Asda: Is our manufacturing base agile enough?

By Elaine Watson

- Last updated on GMT

Related tags: Supply chain, Supply and demand

Asda: Is our manufacturing base agile enough?
Asda has challenged suppliers to help it make its ambient and frozen supply chain as ‘responsive’ as its fresh food delivery system.

Speaking at the annual IGD supply chain summit in London on Friday, Asda supply chain director Gavin Chappell said Asda had moved its supply chain staff at head office onto new contracts so that they were able to provide “a true seven-day service”.

It was now keen to work with suppliers to “maximise inbound opportunities at the weekend. We want to move to a seven-day-a-week inbound.”

He added: “Are our suppliers as flexible as they could be?”

Order quantity review

Asda was also undertaking a comprehensive ‘economic order quantity review’ to assess whether it was ordering appropriate quantities of stock into its distribution centres on a line-by-line basis, he said.

To date, more than 23,000 stock keeping units had been reviewed, Chappell told FoodManufacture.co.uk.

The process had so far proved “quite neutral​” for food manufacturers supplying Asda’s depots, he claimed, with “as many gainers as losers”​.

Asda was also setting up meetings with suppliers to align strategic objectives and improve promotional planning.

Forecast accuracy is getting worse

But being able to respond more quickly to changing demand patterns was more important than trying to produce the perfect promotional forecast, he stressed.

“My contention is that forecast accuracy is getting worse and will continue to get worse.”

This was no reflection on Asda’s systems but simply due to the fact that forecasts were so reliant upon ‘known unknowns’ and ‘unknown unknowns’ that they were unable to deliver consistently, he said. And the challenges would only increase as a higher percentage of stock was sold on deal.

He went on to cite an example of how exactly the same promotion on the same product at different times of year delivered completely different sales uplifts, which were in turn miles off the forecast.

The only way to address such volatility was to equip your supply chain to cope with the unexpected, he said: “Are we working hard and aggressively enough to build agility into our supply chains?”

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1 comment

Supply Chain Agility

Posted by Richard Shipperbottom,

Our experience suggests that there is massive opportunity in this area, and you can get at it with the right tools and techniques. For example, Applied Acumen has typically managed to help suppliers more than halve "overs" through improving operational agility whilst maintaining (usually improving) service levels and quality.

We find the usual knee jerk is for suggestions to invest in software of some kind, or equipment (e.g to allow parallel changeovers), an expensive route when cash is so tight, or petition for a reduction in sku variety - always a dangerous thing to do when chasing top line growth, even if they sometimes do carry negative margin (you should check yours after reading this)!

Furthermore, we have also found that great gains can be made simply through improving the way planning, production and distribution work, singly and collectively. We've yet to visit a business where such improvements don't pay for themselves within 30 days, and where there isn't low hanging fruit (yes, that's our challenge to you!).

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