Logistic & FMCG Companies: How to Profit from a 21st Century Supply Chian

Major retailers are under tremendous pressure to go green and reduce their carbon footprint. To achieve this, they first turned to initiatives close at hand, including the reduction of energy consumption at the store level, product packaging resizing and the more efficient construction of new stores.

Some would argue however that their supply chains represent the biggest source of carbon reduction and as close to home initiatives begin to dry up, retailers are now turning their attentions towards suppliers.

FMCG companies for example are being placed under tighter and tighter scrutiny to deliver on-time, with full loads that aren’t rejected. This can have a major impact on sustainability, as full loads mean fewer lorries on our roads, fewer rejections equal less waste and on-time deliveries reduce bottlenecks and returns.

As if suppliers weren’t being squeezed enough, now comes a whole raft of new initiatives that, unless automated, will place margins under greater and greater pressure.

Nevertheless, supply chain’s can fight back, to not only deliver the carbon reductions retailers seek, but turn these initiatives in to an opportunity to improve profitability.

Picture, if you will, a supplier faced with a mandate from a major retailer to reduce its carbon footprint by 25%. That’s not a 25% reduction in its own internal footprint but the footprint it creates in trading with the retailer. Understandably, all eyes turn to logistics and product returns as two major areas that can achieve this. But how and at what cost?

The answer lies in the redesign and integration of business processes between the supplier and its hauliers that, if done correctly, can not only help them deliver major improvements in carbon footprint but also improve cash-flow and reduce costs.

For example, by exchanging delivery requests, load plans and despatch advices in real-time, suppliers and their logistics providers can increase the number of full loads and decrease the number of incorrectly timed deliveries. Furthermore, by equipping drivers with simple mobile-phone based text messaging (SMS) or Apple iPhone applications, proof of delivery (POD) messages can be sent back to the supplier’s computer system immediately the goods are received. This not only allows the supplier to invoice more quickly (sometimes by weeks) but also has a dramatic impact on reducing invoice queries.

In summary, there are many such initiatives that if implemented can help suppliers and their hauliers drive improvements to margins, cash-flow and customer service, whilst in tandem delivering the sustainability returns their customers demand.

Perceptant is a recognised expert in Efficient Logistics, Supply Chain Management & Electronic Data Interchange (EDI) and has been helping companies seamlessly collaborate for over 20 years. For a limited period, organisations can have a free review of their logistical supply chain by visiting the Perceptant’s Solutions Forum, which can be found on their homepage.

Supply Chains Don't Have To Be Taxing...

One of the areas that doesn’t get enough attention in supply chain is taxation. Whether its because we think that taxes are unavoidable or we don’t know how to get rebates or avoid them in the first place, they are too often seen as a cost of business. While its true that taxes are more certain than death (as you don’t know when you’ll die but you know you’ll get taxed until you do, and then when you do), it’s also true that they can be minimized.

Last year, Supply & Demand Chain ran a great pair of articles on the tax efficient supply chain, that I covered in this post on the tax efficient supply chain. Since then, I haven’t seen much, until this article on how to benefit when the supply chain meets tax which presented ten characteristics of a tax efficient supply chain structure and ten leading practices of companies with tax efficient supply chains.

The practices, in particular, are worth pointing out:

1.Implement limited risk structures following a business change.

Having to make big transfers to cover losses can incur “transfer” taxes related to incoming revenue. Furthermore, if the unit or division the money is coming from is separate or in another country and profitable, you might still have to pay taxes on the “profits” in that business, division, or country and get taxed twice.

2.Align the tax and transfer pricing structure with the locus of strategic decision making.

If your operations aren’t in synch, the corrections you have to make after the fact could have tax implications.

3.Focus resources on primary risks and view Advance Pricing Agreements (APAs) as key tools for minimizing the impact of tax audits.

Good documentation is the key to a successful audit (as long as you have been truthful on your taxes).

4.Document the business case for restructuring when the decision is being made.

Be sure to detail compensation or indemnification payments to restructured entities, or risk being taxed and fined after the fact.

5.Consider applying for an APA in one or more countries.

This will protect you from double taxation in two or more tax jurisdictions.

6.Be sure your documentation includes the responsibility profiles of limited risk entities.

You don’t want your efforts to look like a tax evasion scheme. While it’s perfectly legal to take steps to minimize your tax burden, attempting to alleviate your fiscal responsibilities completely is a different story.

7.Perform an annual review.

