively support the overall business strategy and understand how it supports the retail proposition. If you compete on price you need to be the most efficient; if you compete on freshness, you need to be quickest; if you compete on range, you need to be the most accurate. No matter what your retail USP, your supply chain needs to support it.
Take one example. After years of impressive growth, a global food manufacturer was keen to reduce its inventory levels. Through the implementation of a sales and operations planning programme, we were able to reduce its stockholding by 55% and also reduce operational costs by nearly 10%. Similarly, we recently completed a global supply chain project for an ingredients manufacturer. By aligning the supply chain to the goals of the company and by optimising its distribution networks, we were able to deliver more than 10m a year of savings.
The once hidden area of logistics could be the difference between profit and loss in 2011.
While costs have risen pushed up by VAT, corn, fuel and even fruit juice price rises the malaise in the wider economy has made retailers unwilling or unable to pass on hikes in price. This has created huge downward pressure on the supply chain, with every player, from retailer to farmer, faced with the same conundrum; how to do more with less?
One answer lies in logistics, often seen as the 'operational' (and not strategic) side of businesses. Despite this misunderstanding of the value of logistics management, many more food companies (and even large brands) are revisiting this area of their business and getting impressive results from better supply chain management.
More businesses in the retail sector are realising that better logistics can improve flexibility, reduce product delivery times, improve availability and reduce costs. Additionally, a strategic supply chain can help those in the retail chain by considering potential material shortages and mitigating against them.
A coherent supply chain strategy must actively support the overall business strategy and understand how it supports the retail proposition. If you compete on price you need to be the most efficient; if you compete on freshness, you need to be quickest; if you compete on range, you need to be the most accurate. No matter what your retail USP, your supply chain needs to support it.
Take one example. After years of impressive growth, a global food manufacturer was keen to reduce its inventory levels. Through the implementation of a sales and operations planning programme, we were able to reduce its stockholding by 55% and also reduce operational costs by nearly 10%. Similarly, we recently completed a global supply chain project for an ingredients manufacturer. By aligning the supply chain to the goals of the company and by optimising its distribution networks, we were able to deliver more than 10m a year of savings.
The once hidden area of logistics could be the difference between profit and loss in 2011.
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