Can the supply chain play ball and collaborate?
04 December 2020
If the trials and tribulations of 2020 have taught the handling and storage sector one thing, it's that supply chain collaboration is a vital component of resilience, David Howorth.
Now, as the industry navigates its way through the peak festive season - into the New Year and a post-Brexit universe, adopting a collaborative approach with supply chain partners will help to mitigate risk and heighten responsiveness.
The Covid-19 pandemic has been a catalyst for collaborative change in supply chain management and logistics. And warehousing is the nexus of this transformation – it's placed bang in the centre of the chain. By working together closely warehousing partners and their clients can help to ensure that storage, distribution and returns operate as efficiently as possible no matter what disruption may abound.
As we brace ourselves for more uncertainty ahead, there are a plethora of challenges businesses can anticipate and address through collaboration with their handling and storage partners. These include:
We have witnessed all manner of demand spikes and troughs during the Covid-19 crisis. From food stockpiling, to hand-sanitiser frenzies and loungewear booms, and on the other side of the scale; a collapse in “food to go” products, a fall in demand for personal care products, and party clothes. This is likely to continue, with a demand fall-off following the January sales. Fears of food shortages as Brexit changes take hold and imports are potentially affected may, again, provoke stockpiling and then there will be a new demand landscape forming with the introduction of the vaccine programme.
Warehouse space stretch
Increased demand for certain products along with a boom in ecommerce orders has resulted in increased demand for warehousing space, often at short notice. Storage specialists are having to adapt their space in increasingly innovative ways to optimise space to ensure they can offer the required stretch.
Customer satisfaction risk
The boom in online shopping means more and more customers expecting swift order fulfilment with a super-efficient delivery and returns process. Retailers and manufacturers are competing on the basis of their logistics service capability both in the speed of fulfilling orders and in fulfilling returns – the warehouse operation plays an essential role in keeping those customers satisfied – it has to be more responsive than ever.
Staff shortages and availability
Spikes in demand have led to a need to bring in extra people, fast. This year, within retail we have seen a very quick and significant level of recruitment in distribution centres, stores and home delivery to support the increased volumes – this ability to adapt at speed will continue to be vital.
So, what are the key areas businesses can focus on to prepare for these issues through a collaborative supply chain approach?
Responsiveness relies on knowing what to respond to. This means supply chain partners communicating with each other on a consistent, regular basis. Knowledge share and a solutions-based approach is part of this. Working together warehousing providers and their clients can quickly establish how best to optimise on storage space, and identify and eradicate any potential service obstacles before they happen.
This goes hand-in-hand with communication. And there is certainly room for improvement here. The Deloitte 2020 CPO Flash Survey found that only 50 per cent of procurement organisations had high or very high visibility into their tier 1 suppliers, while 90 per cent of organisations rated visibility into their extended supply networks as moderate to very low. Businesses need to be open with storage and handling suppliers about their biggest challenges, most pressing risks and priority needs, so their partners are better equipped to support and respond.
Harnessing Tech Together
AI and machine learning data analytics tech can predict what might happen in the future, based on past performance. It pulls together historic data from a broad range of sources, before going on to identify outcomes and trends. By sharing this intelligence with supply partners, businesses can ensure that everybody is ready to react well before challenges arise. This type of data mining can also highlight supply chain inefficiencies – which can be raised and addressed with supply chain partners.
Be in it for the Long Term
The most responsive relationships tend to be the ones based on familiarity and trust. This is best built over the long term. Businesses and storage/handling partners need to work together to develop closer more collaborative, strategic and future-focused relationships – unlocking greater benefits year-on-year. As businesses look to invest in automation and robotics to unlock efficiencies, increase resilience and meet the ever more challenging lead time and demand volatility from ecommerce then long-term partnerships are fundamental to the investments required.
While businesses have worked hard to adapt to the changes that this year has brought, the need for a collaborative approach to supply chain strategies has never been more important. Working with suppliers to forecast levels of demand, understand the needs of customers, anticipate and mitigate risk and boost efficiency, will result in the strongest, most agile supply chains.
David Howorth, executive director at SCALA
For more information, visit www.scalagroup.co.uk