How to optimise your supply chain with your trading partner

Date : 23 May 2018

Optimising your supply chain is vital for any successful grocery company, but have you considered the benefits of improving the supply chain with your trading partners?

While every organisation can try to address their own challenges individually, they won’t have enough access to exploit opportunities or remedy issues created by their trading partners. Many companies also don’t have visibility of the challenges they are causing for their trading partners. By acting on your own you may only be shifting unresolved issues up or down the supply chain.

Taking two small examples from the many that emerged during a programme we ran for a supplier and retailer:

  • The retailer hadn’t recognised the significance of previous requests from the supplier to avoid placing orders late on a Saturday. Within days of the start of the process, the retailer brought forward their Saturday orders having seen the manufacturing waste caused by the supplier having to estimate demand.
  • In turn the manufacturer learned of the issues their labelling caused for the retailer’s pickers and store replenishers. Through some simple changes to the font and information labels, time to ID in picking and replenishing was reduced which contributed to a substantial overall improvement in productivity.

Supply chain workers from two different companies walking the supply chain together

To optimise the entire supply chain, you need to be focussed on the end customer. Stand back from the processes for which you are directly responsible and look at the flows of information and product along the entire chain. This process demands that you start working more closely with your supply chain partners, and not just by getting greater visibility of their parts of the value chain and vice versa.

Huge benefits can come from outsiders challenging your established processes, and for you to challenge them in turn. Processes that are of immediate benefit to you could be improved further when you realise the detrimental impact they are having up or down the chain. By working together, new models of working can be found that benefit both parties and the end customer.

Working as individual companies we can address opportunities within our own control, but by working together with our trading partners it’s possible to take advantage of opportunities neither party knew existed.

Supply chain workers from two different companies in-store together

From our experience of helping suppliers and manufacturers optimise their supply chains we’ve drawn up some principles that we help trading partners establish at the outset:

  • Are the correct stakeholders on board from the beginning? This can only work if you have buy-in at senior level from both companies, (e.g. Account, Supply Chain and Category Directors) and they should participate in a kick off meeting setting the parameters below
  • What products, periods and places are you going to work on together?
    • Remember the Pareto Principle. Will you try to improve the 80% of processes that currently work well, or tackle the 20% that cause the majority of your challenges?
  • Review and agree the sharing principles that would promote an open exchange. Consider:
    • Do your teams need to ‘walk’ the supply chain together to experience it as a team?
    • How will you keep the focus on improving overall performance, including reducing total supply chain costs and not just moving costs from one part to another?
    • How will you balance input costs and output benefits, these should be balanced across trading partners?
  • What overall performance improvement are you aiming to achieve?
    • How will you know if you have achieved them?
  • What performance data and supporting information will you need to share?
  • Clearly identify and document all the actions needed, who is responsible, and when
  • It’s very important both parties anticipate and reflect on the their behaviours to ensure they are acting in compliance with relevant competition laws

IGD has been supporting the grocery industry for over a century. Behind the scenes we have created and facilitated projects such as the above in the UK, Ireland, Sweden and North America for manufactures and their retail customers including Axfood, Bergendahls, Booker, Brakes, Coop, ICA, Marks & Spencer, Morrisons, Musgrave, Sainsbury’s, Spar, Tesco, Waitrose and Walmart.

Our programmes ensure evidence-based trials, valid business cases and result in the roll out of commercially sustainable solutions achieving multi-million pound business benefits.

Take a look at our customised menu to see what else we can offer or to ask us about facilitating a project for you.

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