Supply chain collaboration will help beat slump

Greater collaboration between manufacturers in the supply chain will be essential in helping to secure the future of the food industry, a new report has claimed.

As the economic downturn bites, compounded by high oil prices and rising prices for some ingredients, pressure is mounting for firms to work together more closely in the supply chain, consultancy Capgemini has argued.

Speaking at a supply chain conference organised by the IGD think tank last week, Anthoula Madden, vice president of consumer products and consulting services at Capgemini, said: “As this ‘perfect storm’ unfolds, there is a need to adapt and update old supply chain models to shape up for the changes required if the current manufacturing, logistics and distribution value chain is to remain viable.”

Outlining a new report from Capgemini entitled The future of supply chain​*, she predicted that more retailers and manufacturers would start sharing lorries for wholesale and consumer deliveries, collaborating on improved supply and demand planning and operating out of shared warehouses within the next few years.

For example, she said, Del Monte is already sharing consumption data with Walmart to improve demand and supply planning. Meanwhile, the Amsterdam City Cargo Project has implemented warehouses on the edge of the city shared by a number of manufacturers and retailers and a number of pilots are already underway by Unilever, Asda, Nestlé, Unilever and PepsiCo to share fleets in cities, taking 800 lorries off the road.

The report claimed that such efforts could reduce transport costs per pallet by more than 30%, cut handling costs per pallet by 20%, reduce lead times by 40%, reduce truck mileage by more than 25% and lower carbon dioxide emissions per pallet by 25%.

“Collaborative business models are predicted to become the norm, so expect to see Tesco shopping bags emerging from Sainsbury branded vans,” said Madden. “I’m not saying it’s easy to ask manufacturers or retailers to do something that’s very alien to them - namely join forces with the competitor - but once they release that it means more money to invest back into the business, it makes sense. And never has there been a more important time to improve efficiency.”

Nigel Bagley, director of customer development at Unilever added: “We can’t continue to operate with a supply chain that was developed decades ago on a historical method of manufacturing and delivery. The world has changed and we have to change our supply chain to adapt to it.”

• The report was based on the views of 24 retail and manufacturing firms, including Unilever, Kellogg and Nestlé