According to an article last month in The FT, 65% of average supply chain expense for UK supermarkets comes from the cost of taking goods the ‘last mile’ to stores.
There’s a fairly simple explanation for this the multiples have made massive strides in streamlining supply chains, but now the established model for a ‘lean’ supply chain needs to be complemented.
There are many arguments for grocery multiples to incorporate an alternative supply chain, which include: dealing with continuing growth in online grocery sales; servicing the opening of more convenience stores; and the escalating costs of servicing the ‘last mile’.
In these circumstances, a complementary supply chain could be the answer, one with more ‘agility’ built in. A lean supply chain aims for efficiency by minimising inventory and forecasting demand, whereas an agile one is more sensitive, reading demand and responding quickly.
The nature of a smaller store goes hand in hand with restricted access, smaller pack sizes, delivery curfews, tighter labour scheduling, less storage and unique promotional and ranging requirements.
An agile supply chain allows retailers to be where their shoppers increasingly want to be in c-stores and online. Supply chain directors at the multiples need to consider contribution to profit rather than cost and availability alone.
Manufacturers, retailers and wholesalers need to work together to support this focus on profitability. As the country’s largest delivered wholesaler we’re delivering to a store in the UK every 12 seconds we make full use of an agile supply chain model and as a result can offer services such as multi-temperature drops and consolidated deliveries at times that ensure sell-outs at retail and make best use of staff time. This ensures ‘last mile’ costs are strategic investments rather than mere expenses.
When the three elements in the supply chain manufacturer, wholesaler and retailer work together sharing data and creating joint business plans, this ensures maximum efficiencies, reduced mileage and true collaboration.