Insure that you are documenting revenue and paying taxes consistent with all agreements and laws that are in place. Document the findings. If you ever need to show “reasonable care”, this is how you’ll do it.

8.Establish procedures for tax authority audits.

Be prepared and responsible. It will help.

9.Keep informed of tax developments in each operating country.

Being proactive will save you a lot more than if you are reactive.

10.Talk to Peers and Experts.

Talk with companies that have implemented Tax Efficient Supply Chains and expert consultancies (and global tax firms) that have helped.
 
Next generation Supply Chain Management, B2B Integration and EDI - http://www.perceptant.com/

Johnson & Johnson provide sustainability practices for the pharmaceutical industry

Incorporating sustainability into operations and the supply chain is an important focus for pharmaceutical companies. While the complete definition of sustainability includes social, environmental and economic impact, the emphasis in this analysis will be on the incorporation of environmentally favored approaches.

http://www.perceptant.com/blog/?p=148

Marks and Spencer benefits from supply chain management improvements

Marks and Spencer has attributed “continuing improvement in performance” to better stock control, sourcing and supply chain management.
The retail giant’s second quarter trading statement reported that it is continuing to manage costs tightly, although “better than planned volumes” are expected to lead to an increase in full year operating costs of 0 per cent to one per cent, excluding bonus. Capital expenditure for this year is still expected to be around £400m.

http://www.perceptant.com/blog/?p=153

Wal-Mart: One size does not fit all across a Global supply chain…

Fascinating article that highlights “what’s good the goose in not necessarily good for the gander” when it comes to global supply chain management strategy. Perceptant (http://www.perceptant.com) has for a long time advocated that geography, in-county tax, export and logistics rules as well as local employment practices impact supply chain’s in very different ways on a country level. What are your views and thoughts?

http://www.dcvelocity.com/articles/20091008cscmp2009_walmart_supply_chain/

Packaging dimensions help streamline global Supply Chains…

Harkness Wilder and Gladson Announce Strategic Alliance to Deliver Improved Logistics Strategies

EVANSTON, Ill. & LISLE, Ill.–(BUSINESS WIRE)–Harkness Wilder, a consulting firm focusing on designing and implementing business process improvements in supply chain management, and Gladson, the leading provider of product images, product information and category management services, have announced a strategic alliance to deliver improved logistics strategies to the consumer packaged goods industry.

Harkness Wilder’s services specifically target improvement opportunities across the supply chain, such as reduced costs, improved service, increased productivity, and more efficient processes and controls. The company’s practice areas include sourcing, demand planning, inventory management, distribution network design, warehouse operations and transportation management.

Gladson’s Certified Master Data Program provides data on outer dimensions, weights, marking, labeling and bar code information for cases, inner-packs and retail units. This product information helps manufacturers streamline internal operations and support data exchange with trading partners to simultaneously build trust and eliminate the need for costly manual verification. This data can ensure that Harkness Wilder’s clients are working with the most accurate and complete information in the development of their logistics strategies.

“Our clients see logistics as a competitive weapon,” said Mark Shapiro, president and CEO of Gladson. “Harkness Wilder’s expertise in transportation planning and warehouse development in conjunction with Gladson’s highly-accurate product master data will create solutions that deliver real value across the supply chain.”

“Harkness Wilder’s consulting services depend on the accuracy of case-level data to ensure the quickest and most efficient evaluations of logistics activities for their clients, and the most accurate results,” Julie Forgash, CEO of Harkness Wilder said. “Gladson is already the leader in data management for space planning and on-line shopping. Their services at the case-level will be a tremendous advantage to our clients as we help them with logistics planning.”

http://www.perceptant.com/ - Next Generation Supply Chain Management, B2B Integration and EDI

Do Pharmaceutical companies really focus on their Supply Chains?

I read the following and wondered just how much focus Supply Chain Optimization receives in Pharmaceuticals:

"Successful supply chain management, including managing demand, planning API and formulation production, packaging and distributing, is a goal shared by all pharmaceutical manufacturers. According to PharmaTech.com, effective supply-chain management is particularly important as the pharmaceutical industry seeks ways to reduce costs, maintain regulatory compliance, and adhere to quality and safety standards..."

Comments/thoughts?

The Business Case for EDI...

The first return (of many) for companies wanting to receive business documents from their supply chain partners electronically, is because if they are properly integrated then it saves the recipient having to provide the resource to enter the document on the their own ERP system...
http://knol.google.com/k/ian-ford/electronic-data-interchange-edi/yhsjocxy2hhk/2#