Retail Gazette highlights five key talking points from a breakfast event for supply chain, transformation, and tech leaders in the food and beverage sector.
Ranging and supplier efficiency, sustainability, and the ways in which customers’ changing behaviour impacts the long tail supply chain were all hot topics at the Retail Gazette roundtable hosted with database management software and tech provider InterSystems.
Representatives from retailers and brands including Coca Cola, Costa Coffee, Fortnum & Mason, Frasers Group, John Lewis, Nisa, Tesco, and Waitrose took part in the debate, which was held at The Swan at the Globe on London’s Bankside in late September.
Retail Gazette and InterSystems have also published an in-depth report on the ingredients for a successful food and beverage supply chain.
The five big talking points were:
1. Crisis management is business as usual
“The next crisis could be tomorrow,” warned one food retailer in the room, who wanted to illustrate the continual volatility the industry is facing in the aftermath of the Covid crisis and cost-of-living squeeze which has increased costs across the supply chain.
Due to the fast-moving nature of the F&B sector, he warned it is difficult to achieve a completely accurate forecast and suggested the most important thing in retail supply chains is to build in agility to be able to deal with a range of scenarios.
“Better demand planning is needed,” according to another retailer. “The way to run more efficient supply chains is to focus on fewer things to do right.”
He added: “Many of the problems in supply chains come down to priority management rather than a lack of good ideas. In such uncertain times, having the right crisis management plan in place is also crucial for supply chains to operate appropriately.”
2. Sustainability comes with retailer-supplier collaboration
All those at the roundtable said they were taking sustainability seriously.
One F&B business is working with sustainability certification provider Planet Mark to help it map and monitor suppliers, as the majority of carbon emissions in a retailer’s supply chain are so-called ‘Scope 3’ which are not in their direct control.
This is one reason why better retailer-supplier collaboration is vital if the F&B industry is going to improve its environmental performance, they explained.
“Sustainability is hugely important to our business,” explained another retailer, who added: “Consumer behaviours are driving it – and it reverberates all the way down the supply chain.”
One retailer added: “The sustainability discussion needs to be built into tenders with suppliers.”
Another commented: “It is an ongoing education journey to take suppliers on a journey with you from a general business strategy perspective, but particularly around sustainability plans.”
3. Ranging efficiency top of mind
Three retailers at the roundtable listed ranging efficiency as a particular challenge in the current uncertain economic environment.
One said that many retailers in the UK have embarked on a period of “range rationalisation” because it helps bring clarity in terms of their market proposition in the eyes of consumers but also helps them manage operational costs more effectively.
But merger and acquisition (M&A) activity is rife in retail right now, so when retailer portfolios change this disrupts range planning yet further. In such scenarios, it is important to find “the system synergies” as quickly as possible, they noted.
Another retailer added that “cross-enterprise procurement” can be a “real winner” in regards to managing costs and smoothing out supply chains following M&A.
One retailer explained how his firm had reduced delivery frequency to stores, which was one way of improving margins and ticking the right boxes from a sustainability perspective.
4. Don’t slip back into old habits
Although hugely difficult for businesses across the F&B sector, the pandemic did bring about some improvements to processes that helped maintain margins and keep operations as efficient as possible.
Using stores as distribution hubs for ecommerce and the revenue boost that working with quick-commerce providers such as Deliveroo and JustEat has provided are examples of how the pandemic has changed retailing.
“A key battle for us now is don’t slip back into old habits,” said one retailer, who suggested that as warehouse space in the UK and shipping containers return to what is effectively pre-pandemic norms it does not necessarily mean they have to be utilised in the same way as before.
“Efficiency is not just for times of crisis – it needs to be worked on at all times.”
One F&B company representative noted the pandemic uncovered the true importance of the supply chain “once and for all” – and as a leader of that particular department they were keen to leverage this new position of power to enact even more change.
Behind-the-scenes investments can help further support some of these fresh services and new retail operating models, they added.
Often in retail, the customer-facing end changes very quickly – as evidenced by the growth in and popularity of q-commerce – but the longer tail supply chain infrastructure does not, meaning the first mile supply chain cannot keep up with the last mile. This was described as a common industry problem.
With supply chain teams having a more prominent seat at the retail boardroom table now, it was mooted the forgotten back end operations might get the required investment to function optimally.
5. Interest in supply chain technology investment
One food retailer in the room said the pandemic has taught the business how to use data more efficiently to follow consumer trends and understand what shoppers want from the company.
Others in the room agreed they could be using technology more effectively to run their supply chains, but acknowledged it is difficult to find the investment resources and the time to overhaul infrastructure to the required degree amid so much volatility.
Mark Holmes, senior adviser for global supply chain at InterSystems, acknowledged the pandemic accelerated digital transformation across industries which, he said in itself “is disruptive to supply chains”.
He added retailers “need to plan for ongoing disruption in the coming years”.
“Rising levels of supply chain volatility and ever-changing consumer behaviours and retailer-supplier partnerships require a more proactive and predictive approach to supply chain management – and that is where a fresh approach to technology comes in,” Holmes explained.
“What retailers need is a data platform that facilitates real-time communication and the information of integration between manufacturing, logistics providers, suppliers, and the range of different and disparate systems they operate.
“The first mile of the supply chain is where much work can be done by retailers to improve overall performance – it is where investment needs to go to ensure they can optimise the plethora of new last-mile and consumer-facing services they are rolling out.”
Holmes added: “The use of modern data platforms with integrated artificial intelligence and machine learning is how retailers can connect disparate data and get to grips with the current challenges they face.”
Download Retail Gazette and InterSystems white paper on this subject today
Click here to sign up to Retail Gazette‘s free daily email newsletter
