As the squeeze on household budgets looks set for the long haul, so the new look grocery basket has become the focus for business planning. The low-cost retailers, own label brands and loyalty schemes have all benefited from the current consumer focus on costs. However, unless producers and retailers can reduce costs in line with price reductions the consequence will be reduced margins.
For all those involved in the supply chain, the challenge will be to reengineer operations to take advantage of the change in supply and demand patterns by reviewing and restructuring supply chain operations. The potential benefits of reducing the SKU range, introducing special offers, increasing MOQ’s and increasing the average order and delivery size for individual SKU’s will only be realised by reconfiguring the operation to reflect the change in activity.
Key focus areas include: -
- Opportunities to reduce stock as a result of reduced product range or improved purchasing terms
- Changes to the warehouse layout to ensure pick faces and replenishment stock are optimally located, and dynamic where appropriate
- Reviewing picking processes to take advantage of increased order quantity by line item
- Opportunities to increase the use of automation as the distribution profile changes
In a sector with rapidly changing SKU volumes, inbound profiles and consumer behaviours, previously well optimised operations can quickly become inefficient. These types of issues are usually the ones for which the root causes are the easiest to address.
Implementing analysis led changes to processes and warehouse layouts, combined with training to eliminate workarounds, can produce surprisingly significant and cost effective, service level improvements and reductions in cost.
In the medium term, an outsourcing or re-tender process for warehouse and distribution operations is a great opportunity to review volumes and requirements whilst assessing the most competitive options.
For a more strategic outlook, if a 3-5 year horizon for the supply chain looks very different to the historical modelling for the current operation, a strategic infrastructure review can determine the optimum solution for various scenarios – future proofing the operation.
Davies & Robson has a wealth of experience of delivering these tactical, strategic and commercial improvements for food manufacturers, wholesalers and multiples.
If you would like to discuss how Davies & Robson can help you to achieve your supply chain objectives, please call 01327 349090, or email firstname.lastname@example.org