Tips for Managing Supply Chain Volatility
Author: Gary Whittle, Commercial Director, Meachers Global Logistics
The last two years have been some of the most challenging the UK logistics industry has ever faced. The uncertainty caused by Brexit, followed by the Covid-19 pandemic, has resulted in considerable volatility in the supply chain.
Several factors have contributed to this, including increased complexity and confusion around the processes of Brexit, and the necessary measures required to help control the spread of the pandemic at shipping ports.
Spiralling sea and air freight costs, due to a spike in demand over supply, has caused increased volatility and inconsistency in supply chains. Add to this, driver shortages and rises in the cost of fuel, energy and living, and this paints a pretty bleak picture for the supply chain.
Drawing upon my own experiences and observations as a Commercial Director for a global logistics company, here are my tips to help manage supply chain volatility.
Be as flexible as possible
When things are volatile it is important to be as agile as you can be as a business. This is not always easy, but identifying where crisis control levers exist in the business, and how to operate them in those periods, is crucial.
Having our own fleet of trucks and the capacity to hold stock gives us some control to help manage our customers’ supply chains. With many manufacturers historically adopting the Just-in-Time (JIT) model and the current volatility making this model very difficult, one way to mitigate this is to hold extra stock; after all, you cannot sell what you cannot get to your customer.
In terms of our warehousing capacity, we have grown this from 300,000 square feet to 500,000 square feet in the past two years. This has given us the ability to store and change the way our customers’ supply chains work, allowing them to have more flexibility around their storage requirements.
Communication is key
By investing more time in communications, we have been able to successfully manage not only our customers expectations but those of their customers too. Data collection and trend analysis is something that we as a business invest a lot of time into. These are vital tools for operating a smooth supply chain and managing volatility in it.
Right now, it is more important than ever that we regularly sit down with our customers to review their supply chains, discuss if alternative sourcing could be an option and if lead times can be extended to reflect what we think the industry is going to look like in the next twelve months. To ensure these conversations are effective, it is vital we work in a transparent partnership and have a firm understanding of the state of the industry. This comes from carrying out continual due diligence around data and trend analysis, speaking to clients daily, looking at resources levels and liaising with manufacturing plants, enabling our team to know how the supply chain is working at any specific window in time and make the best judgments.
The same is true for any business. Being open, honest and transparent with your customers and suppliers, and sitting down together to determine what is possible, is crucial. Supply chains are a partnership, with all parties wanting the same outcome: goods delivered sustainably and efficiently.
Continually seek efficiencies
Despite the challenges our industry is facing, it remains important for us to constantly innovate and explore new ways of doing things. If something can be done more efficiently then it often brings with it sustainability benefits.
This was true when we worked with Southampton City Council to set up the Sustainable Distribution Centre. The initiative sees us consolidate all public sector deliveries for the last mile of deliveries into the city. It helps to reduce emissions by cutting the amount of trucks on the road going in and out of the major municipal buildings, hospitals and council offices.
The goods are consolidated at the centre and then delivered by a single truck on the last few miles. This same model has now been adopted by some of our customers.
Over the years I have come to realise that it’s good to challenge the standard and explore new ways of doing things. If it isn’t broken, don’t be afraid to break it. Continually seeking improvements and efficiencies has never been more important.
Work with strategic partners
If you want to work efficiently then you have to work together with your partners. There is always room for improvement in our industry, so working collaboratively with our customers, competitors and suppliers is extremely important.
To help ease some of the issues that our industry is seeing around skills gaps and staff shortages, we have been working with the University of Cambridge to look at ways we can automate some of the processes we have done historically as an industry. More importantly, we’ve been looking at how this can be done at relatively low costs so that they can be disseminated through the industry, to our industry colleagues, and adopted by SMEs.
We are working on more projects with other partners, including one around warehousing efficiency and productivity that looks at how sensors can be used to track containers and track productivity in the warehouse.
Strong and supportive relationships are critical at this time. Knowledge sharing, especially with those inside your supply chain, is a great thing and should be embraced.
For more information and further insight into supply chain volatility, read the latest Meachers Know The Way Report, which can be downloaded here