opinion

Critical mass needed in the supply chain sector

By Nick Hay

- Last updated on GMT

Scale, control and synergies are all needed to be successful in the current market climate, according to Hay
Scale, control and synergies are all needed to be successful in the current market climate, according to Hay
Nick Hay, chief executive at supply chain solutions provider Fowler Welch, discusses critical mass within the industry

Changes in market share across the retailers and an increase in routes-to-market in recent years have disrupted the traditional chill supply chain, forcing producers and distribution specialists to rethink their operations.

With more retailers being served across more store formats, by a larger number of suppliers – combined with national, local and artisanal producers – the critical mass is diluted, so supply chains are increasing in complexity and the costs to serve are coming under pressure.

To be successful in this changing climate, supply chains need to have three things at play: scale, control and synergies. Cost-effective, high-quality distribution requires an ability to control what’s going on, with a scale to drive high service, which will in turn drive synergies through critical mass. Our partnership with Dairy Crest at its Nuneaton National Distribution Centre exemplifies all three of these aspects: firstly, with a highly controlled warehouse owned by Dairy Crest that is heavily invested in; secondly, with the warehouse offering opportunities for other companies to join – two further manufacturers have already been secured – to contribute to and benefit from an increase in critical mass; thirdly, with Fowler Welch adding the transport element to the operation, increased critical mass from multiple suppliers creates the scale for control and service. This approach has meant that, year to date in 2018, of all picked cases ordered, not a single case has been shorted by the Nuneaton team – a 100% success rate.

This model can be applied across national operations, but also creates opportunities for smaller producers as artisanal products continue to increase in popularity and need solutions that allow them to supply a number of routes-to-market competitively. Supply chains are only continuing to fragment across a number of channels, so this proliferation means critical mass is more vital than ever.”

Related topics: Supply Chain

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