14th November 2019
Demand driven supply chains are becoming ever more complex as customer expectations extend far beyond the right balance of price and quality. From the complexity of having the right product, in the right place, at the right time across multiple channels -– to the spotlight on sustainability and ethical trading, customer expectations are having a growing influence on a retailer’s supplier decisions.
Today, at any given point, consumers want to know where and how the products are made and if they were produced ethically. Yet while there is a desire to build stronger, long term supplier relationships in order to improve performance and minimise supply chain complexity, rising prices in markets such as China, South East Asia and India are pushing retailers to explore new, untested sourcing locations. Without full visibility of the true cost of on-boarding these suppliers – from the costs and delivery challenges associated with poor transport infrastructure to an understanding of a supplier’s ethical performance – the potential business risks are huge.
James Hargraves, Business Development Director (APAC) at EV Cargo Technology, explains: “Monitoring, measuring and tracking are still at the heart of optimising supplier relationships. Having full visibility of every aspect of supply chain, scalability and right technology solution will help build foundations and improve customer experience.”
Extending Supply Chain Complexity
The retail supply chain has been microscopically reviewed over the past two decades as retailers have looked to achieve the end to end visibility required to improve efficiency and drive out cost. These supply chains have coped with a fast expanding global landscape as well as new international sales channels, via franchises, joint ventures and online sites that have created a complex outward as well as inward supply chain model.
And yet, while logistics operations are growing increasingly advanced, there remains a major gap and potentially catastrophic blind spot between the retailer/supplier processes. A blind spot that could prove extremely costly as companies increasingly look to new suppliers in more unknown markets such as Africa and Myanmar. However, the risk is just as high for those suppliers closer to home, operating in the same country as the goods are sold.
End to End
For maintaining continuity and compliance, it is vital that all aspects of supplier relations are open and transparent, and correctly documented so that essential supply chains can be maintained, and corporate governance rules followed. This information also needs to be readily available to all parts of the business – something which today’s technology solutions can easily support.
With a single view of every aspect of supplier activity, a retailer can take a far more holistic approach. From the initial on-boarding process to driving continual improvement, the ability to compare suppliers based on the full range of information – from product/price to on time in full delivery, ethical standards and supply chain implications – can transform performance and mitigate risk. With a single set of criteria for all suppliers – rated according to the retailer’s specific priorities – all stakeholders can work effectively together.
With a complete view of a supplier’s performance and logistics – including the supplier’s factory and subcontractors – it is far easier to determine the potential impact of raising ethical requirements on the supply base and the need for additional investment and/or suppliers; while the appeal of a lower product price can be accurately compared to the additional costs associated with a location with limited road or rail infrastructure.
In addition, real time decision making is becoming important to enable retailers to exploit automation to drive down costs, support promotional activity or maximise weather-driven sales opportunities. With this complete supply chain visibility, a retailer can now confidently assess new sourcing models, for example the increased use of dual sourcing to combine low cost Far East suppliers with slightly higher cost providers in the UK or Europe that offer the benefits of shorter lead times; or leverage modes other than shipping, to respond to specific customer demands.
Technology as the catalyst
Sustainability is rising on the global retail agenda. Optimising every supplier/retailer relationship is not a quick-fix solution, but a long-term approach. It not only improves performance but opens up new opportunities to add both flexibility and control to a complex business model. Technology plays a key role in combining and monitoring all the key information regarding supplier on-boarding and measuring their performance. From supply chain implications to ethical constraints, using technology enables retailers to gain control over this complex model and achieve the perfect balance of cost, sustainability and supply chain performance required to meet ever rising customer expectations.