Your supply chain is your future…

Once again this year’s Christmas retail sales have highlighted the inexorable rise in the use of e-commerce where we consumers continue to drive business change through our shopping preferences.

We should all be in no doubt that we are engaged in a supply chain revolution and it is the consumers who are driving the change, while many businesses strive to play catch up.

Of itself this situation is serious enough, yet we still see many businesses risking their reputation and future survival prospects as they fail to recognise the significance of effective supply chain management and leadership.

For many consumers the only point of contact with a supplying store or manufacturer may be its website with the actual delivery being made to a drop box or collection point by any one of a number of logistics service providers.

Online customers are notoriously fickle and, if items are lost, delayed or damaged, there are few second chances offered as there are many other suppliers out there and voting with your fingers is quick and easy.

In the current, fragmented logistics market, the final delivery company might have only a tenuous relationship with the supplying business, but if their performance is below par, the customer may never return to your website and perhaps not to your high street store either.

Set against this overwhelming pressure to deliver, you might think that at last business would recognise that the management of its supply chain, which is at the forefront in matching consumer expectation with the ability to supply its products and services, should be a priority, but you would be wrong.

A recent survey by Hitachi Consulting has suggested that 29 per cent of organisations see their supply chain as merely an operational function and 85 per cent don’t see their supply chain as a business strategy enabler.

We need the very best business leaders running supply chain operations throughout industry as the global supply chain is in a state of constant change

Today’s supply chain leaders are the key element in providing insight, strategic direction and technical expertise as business seeks to keep pace with consumer demand and gain commercial advantage in an ever-tougher market.

We need the very best business leaders running supply chain operations throughout industry as the global supply chain is in a state of constant change. Not only are we dealing with the e-commerce revolution, but there are one or two other major movements in play as the global supply chain moves on.

As living standards and therefore the cost of labour rises in China, it’s no longer as cheap as microchips to produce there. Natural disasters are also a significant and relatively recently recognised influencing factor in supply chain management, and they are occurring more frequently.

In recent years, the tsunami and the volcanic dust cloud over the Atlantic had huge impacts on world supply chains, causing unexpected shortages of everything from metals to paint pigments.

Purchasing managers may say it’s cheaper and more efficient to have one major supplier of a particular component or item, but your supply chain manager will probably offer different advice which should be heeded.

Among a growing number of businesses known to be considering such action, the maker of Raspberry Pi, the computer developed for schools, has re-shored the majority of its manufacturing back to the UK to ensure supplies of high-quality, cost-effective products, which will enable the business to continue to serve its customers.

In today’s world of global competitiveness, both from the consumer service perspective and from the product sourcing angle, it is very clear that effective supply chain management is now the key business strategy enabler. Any business that ignores or down plays its supply chain capability is facing a very uncomfortable and probably short future.

Steve Agg is chief executive of the Chartered Institute of Logistics and Transport.