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.

DHL Supply Chain Management Services Grow By 100%

The supply chain management industry has been getting a boost, as more logistics companies look for more efficient technology and cheaper means of freighting.
According to market watchers, the global economic downturn has cut the bottomlines of many logistics firms by about 30 per cent in the last year as export traffic slowed.
Some of these firms have been turning to supply chain management services as a solution.
Richard Owens, CEO, Global Customer Solutions, DHL, said: “We have been very involved and we have seen the demand for services rise more than 100 per cent in the projects that we have done.

“They (logistics companies) see this is as a way to refine their processes, take cost out, and refine their mode of transportation. We are now seeing companies that haven’t used anything but air freight … now looking at sea freight.”

While other industries may be taking a breather, logistics firms are seeing potential business growth from the IT and biomedical industry - with more patents coming online and companies looking for more innovative product offerings to lure in consumers. Such growth is also seen to be raising demand for supply chain management services.
For logistics firms, experts said that they need to think longer term because of the evolving landscape and changing customer demands.
“Well, the landscape needs to change, logistics companies need to be more innovative, and of course it needs to change from the demand of customers of logistics companies,” said Rod Strata, industry principal, Transportation & Logistics, SAP.
“Because in many cases logistics companies are the architects of global trade, what we will see is different offerings. We will see some logistics companies transform with much greater service offerings which will transform their profit margins to double-digit growth going forward,” he added.
According to experts, some upcoming trends which logistics firms need to be mindful of going forward, are climate change, as customers demand lower carbon routes. Global developments, such as China’s increasing position as a technological leader, could also alter trade flows.

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