Boost supply chain efficiencies to beat retail price war

By Laurence Gibbons contact

- Last updated on GMT

Related tags: Supply chain, Food, Retailing

The food supply chain needs to boost efficiencies ahead of the prospect of a retail price war
The food supply chain needs to boost efficiencies ahead of the prospect of a retail price war
The prospect of a supermarket price war – leading to lower supplier prices – makes it even more important to boost food and drink supply chain efficiencies, according to the European Food and Farming Partnerships (EFFP).

The volatile retail market, combined with growing demand for food products, a need to increase economic competitiveness and cut energy use has led the EFFP to call for a “step change”​ in the supply chain.

Siôn Roberts, senior partner, EFFP, told “There are a lot of challenges​ [facing the sector], we’ve got a turf war going on in the retail sector and people are very aware of the volatility in raw material costs because of longer-term challenges of resources.

“We have to find a way to deal with these challenges around resources, and food businesses impact on the supply chain, environment and its suppliers – and align that with driving profits at the same time. People ultimately are only going to make changes if you can align them with making your business successful.”

Food and drink manufacturers should consider how they can grow their businesses, while also using less water and energy and working more collaboratively with both their suppliers and competitors, Roberts added.

He said many of the larger businesses were doing this, but some were still focused on achieving growth through innovation that didn’t take into account its environmental impact.

SCALE project

The EFFP is one of five partners in the ‘Step Change in Agri-Food Logistics Ecocsystems’ (SCALE) project, which is working to develop new tools and frameworks that the agri-food sector can use to improve the efficiency and sustainability of food and drink logistics along the supply chain.

If businesses are able to measure the “triple bottom line”​ of economic, environmental and social costs they will then be able to optimise these three elements to see what might be done differently in the future, SCALE claimed.

The other four partners of the project – part funded by European funding body INTERREG IVB Nort-West Europe – are Cranfield University, DHL, the University of Wageningen and Université d’Artois.

Denyse Julien, senior lecturer at the Supply Chain Research Centre at Cranfield School of Management, told SCALE’s Innovation in agri-food supply chain logistics conference yesterday (March 19): “The aim is to improve economic competitiveness of the food supply chain in Europe and reduce the impact it has on the environment.”

SCALE claimed collaboration between businesses would help create environmental and cost-cutting benefits, such as firms sharing distribution to limit carbon emissions from trucks and reduce noise pollution in urban areas.

Attractive proposition

Roly Taplin, vice president, Agrifood, DHL Supply Chain, told “We are looking at ways to address these concerns, such as different fuels to drive down CO2  ​emissions, but also electric vehicles and consolidating bigger deliveries into fewer trucks to make fewer movements into cities. Therefore, the project SCALE is an attractive proposition for us.”

DHL is working with frozen food retailer Iceland, which is expected to start sharing space on its trucks with another retailer​ later this year.

The three-year project is now entering its second phase – engaging with food and drink businesses and testing its research in pilot schemes to assess its efficacy.

Malt producer Muntons is one of the first firms involved in the pilot scheme.

Alan Ridealgh, md, Muntons, said: “It is a cost reduction exercise – we use a lot of energy in what we do. If we can reduce energy we might not make a lot of money, but at least we’ll keep up with energy price increases and remain relatively competitive in the market.”

Muntons has invested in a £1.2M in burners at its Stowmarket site as well as £4M in silos and burners at its Bridlington facility over the last few years, to increase efficiency.  It now recycles 99.9% of its waste, Ridealgh claimed.

“Waste is something you manage, not throw away. Thinking like this has reduced the amount of waste we create,”​ he added.

SCALE is now looking for more food and drink businesses to become involved in the forthcoming pilot schemes.

Meanwhile, Morrisons pledged to slash prices​ last week in a bid to compete with discount retailers Lidl and Aldi.

Related topics: Supply Chain, Processing equipment

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1 comment

Regulatory pressure and use of IT

Posted by Jim Flynn,

One way food firms can become more efficient in their supply chains is by building trusted supply chains and sharing information. In my field of food safety and quality taking the simple action of proactively managing supplier standards through the effective use of IT systems can shorten supply chains, reduce the risk of costly withdrawal and recall and make BRC standards compliance less of a cost on the business.

That will only happen when food companies wake up to the fact that manually managing supply chains is both costly and risky as they simply don't have the man or woman power to give this task the attention it deserves.

All the best performing companies like McDonalds have systems in place and it doesn't need to cost a fortune. There are very cost effective solutions out there that can give great returns in short time scales.

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