Supply chains have been the subject of much discussion over recent months, explains Gareth Thomas, Senior Manager, Delaware United Kingdom, as challenges brought about by Brexit and the pandemic, and compounded by a shortage of HGV drivers, caused significant disruptions. While the government has introduced temporary visas for fuel tanker and lorry drivers to work in the UK in the run-up to Christmas, at the last count only 127 applications had been received. In stark contrast, the Road Haulage Association (RHA) estimates there is currently a shortage of more than 100,000 qualified drivers in the UK.
On top of this, there have been import delays due to new procedures at ports and crossing points following Brexit. These delays have financial implications. Haulier costs have ramped up as demand increases. This in turn drives up salary costs, which are ultimately passed onto the consumer in the form of price increases.
The situation has also led to growing demand from retailers for large volume product shipments to allow them to replenish shelves emptied by buying spikes. Some food manufacturers have seen key product line volumes increase by 30-50% as result.
These issues are creating significant food supply challenges, with a spate of restaurants and fast food chains, including Nando’s and McDonald’s, feeling the effects first-hand. Meanwhile, manufacturers such as Nestlé are also experiencing problems, which could impact the supply of goods like Quality Street to retailers this festive period and highlights a growing concern about the availability of food products in the UK this Christmas.
Combatting supply chain struggles
In an attempt to combat some of these issues, food manufacturers have had to increase overtime, introduce working days at weekends; and utilise their ERP solutions to plan extraordinary production runs. The ongoing growth in demand has also led to increased shipments of product from plants internationally. This has had a knock-on effect on food supply chains around the world.
Consequently, the retail sector must find ways to reduce the impact of both current and future supply chain disruption. The starting point for this is to build stronger relationships with their suppliers. Taking this approach will allow retailers and suppliers to join forces to adopt more flexible approaches and mitigate any issues.
One area in which retailers could lend manufacturers a hand is in optimising distribution. In this scenario, retailers could share distribution runs with other customers, ensuring lorries are never under-utilised and helping to ease the burden on the hauliers. Alternatively, they could consider putting arrangements in place for temporary storage to stockpile key products. Another option, should shelf-life allow, would be for retailers to work with manufacturers to optimise production, calling in orders that sit further along the planning horizon earlier than usual.
Whichever strategies retailers and manufacturers decide to take, it is vital that their efforts are backed up and supported by the latest supply chain technology.
Futureproofing supply chain management
Modern ERP solutions for retail applications are pivotal in supporting supply chain management and possess functions that are frequently under-utilised in mitigating supply chain disruption. That includes being able to model the impacts on the supply chain and therefore plan for future supply chain issues.
For instance, these solutions can demonstrate what will happen if organisations pull orders in early or highlight the potential demand on storage and internal distribution. They can help food retailers and manufacturers understand how their supply chains are likely to react in conditions of stress. Additionally, analytical tools and stock requirement lists, powered by machine learning and artificial intelligence technologies, can reveal when stock is dangerously close to running out, which production lines will be affected and identify the customer orders that will not be fulfilled. It also facilitates insight into revised availability to help those difficult conversations with customers in the case of stock being unavailable. It can also help the reprioritisation of fulfilment to more strategic customers where challenges arise.
Armed with this kind of insight, retailers and manufacturers will be able to take mitigating actions and achieve resilience across the supply chain. As the festive season fast approaches, all of this will be essential in helping those food sector businesses to navigate the difficult, disruptive times they continue to face and set them up to better cope with any future disruption.