Raconteur takes a look at three very different sectors and the particular challenges they face
Many of the issues facing today’s supply chain professionals are common across industries and sectors. Every organisation has to cope with various degrees of supply chain-related risk and ensure they are sourcing responsibly. Buying and delivering products at the right price is essential across all sectors, while closer supplier relations make sense in most industries. Yet there are differences. The impact of online shopping and the delivery of these goods have challenged the retail sector, while others experience pressures around cost, risk or lead times. The impact of new technology, big data and the internet of things will also vary.
The battle to cope with multichannel shopping continues to dominate the agenda in the retail supply chain. “It’s essential for retailers to have inventory visible and accessible via all channels, and that their supply chain capability is aligned to the front-end online experience,” says Jonathan Vardon, global head of retail at UST Global. Click-and-collect is another potential problem, he adds, with almost a third of people experiencing issues locating products ordered online when they arrive in-store.
But online shopping may have reached a peak in grocery retailing, says Professor David Grant, of Hull University Business School’s Logistics Institute. “This has always been a complementary channel for supermarkets,” he says. “They aren’t recovering their delivery costs, and new and more forms of unattended delivery will be required to meet consumers’ needs to obtain the goods if they are not at home to receive them.”
The retail sector, though, is one that can benefit the most from the trend towards the internet of things (IoT), says Sarah Ecclestone, director, enterprise networks and IoT, at Cisco UK and Ireland. This could include providing customers with information about a particular item’s provenance to allay concerns around where it has come from, as well as helping retailers to analyse shoppers’ habits and plan their supply chains more effectively.
A lack of visibility in the pipeline of work is a particular challenge in the construction sector, says Richard Selby, director at Pro Steel Engineering. “With more notice, sub-contractors can work more effectively by arranging training for specific jobs and increasing or decreasing the workforce as needed,” he says. “This prevents wasted time and money, and would enable the whole process to run more smoothly.”
Cash flow is also a perennial problem and is often caused by lack of planning, says Gavin Swindell, managing director of REL, a division of the Hackett Group. “It’s the classic scenario of letting the water run out of the tank to reveal rocks that were always there,” he says. “World-class construction companies are prioritising cash creation through their own internal operations by optimising the cash conversion cycle or the length of time it takes to convert resource inputs into cash flows.”
In some parts of the sector, such as energy, oil and gas development, greater use of automation and software is having an impact, in the wake of disasters such as the BP oil spill in the Gulf of Mexico. “Smart systems are gradually infiltrating the supply chain and performing tasks previously carried out by humans,” says Chris Mills, chief technology officer, Europe, Middle East and Africa, at cloud business Pivotal.
The precise requirements of making and transporting drugs create a number of challenges in the pharmaceutical sector. “Investigational medicinal products and the entire supply chain are cost intensive,” says Jens Mattuschka, vice president, worldwide operations, clinical trial supplies and logistics, at PAREXEL International. “Supply chain managers need to implement control measures, such as intelligent stock management and just-in-time labelling, to reduce oversupply and keep costs in check.”
The sector has not helped itself, though, with adversarial relationships between pharmaceuticals and their suppliers, says Hugh Williams, managing director at Hughenden Consulting. “Pharmaceutical companies are renowned for being tough, unreasonable negotiators,” he says. “Many logistics providers complain about not being able to reconcile demands for low-cost service and high creativity and innovation.”
Also, the sector has proved itself reluctant to embrace new manufacturing techniques which could make it more efficient, says Robert Harrison, pharmaceutical industry manager at COPA-DATA. “If you take a look at other industries, in comparison the pharmaceutical industry is lagging behind,” he says. “However, the pharmaceutical industry is quite different; they manufacture very toxic substances which go inside the body. High quality and consistency have always been the focus, with strict controls and validation in place. This makes change hard and costly.”