Some of the leading names in UK supply chain and logistics gathered recently at the SCALA Annual Logistics Debate at Wroxall Abbey, Warwick with the agenda to discuss "Can Supply Chain Collaboration Improve On Shelf Availability?
The debate, hosted by supply chain consultant SCALA, was chaired by David Grahamslaw, vice chair for CILT West Midlands, with an expert panel comprising: Duncan Lowe, supply chain director for Pepsi Co; Keith Newton, customer logistics director for Cadbury; Neil Ashworth, supply chain director for Tesco.com and John Potter, senior partner at SCALA.
Peter Surtees, European supply chain director for Kimberly Clark had initiated debate earlier in the day revealing that on shelf availability plays a critical role in the organisation as it is the ultimate KPI used. He indicated that just 1% improvement in on shelf availability could be potentially worth up to 5million depending on the product mix. This news follows research conducted by SCALA this month revealing that a shocking 15% of leading FMCG brands do not know their current levels of on shelf availability achieved.
The research also revealed that in contrast to Kimberly Clark, a third of brands did not have on shelf availability as a key KPI. John Potter remarked on how levels achieved and degrees of collaboration across the supply chain had yet to meet the indicators set out 15 years ago. Over the course of the open debate discussion was raised on who was responsible for initiating these partnerships, what the barriers were to establishing effective collaboration and who was to blame for failing to meet on shelf availability targets.
Keith Newton elaborated on the fundamentals required for effective collaboration: "To enable good collaboration, you need good basics." Expanding on this theory, he explained that the essence of achieving this was to develop successful relationships and collaboration internally. Having gone through an extensive learning period over the past two years, customer service had become the number one business objective for Cadbury, in addition to introducing collaborative seasonal delivery teams, with operations and planning already underway for Easter 2011.
The introduction of these new internal mechanisms had then provided the ability to work proactively with customers and establish joint supplier plans around new collaborative frameworks. He indicated that, with some customers, this has improved their awareness of, and levels of, on shelf availability. In addition, working collaboratively with third parties across our own and our customers' warehouses and transportation has enabled us to identify new measuring practices, where previously we tracked delivery on time in full, by engaging with third parties we have improved these measures by focusing on post goods issue.
Further to building relationships and partnerships, Neil Ashworth from Tesco.com said that without visibility across their extended supply chain networks, organisations would be unable to progress down the collaborative agenda, heightened by a lack of specificity regarding the definition of 'shelf-edge'. With increased internationalisation, technological advancements and multi-channel offerings, supply chain teams must be aware that the "shelf edge is everywhere, in store, on the web, on the phone, even at the water cooler. Key to this development is customer research; today's customer is predicated on deselection online, unlike the traditional process of selection in store. This deselection process involves editing out on price, unavailability, returns policy and increasingly the ethical and moral credentials of those involved in the supply chain. As a result, the retailer has many challenges from these emerging market dynamics."
Neil continued: "The challenges are greater than ever in this new virtual world and we have to embrace these new relationships. We see collaboration as an overwhelming priority and we all must be ready for the cross-channel consumer and be prepared to collaborate to win their business."
PepsiCo has simplified its strategy for achieving successful customer collaboration. Dunc Lowe emphasises that despite technological advances, the value of human interaction cannot be understated in building sustainable long term relationships with your customers: "We do some of our best collaborative work by simply just going and talking to people." He went on to emphasise that supply chain collaboration should not be exclusively focused on availability. "It is about creating the right agenda in which you can participate." He added that manufacturers must accept that the retailer will invariably hold the balance of power.
When the debate was thrown open, some lively exchanges ensued, with the issue of trust between retailer and manufacturer being raised repeatedly. Duncan continued: "Trust is implicit in our relationship with retailers." The Cooperative food group admitted that in the region of 60-70 per cent of shelf gaps can be attributed to issues at the retail stores but this still left 30-40 per cent to tackle.
The question of implants at retail sites was also raised again and again with many participants convinced they were the most effective method of improving relationships and developing greater understanding of customer operations and strategy. "Implants are invaluable, but not critical" Duncan added. In addition the need for incentivised relationships with 3PLs was another area lacking in the current supply chain industry, with greater opportunities to seek mutual benefits yet to be embraced by many.
The SCALA Annual Logistics Debate, attended by over 150 delegates, was supported by the CILT UK, AEB Advanced Global Trade Solutions, Slimstock and BiS Henderson and CDC Software Solutions.