This supplement is an independent publication from Raconteur MediaNovember 5 2008
SUPPLY CHAIN MANAGEMENT
Value chain is
the new king
Supply chain management is king, but it is changing. Itmoved yesterday, was remodelled last month and hasin last the last decade transformed almost beyondbelief, writes Stephen Neale. Partly responsible for the recent shiftis the economic downturn, but tech-nology and innovation are much big-ger forces, as are the dynamics of cus-tomer demand. End users in the 21stCentury have high expectations.Wiser and better informed than theirpredecessors, they demand servicesthat depend on intellectual property,entertainment electronics and newinnovative products to sit alongsidetheir desks, televisions, fridges andbaked beans. At the heart of the revolution arethe constant themes; global valuesthat apply from Calcutta to Connecti-cut. They are as true in today’s down-turn as they were in the best of boomtimes: meeting deadlines, achievingstrong profits and complying withregulators’ demands.Wincanton is one of the many com-panies at the forefront of the logisticsindustry, working in partnership withmodest sized companies and house-hold names to add value and lastingimprovements across the process.Head of business development in theUK is Tony Hourigan.“Differentiation in the logisticsarena is about the ability to evolvethinking and adapt to the rapidlychanging pressures within our cus-tomers’ businesses,” he says.If agility in the system is part of theanswer, the buzz word for best practiceis ‘efficiency’. It has become an almostreligious mantra, delivering on profitsand promises, and serving moralresponsibilities aligned to the environ-mental and ethical conundrums.Efficiency today remains elusive tosome because its delivery points areassociated with reduced capital invest-ment, collaboration with partners andsharing assets. Those grasping thesesimple truths are already profiting.“We are in a situation today whereretailers are sharing the same fleet oflorries,” says Mr Hourigan, who oper-ates in the south west. Customers suchas Argos, Woolworths and WH Smithare making use of the same vehicles.Nick Cullen, managing directorCEVA Logistics (formed as part of amerger between TNT Logistics andEGL), confirms customers want more‘holistic solutions’.“They are giving up control to takecontrol,” he explains. “If you let peopleshare a piece of the network they willbenefit in terms of both lessened riskand increased profit.”If devolved capital investments inports, fleets and warehouses are indecline, IT systems are not. Software isincreasingly sought out to delivertransparency in the process whereGREEN WAREHOUSE EFFECTIt’s not just about efficient movement. Storageand warehousing also have a part to play in anenvironmentally-friendly supply chainP. 5information has become all impor-tant. IT information can offer an ana-lytical view of a business, determiningproduct costs down to the last penny.Partly explaining why IT is too criti-cal to make spending cuts, today’s soft-ware solutions are about more thandatabases and communications. Theyare providing remarkable answers toport, warehousing and storage prob-lems, labour and transportation costsand environmental andethical issues. Technology isdriving efficiency. But in the endgame, it is not about complex pro-grammes, it is about common sense.“Everyone wants to move vehicles asshort a distance as possible and as full aspossible” says Mr Hourigan, of Wincan-ton. “There’s a fanatical view aboutempty mileage. This view is driven bysavings and there is a linear relationshipTHE TROUBLE WITH RFID A lack of global standards and a baffling arrayof options are hampering the adoption ofRFID technology. between environmental andcost-effective solutions. solutions. Theexpansionist ideas are gone.Logistics were once used to managecompetitive advantage. But the nextstep in cost saving is broad networks.”The world is changing. Supply chainmanagement is growing up. Actually itjust left the building. Welcome to valuechain management. The king is dead.Long live the king.P. 9SCARCE LIQUIDITY Over-complexity and high cost may both add topressure for an overhaul of supply chain andtrade finance. P. 13