Are we talking enough about supply chain productivity?

Ben Balfour
6 May, 24

Ben Balfour is Managing Director of Advanced Supply Chain (ASC). He asks whether supply chain shocks have distracted from the opportunities to enhance supply chain productivity. 

Global logistics is a challenging business and recent years have been no exception; conflict, political pressure, economic instability and suppressed consumer demand have created a tumultuous operating environment. It’s little surprise, therefore, that supply chain productivity has slipped down the list of priorities.

Managing volatility has become a key priority for supply chain management strategies. This has driven a trend of more reactive, shorter-term planning and measures that are geared towards dealing with problems in the here and now. In many respects, this is understandable. Take retail supply chains, for example. If unpredictable demand is causing stockpiling, retailers and their suppliers must find quick-fire solutions to clear warehouses before stock value rapidly diminishes.

Likewise, hard-to-forecast market demand, coupled with global supply chain disruption caused by attacks in the Red Sea, can make stock inventory management increasingly complex. Supply chain strategies have little choice but to keep adapting to effectively mitigate the risks and impacts of today’s ever-changing challenges. However, although this is a necessity, it can detract from a proactive approach to improving productivity.

The productivity puzzle

The very concept of productivity can prove overwhelming and off-putting for supply chain professionals. The UK has long been renowned for its low levels of productivity, compared to other G7 countries, spurring debate amongst policy makers, academics and industry leaders to tackle the UK’s ‘productivity puzzle’. Difficulties of solving productivity at a national level can push the subject further down boardroom agendas, and even more so when immediate efficiencies are required in supply chains.

In addition, there’s often the belief that addressing supply chain productivity requires significant capital investment, disruptive transformation and lengthy periods of time to deliver improvements and return on investment. This doesn’t always have to be the case and is a key reason that productivity should remain an ongoing focus, even during volatile times.

Prioritise visibility

No supply chain can be truly productive without complete visibility – this should be a given with the technology and software at our disposal today, but, surprisingly, isn’t always the case. Rapid growth and diversification of supply chains, with new sales channels, suppliers and stock being added and changed, can cause logistics operations to outgrow software capabilities. This can cause a breakdown in the flow and availability of supply chain data, compromising accuracy and insight.

Supply chain professionals should have a ‘control tower’ view of their entire operations, from source of supply, right through to the point of sale, and back again. A rich, constant flow of accessible data will quickly shine a spotlight on what is and isn’t working, creating opportunity to make changes that improve productivity. A control tower view can also enhance scenario modelling and forecasting and inform the development of contingency plans for mitigating supply chain shocks.    

Don’t underestimate Pre-retail Compliance

We’re seeing a growing trend of suppliers developing pre-retail logistics solutions that save time, resource, usage of materials and touchpoints during warehousing and fulfilment. This stretches from the order booking portals used by retailers, right through to the quality control of outbound goods. Improvements are motivated by a desire to enhance compliance with retailer KPIs, as well as strengthen relationships with key customers during challenging trading times by improving productivity.

Digitalisation and automation throughout pre-retail logistics is a vital step towards maximising packaging and labelling consistencies. Via touch screen kiosks, suppliers can easily print labels on demand, with these set according to formats provided by retailers, or developed bespoke to their requirements. This minimises errors caused by the manual writing and filling-out of labels, saving time and avoiding mistakes that have to be corrected.

Working processes can also be streamlined and standardised. Levels of administration can be cut, and workflows and throughput better planned. For example, capable IT systems and transport management systems allow suppliers to accurately calculate cube optimisation, potentially reducing vehicle movements and the number of vehicles on the road. Licence plates on fleet can also be programmed for ‘green lane’ receipting to reduce unnecessary dwell time.  

The combination of these performance benefits means there less duplication of processes and fewer mistakes, enabling suppliers to move goods through warehouses quicker, without risk to quality. Material usage, such as how goods are packaged during inbound and outbound logistics, can also be better coordinated to avoid time and wastage caused by any unnecessary re-packing or re-branding.

Small changes can be made throughout pre-retail compliance to drive immediate and long-term productivity gains. Rich and reliable supply chain data is crucial for this and ensuring that levels of productivity continue to evolve as logistics operations face different risks.

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