Time to call in the supply chain ‘troubleshooters’? If you really want to cut costs you should be squeezing more efficiencies out of your logistics networks
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  • Rises in raw material, fuel and commodity costs have created a perfect storm in the grocery market, which has hit retailers, small producers and even big brands in recent weeks.

    While costs have risen – pushed up by VAT, corn, fuel and even fruit juice price rises – the malaise in the wider economy sees retailers unwilling or unable to pass on these hikes in price. This has created huge downward pressure on the supply chain and has even seen some well known brands lose their space on supermarket shelves, as they have not been able to reduce prices in line with retailers’ expectations.

    Every player in the food supply chain, from retailer right back to farmer, is faced with the same conundrum; how to do more with less? One answer lies in the all too often hidden area of logistics, which is often seen as the ‘operational’ (and not strategic) side of many businesses. Despite this misunderstanding of the value that better logistics management can bring, many more food companies (and even large brands) are revisiting this area of their businesses and uncovering some impressive results from better supply chain management.

    We are seeing more businesses in the retail sector realising that the supply chain is not just an operational overhead, but an important strategic lever. There is certainly a growing appreciation that better logistics can improve flexibility, reduce product delivery times, improve availability and actually reduce costs. Additionally, a strategic supply chain can help those in the retail chain by considering potential material shortages and mitigating against them.

    A coherent supply chain strategy must actively support the overall business strategy and understand how it supports the retail proposition. If you compete on price you need to be the most efficient; if you compete on freshness, you need to be the quickest; if you compete on range, you need to be the most accurate. No matter what your retail USP is, your supply chain needs to support it.

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