The recession has placed increasing pressure on firms to remain competitive in an ever more cut-throat market as consumers look for increasing value whilst retaining “givens” like quality and availability.
This pressure has led to many businesses placing increased focus and responsibility on their supply chains to both source more effectively and be innovative in managing cost. It is not just that retailers want to get more supplies for less but that this is coupled with a requirement for efficiency and risk management.
Keeping Costs Down
Before looking at the impact that the recession has had on business practices lets put it into some perspective. Discover US Spending monitor (an organization that tracks consumer confidence) found in a recent survey that during 2010 “a majority of couples with children viewed both the US economy and their personal finances as getting worse”. The Washington Independent reports on economist Robert Gordon predicting that “the period will witness the slowest growth ever in GDP per capita and, therefore, American living standards.” Many stores (and house hold names) have gone. Many more are teetering on the brink. The predicted slow growth and pressure on consumer spending will mean for that the pressure on retail will be immense.
Sophisticated consumers
The retail supply chain has increasingly become much more sophisticated with global networks of suppliers, multiple distribution channels and increasing legislative controls. This vastly changing landscape alongside hugely competitive markets filled with ever more savvy consumers requires appropriate strategy.
Supply Chains answer
With increased pressure being placed on Supply Chain teams, executives will need to develop strategies that deliver against a set of key objectives
Cost
Quality
Agility and flexibility
Managing risk
Efficiency
On the face of it this isn’t to dissimilar from the standard deliverables from most supply chain teams are faced with – the key difference in today’s market is the stakes if the team fails to deliver.
So given these objectives what are we likely to see from retail supply chains? Perhaps a focus on the following?
Cost reduction programs
Procurement teams will no doubt be under increasing pressure on acquisition costs with pressure to either hold or, in all probability reduce, prices through far greater scrutiny of sourcing practices and letting of contracts.
Close attention on all capital investments especially inventory and stocking policies, re-order levels and forecast accuracy.
Many businesses may target specific business change programs to deliver savings.
Increased focus on sourcing and the supplier
The search to sustain competiveness will include greater reliance on supplier selection including emerging markets and low cost suppliers whilst sustaining the reliance on quality and innovation.
Increased reliance on performance
Agility and flexibility rely on processes and performance – suppliers beware – perform poorly and see your position overtaken by a competitor.
The ability to manage risk will depend far greater on speed to react with a key reliance on process.
Increased reliance on management information and awareness
Never before has being able to understand your supply chain at a micro level been so important.
Closer integration within the supplier community
Achieving economies of scale and agility through greater integration and partnering
Targeted use of technology
Deploying technology to facilitate efficiency and business change – targeting reduction of overhead costs and administrative burden.
Every cloud has a silver lining
To finish on a positive note this increased reliance on the supply chain in “bumpy times” will place ever more reliance on the supply chain executive – and as such create great opportunities for career development, responsibility and increase market demand for those that can help companies through these troubled times.
Over the past decade, the growth of the “green supply chain” has been extraordinary. Driven by both increasing awareness and legislation, ensuring sustainability and minimizing the environmental impact of the company has become an integral element in business decision-making and planning activities. Environmental impact has also appeared as a key differentiator in the marketplace underpinning many companies corporate responsibility programs.
One of the challenges that many organizations face is how to address environmental management planning for their particular business. Developing a cohesive plan can be complex – after all – the environmental impact of a business has many facets making it difficult to discern exactly what should be included in the plan and how it should be prioritized.
To assist in this process, many organizations are increasingly turning to the BS EN ISO 14000 standard. ISO 14000 is a comprehensive set of standards that businesses can use as a framework to establish, measure and systematically document the environmental management system for their businesses. Included within this set of standards is ISO 14001 which represents the most well known and widely used standard for implementing an environmental management system and one in which a company can be certified by a third party.
Whilst not a management system in its own right ISO14001 provides a framework that can be used by companies looking to establish suitable controls and processes. Underpinned by thorough analysis of “waste streams” (as opposed to value streams) and a Plan, Do, Check, Act structure companies can establish their objectives, monitor and measure the success and instigate continuous improvement activities to sustain activities and targets.
Benefits of ISO 4001:
The benefits of ISO 4001 are quite significant. Benefits include
• Legislative compliance
• Increased access to customers
• Improved risk management
• Potential to reduce insurance costs
• Cost reduction
• Demonstrating comitment to stakeholders.
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How ISO 4001 applies to the supply chain
There are various ways in which ISO 4000 and Environmental management can impact the supply chain – the two key areas are:
Direct implication on working practices
The most obvious impact caused establishing a set of environmental policies and procedures is on existing working practices. Whilst the environmental policy has to be formulated after careful analysis and examination of all aspects of the business (not just the supply chain) material supply and control can be significant contributors.
There are many environmental issues that are specific to the supply chain and others that are generic and apply to the company as a whole. The supply chain can be critical in terms of reducing the environmental impact of the business, with several areas being key contributors such as production processes and logistics/transportation, material storage and even administrative overhead impacting enablers such as energy usage recycling, packaging, outputs and so on.
Implementing the management plan may have direct consequences for existing supply chain processes, which will require careful consideration and re-engineering.
Utilizing ISO 4000 as a requirement when sourcing
Material sourcing and supplier selection can be key contributors to a companies environmental impact – Whilst using standards such as ISO 4000 as a criteria when selecting suppliers can help – it has maybe not yet reached the critical mass to make this workable – however in placing either ISO 4000 attainment or insisting on key environmental management policies being in place a requirement of contracts or long term agreements (LTA’s) buyers can have a direct role in delivering against environmental management plan.
The future
Environemental management is here to stay – supply chains must adapt and consider how they impact a business utilizing tools and techniques such as ISO 4001 to help deploy a framework on which to develop and sustain suitable policies and procedures.